Page 210 - Full Book_24.4.2021

NOTES TO THE
FINANCIAL STATEMENTS

for the financial year ended 31 december 2020 (continUed)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.22 Equity instruments (continued)
Warrants (continued)
Upon issuance of warrants, it is the Group and the company’s (“the issuers”) obligation to issue a fixed amount of
ordinary share capital at the agreed exercise price.

any premium received for the warrants on the issuers own shares is added directly to equity. any consideration paid
inteGrated annUal rePort 2020 2.23 Recognition of income
is deducted directly from equity. changes in the fair value of an equity instrument are not recognised in the financial
statements.

Financing income – Banking business

financing income is recognised in the profit or loss using the effective profit rate method. the effective profit rate is the
rate that discounts estimated future cash payments or receipts through the expected life of the financial instruments
or, when appropriate, a shorter period to the net carrying amount of the financial instruments. When calculating the
effective profit rate, the Group has considered all contractual terms of the financial instruments but does not consider
204 future credit losses. the calculation includes all fees and transaction costs integral to the effective profit rate, as well as
premium or discounts.
income from a sale-based contract is recognised on effective profit rate basis over the period of the contract based on
the principal amounts outstanding whereas income from ijarah (lease-based contract) is recognised on effective profit
bimb holdinGS berhad 199701008362 (423858-X) once a financial asset or a group of financial assets has been written down as a result of an impairment loss, income
rate basis over the lease term.

is recognised using the effective profit rate used to discount the future cash flows for the purpose of measuring the
impairment loss.
Financing income – Takaful business
income from financing are recognised on an accrual basis and on a time proportion basis that takes into account the
effective yield of the asset.
Contribution income – General Takaful Fund
contributions are recognised in a financial period in respect of risks assumed during that particular financial period based
on the inception date. inward treaty retakaful contributions are recognised on the basis of periodic advices received from
ceding takaful operators.

Contribution income – Family Takaful Fund
contribution is recognised as soon as the amount of the contribution can be reliably measured. initial contribution is
recognised from inception date and subsequent contribution is recognised when it is due. at the end of each financial
period, all due contributions are accounted for to the extent that they can be reliably measured.
Wakalah fees
Wakalah fees are recognised as income or expenses by the respective funds based on a predetermined percentage of
gross contributions upon inception of certificates. Wakalah surplus/(deficit) is arrived at after deducting commission and
management expenses against the Wakalah fees charged.
Fee and other income recognition

financing arrangement, management and participation fees, underwriting commissions, brokerage fees and wakalah
performance incentive fees are recognised as income based on contractual arrangements. fees from advisory and
corporate finance activities are recognised net of service taxes and discounts on satisfaction of performance obligations
and completion of each stage of the assignment.
dividend income from subsidiaries and associates and other investments are recognised when the Group’s rights to
receive payment is established.