ING Bank Śląski | Annual Report 2014

ING BANK ŚLĄSKI

ING BANK ŚLĄSKIAnnual Report 2014

Financial results
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18. Investments

View the data in terms of 8-year-period

  end of 2014 end of 2013
Available-for-sale financial assets, including: 22,829.3 19,493.6
  - fair value hedge - hedged items 4,095.9 1,971.6
Total 22,829.3 19,493.6

 

Available-for-sale financial assets
  end of 2014 end of 2013
Debt securities, of which: 22,815.3 19,466.3
  - Fixed rate debt instruments, of which: 12,345.9 10,018.6
     - Treasury bonds 10,149.1 7,016.2
     - NBP bills 499.9 1,099.8
     - BGK bonds 1,696.9 1,902.6
  - Floating rate debt instruments, of which: 10,469.4 9,447.7
     - Treasury bonds 10,469.4 9,447.7
Total debt instruments, of which: 22,815.3 19,466.3
     - listed instruments 22,315.4 18,366.5
     - unlisted instruments 499.9 1,099.8
Equity instruments 14.0 27.3
  - Equity instruments at cost 19.7 40.7
  - Market value evaluation 0.6 0.5
  - Impairment -6.3 -13.9
Equity instruments – carrying value, of which: 14.0 27.3
     - listed instruments 9.0 24.6
     - unlisted instruments 5.0 2.7
Total available-for-sale financial assets 22,829.3 19,493.6

The item Equity Instruments include stocks and shares of number of entities not quoted on stock exchange which are not presented as fair value. It is difficult or impossible to determine the fair value due to absence of active market for those instruments. The Group is of the opinion that the purchase price is the best indicator of their value. 

Moreover, the Group hold shares of one company, purchased under debt restructuring. It’s valuation is based on the market rate, including the impairment losses. 

Owning part of shares is related to Group’s activities. These are shares i.a. in GPW, KIR, SWIFT, BIK, PSP. Other shares are classified by the Group for disposal (by sale or liquidation).

Investments by maturity

  end of 2014 end of 2013
up to 1 month 544.6 1,099.8
over 3 months and up to 1 year 3,199.7 509.4
over 1 year and up to 5 years 11,174.9 11,275.9
over 5 years 7,910.1 6,608.5
Total 22,829.3 19,493.6

Movements in investments

  2014 2013
Opening balance 19,493.6 17,881.1
Increases, of which: 85,149.5 141,703.6
  - purchase of debt securities 83,867.3 140,828.7
  - increase in the value of securities 1,279.9 873.4
  - purchase of shares in other parties 2.3 0.0
  - release of provisions for shares 0.0 1.5
Decreases, of which: 81,813.8 140,091.1
  - sales of debt securities 8,299.2 9,661.3
  - redemption of debt securities 72,723.5 129,191.3
  - drop in the value of securities 777.4 1,235.0
  - sale of shares in other parties 13.7 3.5
Closing balance 22,829.3 19,493.6

In 2014, the Group sold part of shares of 1 company from its investment portfolio. The net income on sale of those shares amounted to PLN +6.5 million. To compare, in 2013, the Group sold shares of 4 companies from its investment portfolio. The net income on sale of those shares amounted to PLN +0.5 million.

Fair value hedge - hedged items

  end of 2014 end of 2013
Fixed rate debt instruments, of which: 4,095.9 1,971.6
  - Treasury bonds 3,726.0 1,745.9
  - BGK bonds 369.9 225.7
Total 4,095.9 1,971.6

Specific information on the hedge accounting applied in the Group is presented later in the report in the note no. 40 Hedge accounting.

18.1. Reclassification of the debt securities

In 2008 the Group reclassified certain securities. The Group reclassified a part of the debt securities from the available-for-sale financial assets to the loans and other receivables category.

The reason for reclassification was the lack of or inactiveness of the market, which in the opinion of the Group causes the above securities to match the definition of loans and receivables according to IAS, namely they “are financial assets other than derivatives, with the determined or possible to determine payments, and which are not quoted on active market”, and the Group’s intention pertaining thereto, i.e. Group’s intention and possibility to hold them in a foreseeable future, did not change.

The reclassification resulted in a change in the basis of the debt securities measurement, that is from measurement at fair value to measurement at amortised cost. Fair value of debt securities as of reclassification date constituted their new amortised cost.

Debt securities reclassified from available-for-sale category to loans and receivables
Name of security Date of reclassification end of 2014 end of 2013
fair value as of
the date of
reclassification
carrying amount fair value fair value as of
the date of
reclassification
carrying amount fair value
T-eurobonds 01.10.2008 1,242.9 1,855.0 2,101.7 1,242.9 1,783.5 1,991.0
Corporate bonds 19.12.2008 8.9 8.5 8.1 11.0 10.7 9.9
Municipal bonds 19.12.2008 20.1 20.5 20.4 25.2 25.5 24.7
Total   1,271.9 1,884.0 2,130.2 1,279.1 1,819.7 2,025.6

Upon reclassification, the above named securities are presented in the financial statements under the item Loans and other receivables to customers

T-bonds denominated in EUR (T-eurobonds) classified as of their purchase date to the available-for-sale financial assets were the base instruments secured in the fair value hedge accounting against the interest rate risk. As of reclassification date, the original strategy of hedging the securities from the available-for-sale portfolio was closed. Due to the fact that the intention of the Group was to sustain the hedging connection, as of the reclassification date a new hedging strategy was started, i.e. the strategy which hedged the fair value against the interest rate risk related to the securities classified to loans and other receivables category.

Fair value of gain or loss, which would be presented in revaluation reserve once reclassification is not performed
Name of
security
Fair value recognised in equity
end of 2014 end of 2013
T-eurobonds 246.7 207.5
Corporate bonds -0.5 -0.8
Municipal bonds -0.1 -0.7
Total 246.1 206.0

Had the above securities not been re-classified to the category of loans and other receivables but left in the category of available-for-sale financial assets, the amounts of measurement at fair value would have been recognised in full in the revaluation reserve. The above figures have been estimated without including the impact that the further application of the fair value hedge accounting would have on the income statement or the capitals because in the opinion of the Group such calculations would be prone to error and would rely on hypothetical assumptions that would be difficult to verify.

Costs and revenues included in the profit and loss account
2014
Name of
security
accrued interests
(coupon)
amortised discount/premium depreciation of the revaluation reserve carrying value of hedged instruments in FVH strategy adjustment *)
T-eurobonds 77.5 -2.8 1.9 20.7
Corporate bonds 0.3 0.0 0.0 0.0
Municipal bonds 0.7 0.1 -0.1 0.0
Total 78.5 -2.7 1.8 20.7

 

2013
Name of
security
accrued interests
(coupon)
amortised discount/premium depreciation of the revaluation reserve carrying value of hedged instruments in FVH strategy adjustment *)
T-eurobonds 77.7 -2.8 1.9 -83.8
Corporate bonds 0.6 -0.1 0.1 0.0
Municipal bonds 1.2 0.1 -0.1 0.0
Total 79.5 -2.8 1.9 -83.8

*) measurement due to the hedged interest rate risk

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