HSBC 2014 Annual Report Download - page 155
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HSBC BANK PLC
Notes on the Financial Statements (continued)
153
Notional contract amounts of derivatives held for trading purposes by product type
The group
The bank
2014
2013
2014
2013
£m
£m
£m
£m
Foreign exchange
2,520,473
2,343,902
2,539,975
2,375,578
Interest rate
11,609,407
13,612,533
9,024,790
9,581,060
Equities
362,678
336,980
358,081
330,845
Credit
269,376
263,524
269,366
263,531
Commodity and other
40,030
34,233
40,173
35,414
At 31 December
14,801,964
16,591,172
12,232,385
12,586,428
Derivatives valued using models with unobservable inputs
The difference between the fair value at initial recognition (the transaction price) and the value that would have been
derived had valuation techniques used for subsequent measurement been applied at initial recognition, less subsequent
releases, is as follows:
Unamortised balance of derivatives valued using models with significant unobservable inputs
The group
The bank
2014
2013
2014
2013
£m
£m
£m
£m
Unamortised balance at 1 January
85
90
81
86
Deferral on new transactions
76
113
76
111
Recognised in the income statement during the period:
– amortisation
(56)
(55)
(56)
(54)
– subsequent to unobservable inputs becoming observable
(8)
(25)
(8)
(25)
– maturity, termination or offsetting derivative
(45)
(38)
(44)
(37)
Other
7
–
7
–
Unamortised balance at 31 December1
59
85
56
81
1 This amount is yet to be recognised in the consolidated income statement.
Hedge accounting derivatives
HSBC uses derivatives (principally interest rate swaps) for hedging purposes in the management of its own asset and
liability portfolios and structural positions. This enables HSBC to optimise the overall cost to the Group of accessing debt
capital markets, and to mitigate the market risk which would otherwise arise from structural imbalances in the maturity
and other profiles of its assets and liabilities.
The notional contract amounts of derivatives held for hedge accounting purposes indicate the nominal value of
transactions outstanding at the balance sheet date; they do not represent amounts at risk.
Notional contract amounts of derivatives held for hedge accounting purposes by product type
The group
2014
2013
Cash flow
hedge
Fair value
hedge
Cash flow
hedge
Fair value
hedge
£m
£m
£m
£m
Foreign exchange
6,386
72
7,491
137
Interest rate
82,077
29,722
94,586
30,122
At 31 December
88,463
29,794
102,077
30,259
The bank
2014
2013
Cash flow
hedge
Fair value
hedge
Cash flow
hedge
Fair value
hedge
£m
£m
£m
£m
Foreign exchange
5,782
–
7,071
–
Interest rate
44,977
23,363
45,070
23,031
At 31 December
50,759
23,363
52,141
23,031