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 21 - leverage features; - terms that limit the Bank and its subsidiaries’ claim to cash flows from specified assets (e.g. non-recourse loans); and - features that modify consideration of the time value of money (e.g. periodical reset of interest rates). Based on business model and the contractual term of cash flows assessment, there are three categories into which the Bank and subsidiaries classify and measure debt instruments: Amortised cost Debt instruments are measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: - the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and - the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI. Debt instruments measured at amortised cost is initially measured at fair value plus incremental direct transaction costs, and subsequently at their amortised cost using the effective interest method adjusted by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Fair value through Other Comprehensive income (FVOCI) Debt instruments are measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL: - the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and - the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI. For debt instruments measured at FVOCI, these assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. Fair value through Profit or loss (FVTPL) Unless debt instruments are classified as measured at amortised cost or FVOCI, debt instruments are classified as measured at FVTPL. On initial recognition, the Bank and subsidiaries may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. For debt instruments measured at FVTPL, these assets are subsequently measured at fair value. Net gains and losses, including any interest are recognised in profit or loss. Financial assets - Equity instruments All equity instruments included equity investment measured at fair value. On initial recognition of an equity investment that is not held for trading, the Bank and subsidiaries may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment - by-investment basis. Unless equity investments are elected to present subsequent changes in fair value in OCI, equity instruments are classified as measured at FVTPL. 265 Form 56-1 One Report 2021
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