TMBThanachart Bank Public Company Limited and its Subsidiaries (Formerly TMB Bank Public Company Limited and its Subsidiaries) Notes to the financial statements For the year ended 31 December 2021 20 Any cumulative gain or loss recognised in OCI in respect of equity investment securities designated as at FVOCI is not recognised in profit or loss on derecognition of such securities. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the Bank and its subsidiaries are recognised as a separate asset or liability. Disposal of investments For debt and equity securities, cost of both investments sold and those still held are determined using the weighted average method. Derecognition of financial liabilities The Bank and its subsidiaries derecognise a financial liability when its contractual obligations are discharged or cancelled or expire. 3.4.3 Classification and measurement of financial instruments Classification of financial assets On initial recognition, a financial asset is classified as measured at: amortised cost, FVOCI or FVTPL. Financial assets - debt instruments Classification of debt instruments included loan and investments in debt securities depend on Business model assessment and assessment of whether contractual cash flows are solely payments of principle and interest. Business model assessment The Bank and its subsidiaries make an assessment of the objective of a business model in which an asset is held. The information considered includes: - the stated policies and objectives for the financial assets and the operation of those policies in practice. In particular, whether management’s strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets; - how the performance of the financial asset is evaluated and reported to the Bank and its subsidiaries’ management; - the risks that affect the performance of the business model (and the financial assets held within that business model) and its strategy for how those risks are managed; and - the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Bank and its subsidiaries’ stated objective for managing the financial assets is achieved and how cash flows are realised. Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets. Assessment of whether contractual cash flows are solely payments of principle and interest In assessing whether the contractual cash flows are SPPI, the Bank and its subsidiaries consider the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Bank and its subsidiaries consider: - contingent events that would change the amount and timing of cash flows; 264 TMBThanachart Bank Public Company Limited
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