Instrument held for trading purposes Use of the option to recognise in FVOCI YES NO NO YES Fair value through profit or loss (FVTPL) Non-recyclable Fair Value through OCI (NR FVOCI) Equity instruments at fair value through profit or loss Financial assets measured at fair value through profit or loss are initially recognised at fair value, excluding transaction costs (directly recorded in profit or loss). Equity instruments held for trading are recorded on the trade date. Equity instruments measured at fair value through profit or loss and not held for trading are recorded at settlement date. They are subsequently measured at fair value and changes in fair value are recognised in profit or loss, under Net Banking Income, against Outstandings. This category of financial assets is not impaired. Equity instruments at fair value through other comprehensive income not recyclable to income (irrevocable option) The irrevocable option to recognise equity instruments at fair value through other comprehensive income on items that may not be reclassified is adopted at the transactional level (line by line) and applies from the date of initial recognition. These securities are recorded at the trade date. The initial fair value includes transaction costs. During subsequent valuations, changes in fair value are recognised in other comprehensive income on items that may not be reclassified. In the event of disposal, these changes are not reclassified to profit or loss, and the gain or loss on disposal is recognised in other comprehensive income. Only dividends are recognised in income if: - the entity's right to collect payment is established; - it is likely that the economic benefits associated with the dividends will flow to the entity; - the amount of dividends can be reliably measured. This category of financial assets is not impaired. Derecognition of financial assets A financial asset (or group of financial assets) is derecognised in whole or in part: - when the contractual rights to the cash flows related to the asset expire; - or when they are transferred or considered as such because they have one or more beneficial owners and when substantially all the risks and benefits of the financial asset are transferred. In this case, any rights or obligations created or retained at the time of transfer are recognised separately as assets and liabilities. If the contractual rights to the cash flows are transferred but only some of the risks and rewards as well as control are retained, CFM Indosuez Wealth continues to recognise the financial asset to the extent of the entity’s continued involvement in this asset. Financial assets renegotiated for commercial reasons without any financial difficulties of the counterpart and with the aim of developing or keeping a commercial relationship are derecognised at the date of the renegotiation. The new loans granted to clients are recorded at their fair value on the date of renegotiation. Subsequent accounting treatment will depend on the business model and the SPPI test. Financial liabilities Classification and valuation of financial liabilities On the balance sheet, financial liabilities are classified into two accounting categories: - financial liabilities at fair value through profit or loss, either by default or as an option; - financial liabilities at amortised cost. Financial liabilities at fair value through profit or loss, by default Financial instruments issued primarily with a view to being bought back in the short term, instruments forming part of an identified portfolio of financial instruments that are managed together and which show indications of a recent short-term profit-taking profile, and derivatives (with the exception of certain hedging derivatives) are measured at fair value by nature. Changes in the fair value of this portfolio are booked to the Income Statement. Financial liabilities designated at fair value through profit or loss CFM Indosuez Wealth does not offer this instrument. Financial liabilities valued at amortised cost All other liabilities matching the definition of a financial liability (excluding derivatives) are valued at amortised cost. These liabilities are initially measured at fair value (including transaction income and costs) and subsequently recognised at amortised cost using the effective interest rate method. Reclassification of financial liabilities The initial classification of financial liabilities is irrevocable. No subsequent reclassification is allowed. CFM Indosuez Wealth Management 72
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