Annual Financial Statements 2010 of Bank Austria

Consolidated Financial Statements in accordance with IFRSs
A – Accounting policies (CoNTINuED)
Financial assets and financial liabilities at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated as at fair value through
profit or loss upon initial recognition.
Financial assets and financial liabilities held for trading (HfT)
Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing them in the near term. When an
HfT financial instrument is recognised initially, it is measured at its fair value excluding transaction costs that are directly recognised in profit or
loss. After initial recognition, an entity shall measure these financial instruments at their fair value through profit or loss. A gain or loss arising
from sale or redemption or a change in the fair value of an HfT financial instrument is recognised in the income statement item Gains and losses
on financial assets and liabilities held for trading.
Financial assets held for trading include securities held for trading and positive market values of derivative financial instruments, recognised at
their fair values. To determine fair values, market prices and quotes via Bloomberg, Reuters, MarkIT and other price indications from the interbank
market etc. are used. Where such prices or quotes are not available, values based on present values or option pricing models are applied.
The item Financial liabilities held for trading shows negative market values of derivative financial instruments and short positions held in the
trading portfolio. To determine fair values, market prices and quotes via Bloomberg, Reuters, MarkIT and other price indications from the interbank
market etc. are used. Where such prices or quotes are not available, values based on present value calculations or option pricing models are
applied.
At fair value through profit or loss (fair value option)
When financial assets and financial liabilities are recognised initially, they may be classified as financial assets and financial liabilities at
fair value through profit or loss if certain requirements are met (either reduction of valuation inconsistencies between related financial instruments,
or inclusion in a group of financial instruments managed at their fair values on the basis of an investment and risk strategy).
In UniCredit Bank Austria’s statement of financial position, financial assets/liabilities at fair value through profit or loss include only those financial
instruments which were designated as at fair value through profit or loss upon initial recognition.
Available-for-sale financial assets (AfS)
Available-for-sale financial instruments include debt instruments and equity instruments. Equity instruments classified as available for sale are
those which are not classified as held for trading or at fair value through profit or loss. To determine their fair values, the methods described in
“Fair values – fair value hierarchy” below are used. Changes in fair values resulting from remeasurement are recognised in a component of equity
(available-for-sale reserve) with no effect on income until the disposal of the financial asset. Impairment losses are recognised in income. Reversals
of impairment losses on equity instruments are recognised in the available-for-sale reserve within equity; reversals of impairment losses on
debt instruments are recognised in profit or loss.
Shares in companies which are neither consolidated nor accounted for under the equity method are classified as available for sale.
Held-to-maturity investments (HtM)
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity investments if the Group
has the positive intention and ability to hold them to maturity. After initial recognition, held-to-maturity investments are recognised at amortised
cost using the effective interest method, with any reduction for impairment. Impairment losses within the meaning of IAS 39.63 are recognised in
profit or loss in the item Impairment losses on held-to-maturity investments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial
recognition such financial assets are measured at amortised cost using the effective interest method, with any reduction for impairment. The
computation of amortised cost includes a premium or discount upon acquisition, and fees or costs constituting an integral part of the effective
interest rate. Income from amortisation using the effective interest method is included in the income statement as part of financial income.
Impairment losses are recognised in the income statement as financial expenses.
Bank Austria · Annual Financial Statements 2010
64