HSBC 2001 Annual Report Download - page 228

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
226
(ii) Financial instruments not held for trading purposes and for which a liquid and active market exists
2001 2000
Carryin
g
value
Mark-to-
market
values Carryin
g
value
Mark-to-
market
values
US$m US$m US$m US$m
Assets:
Treasury bills and other eligible bills.. 12,890 12,901 15,862 15,831
Debt securities .................................... 92,944 94,145 86,954 87,744
Equity shares....................................... 4,755 5,295 4,638 5,773
110,589 112,341 107,454 109,348
Liabilities:
Debt securities in issue ....................... 24,973 25,115 27,479 27,630
Subordinated liabilities ....................... 14,410 14,828 16,222 16,168
Non-equity minority interests ............. 4,160 4,134 5,171 5,535
43,543 44,077 48,872 49,333
Where possible, mark-to-market values have been estimated using market prices for these financial
instruments. Where market prices are not available, values have been estimated using quoted prices for
financial instruments with similar characteristics, or otherwise using a suitable valuation technique where
practicable to do so.
The valuation techniques used are:
–Treasury bills and other eligible bills
Mark-to-market value approximates to carrying value because these are mainly short-term in maturity
with a carrying value not materially different from mark-to-market value.
–Loans and advances to banks and customers
For variable rate loans and advances with no significant change in credit risk, the carrying value is
considered to represent mark-to-market value. The mark-to-market values of other loans and advances
are estimated by discounting future cash flows using market interest rates.
–Debt securities and equity shares
Listed securities are valued at middle-market prices and unlisted securities at management’ s valuation
which takes into consideration future earnings streams, valuations of equivalent quoted securities and
other relevant techniques.
–Debt securities in issue, short positions in securities, subordinated liabilities and non-equity minority
interests
Mark-to-market values are estimated using quoted market prices at the balance sheet date.
–Deposits by banks and customer accounts
Deposits by banks and customer accounts which mature or reprice after six months are grouped by
residual maturity. Fair value is estimated using discounted cash flows, applying either market rates,
where applicable, or current rates offered for deposits of similar repricing maturities.
(c) Gains and losses on hedges
Unrecognised gains and losses
Gains and losses on instruments used for hedging are recognised in line with the underlying items which are
being hedged. The unrecognised gains on instruments used for hedging as at 31 December 2001 were US$3,137