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2 Material accounting policies (continued)
2.6 Summary of material accounting policies (continued)

m Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation.

Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated statement of
income during the financial period in which they are incurred.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Consolidated statement
of financial position date. Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These are included in the Consolidated statement of income.

Leasehold improvements and leased equipment are depreciated on a straight-line basis over the period of the lease.
Depreciation other than on leasehold improvements and leased equipment is computed on the declining balance
method at rates expected to apportion the cost of the assets over their estimated useful lives.

The depreciation rates used are as follows:
Freehold and leasehold premises 2%
Equipment 15%– 33.33%
Equipment (computers, software, servers, other hardware, etc.) Straight line 4 – 8 years
Furniture and fittings Straight line 10 – 60 years

n Impairment of non-financial assets
Further disclosures relating to impairment of non-financial assets are also provided in the following notes:
• Disclosures for significant assumptions (Note 3)
• Premises and equipment (Note 7)
• Intangible assets (Note 9)

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s
recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash-Generating Unit’s (CGU) fair
value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and
is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows available to shareholders are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account.
If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated
by valuation multiples, quoted share prices for publicly-traded companies or other available fair value indicators.