2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.23 Fair value measurements (continued) The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price – i.e. the fair value of the consideration given or received. If the Group and the Bank determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out. If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price. Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk that are managed by the Group on the basis of the net exposure to either market or credit risk are measured on the basis of a price that would be received to sell a net long position (or paid to transfer a net short position) for a particular risk exposure. Those portfolio-level adjustments are allocated to the individual assets and liabilities on the basis of the relative risk adjustment of each of the individual instruments in the portfolio. The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date on which the amount could be required to be paid. The Group and the Bank recognise transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. 3. CASH AND SHORT-TERM FUNDS Group Bank 2023 RM’000 2022 RM’000 2023 RM’000 2022 RM’000 Cash and balances with banks and other financial institutions^ 936,629 817,436 933,427 816,234 Money at call and interbank placements with maturity not exceeding three months 3,777,836 6,327,678 3,744,816 6,311,925 4,714,465 7,145,114 4,678,243 7,128,159 ^ Includes Deferred Net Settlement (“DNS”) collateral for Retail Payment Settlement in RENTAS amounting to RM30,780,000 (2022: RM Nil). Withdrawal and substitution of DNS Collateral is subject to approval by BNM and Payments Network Malaysia Sdn Bhd (“PayNet”). All bank balances are assessed to have low credit risk as they are held with reputable banking institutions and the identified expected credit loss was immaterial. Cash and bank balances of the Group includes restricted cash amounting to RM11,660,000 (2022: RM718,000) which is attributed to the creation of units of the funds. Accordingly, amount due to trustee was recognised and disclosed in Note 21 to the financial statements. 299 1 2 3 4 5 6 7 8 9 www.bankislam.com FINANCIAL STATEMENTS
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