Debt instruments at amortised cost Initially measured at fair value, debt instruments are subsequently measured at amortised cost if they are eligible for the Hold to Collect model and pass the “SPPI” test. They are recorded on the settlement date and their initial valuation also includes accrued coupons and transaction costs. Amortisation of any premiums/discounts and transaction costs on loans and receivables and fixed income securities is recognised in the income statement using the effective interest rate method. This category of financial instruments is subject to Expected Credit Loss (ECL) adjustments under the conditions described in the specific paragraph "Impairment and provisioning for credit risk". Debt instruments at fair value through other comprehensive income recyclable to income Initially measured at fair value, debt instruments are valued at fair value through other comprehensive income on items that may be reclassified if they are eligible for the Collect and Sell model and if they meet the SPPI test. They are recorded on the trade date and their initial valuation also includes accrued coupons and transaction costs. Amortisation of any premiums or discounts and transaction costs on fixed-income securities is recognised in the income statement using the effective interest rate method. These financial assets are subsequently measured at fair value, with changes in fair value recorded in other comprehensive income on items that may be reclassified and offset in Outstandings (excluding accrued interest recognised in profit or loss according to the EIR method). If the securities are sold, these changes are transferred to the Income Statement. This category of financial instruments is subject to Expected Credit Loss (ECL) adjustments under the conditions described in the specific paragraph "Impairment and provisioning for credit risk" (without affecting the fair value in the balance sheet). Debt instruments at fair value through profit or loss Debt instruments are measured at fair value through profit or loss in the following cases: - The instruments are classified in portfolios consisting of financial assets held for trading or whose main purpose is their sale; - Financial assets held for trading are assets acquired or managed by the business primarily for the purpose of selling them in the short term or as part of a portfolio of instruments jointly managed for the purpose of obtaining a profit related to short-term price fluctuations or an arbitraging margin. Although contractual cash flows are collected during the time that CFM Indosuez Wealth holds the assets, the collection of these contractual cash flows is not essential but incidental. - Debt instruments that do not meet the SPPI test criteria. This is notably the case for mutual funds; - Financial instruments classified in portfolios for which CFM Indosuez Wealth chooses valuation at fair value in order to reduce a difference in accounting treatment in the income statement. In this case, the instrument is classified as designated 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) and including accrued interest. They are subsequently measured at fair value and changes in fair value are recognised in profit or loss, under Net Banking Income, against Outstandings. Interest on these instruments is recognised under “net gains or losses on financial instruments at fair value through profit or loss”. No impairment for credit risk is recorded on this category of financial assets. Debt instruments measured at fair value through profit or loss by nature whose business model is "Other/Sell" are recorded at the delivery settlement date. Debt instruments designated at fair value through profit or loss are recorded at the trade date. Debt instruments measured at fair value through profit or loss by nature, by failing the SPPI test, are recorded at the settlement date. Equity instruments Equity instruments are by default recognised at fair value through profit or loss, except in the case of the irrevocable option for classification and valuation at fair value through other comprehensive income on items that may not be reclassified, provided that these instruments are not held for trading purposes. 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. CFM Indosuez Wealth Management 82
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