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41. FAIR VALUES OF FINANCIAL INSTRUMENTS
41.1 VALUATION CONTROL FRAMEWORK
The Group has an established control framework with respect to the measurement of fair values, which includes formalised processes
for the review and validation of fair values independent of the businesses entering into the transactions.
The Market Risk Management (“MRM”) function within the Group Risk Management Division is responsible for market data validation,
initial model validation and ongoing performance monitoring.
The Treasury Financial Control – Valuation Control function within the Group Finance Division is responsible for the establishment
of the overall valuation control framework. This includes, but is not limited to, reviewing and recommending appropriate valuation
reserves, methodologies and adjustments, independent price testing, and identifying valuation gaps.
Valuation policies are reviewed annually by the MRM function. Any material changes to the framework require the approval of the
CEO and concurrence from the Board Risk Management Committee. Group Audit provides independent assurance on the respective
divisions’ compliance with the policy.
41.2 FAIR VALUES
Financial instruments comprise financial assets, financial liabilities and off-balance sheet financial instruments. The fair value of a
financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants. For financial assets and liabilities not carried at fair value on the financial statements, the Group has determined
that their fair values were not materially different from the carrying amounts at the reporting date. The carrying amounts and fair
values of financial instruments of the Group are described below.
Financial assets
Fair values of cash and balances with central banks, placements with banks, interest and other short term receivables are expected to
approximate their carrying value due to their short tenor or frequent re-pricing.
Securities held by the Group, comprising government securities and debt and equity securities are substantially carried at fair value on
the balance sheet.
Non-bank customer loans are carried at amortised cost on the balance sheet, net of specific and portfolio allowances. The Group deemed
the fair value of non-bank loans to approximate their carrying amount as substantially the loans are subject to frequent re-pricing.

Financial liabilities
Fair value of certain financial liabilities, which include mainly customer deposits with no stated maturity, interbank borrowings and
borrowings under repurchase agreements, are expected to approximate their carrying amount due to their short tenor. For non-bank
customer term deposits, contractual or derived cash flows are discounted at market rates as at reporting date to estimate the fair
value, which approximate the carrying value.
The fair values of the Group’s subordinated term notes and covered bonds are determined based on quoted market prices and
independent broker offer prices. For other debts issued which are usually short term, the fair value approximates the carrying value.
41.3 FAIR VALUE HIERARCHY
The Group determines the fair values of its financial assets and liabilities using various measurements. The different levels of fair value
measurements are as follows:
• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 – inputs other than quoted prices included within Level 1 that are observable market data either directly (i.e. as prices) or
indirectly (i.e. derived from observable market data). The valuation techniques that use market parameters as inputs include, but
are not limited to, yield curves, volatilities and foreign exchange rates; and
• Level 3 – inputs for the valuation that are not based on observable market data.
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