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NOTES / ACCOUNTING AND VALUATION PRINCIPLES
cedure is applied for the regulatory reporting system. Interest-rate risks arising outside of trading activities are
analysed continuously, using the value at risk of the banking book and interest simulations.
(9) Financial investments
All fixed-interest and variable-yield securities, investments in unconsolidated affiliated companies, associates and
other investments not attributed to the trading book are entered under this item. The items are either “held to
maturity” or are “available for sale”.
1. Held to maturity: Fixed-interest securities are valued at cost. If the cost differs from the repayment amount,
the difference is written back, affecting the Income Statement proportionately over time. If the credit standing
of the security debtor indicates a permanent impairment, the item is written off as necessary. Effects on
the Income Statement are shown under net income from investments.
2. Available for sale: Securities that are attributed neither to fixed assets nor to the trading portfolio have the
function of a liquidity reserve (available for sale) and are entered at the fair value on the balance sheet date.
Variable-yield securities are usually placed in this category and valued at the fair value. They are recorded in
the balance sheet under financial investments, and effects on the Income Statement are shown under net
income from investments.
3. Significant associates are accounted for under the equity method. Investments in unconsolidated affiliates as
well as other investments are valued at cost. In the event of permanent impairment, the relevant item is written
down.
(10) Derivative transactions
The fair value of derivatives is calculated according to recognised methods in every case. Derivatives are treated
differently according to their category, applying IAS 39:
1. Derivates in the trading portfolio are recognised as trading assets or trading liabilities. If they show positive
fair values, including deferred interest (dirty price), they are recognised as trading assets. Trading liabilities
include negative fair values. Trading assets are not offset against trading liabilities (netting). The change in
the dirty price is shown as affecting results under the trading result.
2. Derivatives intended to protect the fair value of banking book items (fair value hedges) are also shown at
their fair value (dirty price) under financial investments or other liabilities. Changes in the fair value of the
items to be protected are entered with an effect on the Income Statement under the net income from investments
in the same way as the derivatives in this category.
3. Derivatives intended to hedge payment flows arising out of balance sheet items (cash flow hedges) are also
reported under financial investments or other assets at their fair value (dirty price). The change in fair value
is, however, netted against the reserves for hedging purposes with no effect on the Income Statement.
4. Other derivatives are intended to protect against banking book market risks, but it is not possible to show
a microhedge because hedging is conducted in relation to a whole portfolio (macrohedge). In applying IAS
39, the fair values under this category are also reported in the Balance Sheet: positive dirty prices are shown
under loans and advances to banks and negative dirty prices under amounts owed to banks. The change in
the value of these derivatives on a clean-price basis is presented in the Income Statement under balance of
income and expenses. Since the Bank uses derivatives to control the interest-rate risk at a global level, but
since the effect of fair value changes of items protected at a macro level according to IAS 39 cannot be
shown in the Income Statement, this part of the result is only of limited informative value.
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