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4.4. Estimated fair value of financial assets and liabilities<br />
4.4.1. Financial instruments not measured at fair vaule<br />
The following table summarises the carrying amounts and fair values of those financial assets and<br />
liabilities not presented on the Bank’s statement of financial position at their fair value:<br />
Carrying value Fair value<br />
(in thousands of EUR) 2011 2010 2011 2010<br />
Financial assets<br />
Loans to banks 25,394 10,663 25,511 10,819<br />
Loans to customers 1,245,376 1,282,116 1,242,611 1,286,875<br />
Held-to-maturity investments - 27,893 - 33,951<br />
Financial liabilities<br />
Due to banks 1,974 - 1,776 -<br />
Due to customers 1,224,874 1,176,704 1,231,385 1,180,362<br />
Borrowings from banks and from other customers 266,945 318,642 266,768 318,418<br />
Debt securities in issue 30,307 30,302 30,307 30,302<br />
The fair value for other financial assets and liabilities is not disclosed because the carrying amount is<br />
a reaconable approximation of fair value.<br />
The following summarises the major methods and assumptions used in estimating the fair values of<br />
financial instruments.<br />
4.4.1.1. Loans and advances<br />
Fair value of loans and advances is calculated based on discounted expected future principal<br />
and interest cash flows. For loans that do not have fixed repayment dates or that are subject to<br />
prepayment risk, repayments are estimated based on experience in previous periods when interest<br />
rates were at levels similar to current levels, adjusted for any differences in interest rate outlook.<br />
Expected future cash flows are estimated considering credit risk and any indication of impairment.<br />
Expected future cash flows for homogeneous categories of loans are estimated on a portfolio basis.<br />
The estimated fair values of loans reflect changes in credit status since the loans were made and<br />
changes in interest rates in the case of fixed rate loans. As the Bank has very limited portfolio of loans<br />
and advances with fixed rate, the fair value of loans and advances is not significantly different from<br />
their carrying value.<br />
4.4.1.2. Held to maturity assets<br />
Fair value of assets held to maturity equals its market value. In the case there is no active market fair<br />
value is assessed using internal valuation models.<br />
4.4.1.3. Bank and customer deposits<br />
For demand deposits and deposits with no defined maturities, fair value is taken to be the amount<br />
payable on demand at the reporting date. The estimated fair value of other deposits is based on<br />
discounted cash flows using interest rates for new deposits with similar remaining maturity. The<br />
value of long-term relationships with depositors is not taken into account in estimating fair values.<br />
92<br />
<strong>Gorenjska</strong> <strong>banka</strong>, d. d., Kranj<br />
<strong>Annual</strong> <strong>Report</strong> 2011<br />
Financial <strong>Report</strong>
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