Page 344 - Bank Muamalat_AR24

342 BANK MUAMALAT MALAYSIA BERHAD

NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2024 (29 JAMADIL AKHIR 1446H)

48. FAIR VALUE MEASUREMENTS (CONT’D.)

(b) Financial instruments not carried at fair value (cont’d.)
Fair value is the estimated amount at which a financial asset or liability can be exchanged between two (2) parties
under normal market conditions. However, for certain assets such as financing and deposits, the respective fair values
are not readily available as there is no open market where these instruments are traded. The fair values for these
instruments are estimated based on the assumptions depicted below. These methods are subjective in nature, therefore,
the fair values presented may not be indicative of the actual realisable value.
Fair value information has been disclosed for the Group’s and the Bank’s investments in equity instruments that
are carried at cost because fair value cannot be measured reliably. The Group and the Bank do not intend to dispose
of this investment in the foreseeable future.
Financing of customers

The fair values of financing of customers not designated as hedged item are estimated based on expected future
cash flows of contractual instalment payments, discounted at applicable and prevailing rates at reporting date offered
for similar facilities to new customers with similar credit profiles. In respect of non-performing financing, the fair values
are deemed to approximate the carrying values, which are net of allowance for impairment losses.
Deposits from customers and deposits and placements of banks and other financial institutions

The fair values of deposits from customers and deposits and placements of banks and other financial institutions
with maturities of less than one year are estimated to approximate their carrying values due to the relatively short
maturity of these instruments. The fair values of deposits from customers and deposits and placements of banks and
other financial institutions with remaining maturities of more than one year are estimated based on discounted cash
flows using applicable rates currently offered for deposits with similar remaining maturities.

Subordinated sukuk
The fair values of subordinated obligations are estimated by discounting the expected future cash flows using the
applicable prevailing profit rates for financing with similar risk profiles.