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2014 ANNUAL REPORT
2 Significant accounting policies
(continued)
2.6 Summary of significant accounting policies
(continued)
p) Dividends
Dividend income is recognised when the right to receive the payment is established.
q) Segment reporting
A geographical segment is engaged in providing products, or services within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in other economic environments.
A business segment is a group of assets and operations engaged in providing similar products and services that are subject to risks
and returns that are different from those of other business segments.
The Group analyses its operations by both geographic and business segments. The primary format is geographic, reflecting its
management structure. Its secondary format is that of business segments reflecting retail and commercial banking and investment
banking.
r) Customers’ liabilities under acceptances, guarantees, indemnities and letters of credit
These represent the Group’s potential liability, for which there are equal and offsetting claims against its customers in the event of a call
on these commitments. These amounts are not recorded on the Group’s consolidated statement of financial position but are detailed in
Note 28(b) of these consolidated financial statements.
s) Share-based payments
Employees of the Group receive remuneration in the formof share-based payments, whereby employees render services as consideration
for equity instruments (equity-settled transactions).
3 Significant accounting judgements and estimates in applying the Group’s accounting policies
Management has made the following judgements in its application of the Group’s accounting policies which have the most significant effect on
the amounts reported in the consolidated financial statements:
Impairment of financial assets
Management makes judgements at each statement of financial position date to determine whether financial assets are impaired. Financial assets
are impaired when the carrying value is greater than the recoverable amount and there is objective evidence of impairment. The recoverable
amount is the present value of the future cash flows.
Inherent provisions on advances (Note 4b)
Inherent provisions on advances are calculated on an estimate of impairment incurred but not reported, existing in assets as at the consolidated
statement of financial position date. Estimated impairment incurred is determined by applying against performing loan balances, the average loan
default rates and adjusting this balance for current economic factors that affect loan performance. An anticipated recovery rate (determined from
historical average) is then applied to determine the value that is recoverable. This calculation is computed by product type.
Valuation of investments (Note 5)
The Group has applied IAS 39 in its classification of investment securities which requires measurement of securities at fair value. For unlisted
securities, fair values are estimated using price/earnings or price/cash flow ratios which have been refined to accommodate the specific
circumstances of the issuer.
