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The Group mitigates the credit risk of derivatives by holding collateral in the form of cash.
(k) reclassification of financial assets
The Bank may choose to reclassify a non-derivative financial asset held for trading out of the held-for-
trading category if the financial asset is no longer held for the purpose of selling it in the near-term.
Financial assets other than loans and receivables are permitted to be reclassified out of the held for
trading category only in rare circumstances arising from a single event that is unusual and highly unlike-
ly to recur in the near-term. In addition, the Bank may choose to reclassify financial assets that would
meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories
if the Bank has the intention and ability to hold these financial assets for the foreseeable future or until
maturity at the date of reclassification.
Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost
or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassi-
fication date are subsequently made. Effective interest rates for financial assets reclassified to loans
and receivables and held-to-maturity categories are determined at the reclassification date. Further
increases in estimates of cash flows adjust effective interest rates prospectively.
(l) Pledged assets
Financial assets transferred to external parties that do not qualify for de-recognition are reclassified
in the statement of financial position from financial assets held for trading or investment securities
to assets pledged as collateral, if the transferee has received the right to sell or re-pledge them in the
event of default from agreed terms.
Initial recognition of assets pledged as collateral is at fair value, whilst subsequent measurement is
based on the classification of the financial asset. Assets pledged as collateral are either designated
as held for trading, available for sale or held to maturity. Where the assets pledged as collateral are
designated as held for trading, subsequent measurement is at fair value through profit and loss, whilst
assets pledged as collateral designated as available for sale are measured at fair-value through equity.
Assets pledged as collateral designated as held to maturity are measured at amortized cost.
3.10 Property and equipment
(a) Recognition and measurement
Items of property and equipment are measured at cost less accumulated depreciation and accumulat-
ed impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the
asset.
When significant parts of an item of property or equipment have different useful lives, they are ac-
counted for as separate items (major components) of property and equipment.
The gain or loss on disposal of an item of property and equipment is determined by comparing the
proceeds from disposal with the carrying amount of property and equipment, and are recognised
net within other income in the Income statement
(b) Subsequent costs
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as ap-
propriate, only when it is probable that the future economic benefits associated with the item will flow
to the Group and its cost can be measured reliably. The costs of the day-to-day repairs and mainte-
nance of property and equipment are recognised in Income statement as incurred.
(c) Depreciation
Depreciation is recognised in the income statement on a straight-line basis to write down the cost
of items of property and equipment, to their residual values over the estimated useful lives. Leased
assets under finance lease are depreciated over the shorter of the lease term and their useful lives.
Depreciation begins when an asset is available for use and ceases at the earlier of the date that the
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