RBS 2008 Annual Report Download - page 210

209RBS Group Annual Report and Accounts 2008
Amounts included in the consolidated income statement:
Group
2008 2007 2006
£m £m £m
Gains on financial assets/liabilities designated as at fair value through profit or loss (901) 1,074 573
Gains on disposal or settlement of loans and receivables 4 3 21
Fair value of financial instruments not carried at fair value
The following table shows the carrying values and the fair values of financial instruments carried on the balance sheets at amortised cost.
Group Company
2008 2008 2007 2007 2008 2008 2007 2007
Carrying Fair Carrying Fair Carrying Fair Carrying Fair
value value value value value value value value
£m £m £m £m £m £m £m £m
Financial assets
Cash and balances at central banks 12,400 12,400 17,866 17,866 ————
Loans and advances to banks
Loans and receivables 81,963 81,929 147,821 147,818 27,031 27,031 7,686 7,686
Loans and advances to customers
Loans and receivables 806,627 761,619 709,090 711,346 ——307 307
Finance leases 14,453 14,527 12,570 12,376 ————
Debt securities
Loans and receivables 12,985 11,500 2,672 2,644 ————
Settlement balances 17,832 17,832 16,589 16,589 ————
Financial liabilities
Deposits by banks 176,890 176,266 246,803 246,627 1,802 1,802 5,572 5,572
Customer accounts 575,532 576,378 614,432 614,067 26 26 ——
Debt securities in issue 248,846 241,295 222,883 222,763 14,179 14,010 13,453 13,453
Settlement balances 11,741 11,741 17,520 17,520 ————
Subordinated liabilities 47,645 36,446 37,146 35,793 10,314 8,752 7,743 6,983
Notes:
(1) Financial assets and financial liabilities for which carrying amount approximates to fair value because they are of short maturity.
(2) Fair values are estimated by discounting expected future cash flows; using current interest rates and making adjustments for credit.
(3) The fair value of deposits repayable on demand is equal to their carrying value. The fair value of other deposits by banks and customer accounts is estimated by discounting expected future
cash flows at current rates and adjusting, where appropriate, for the Group’s own credit spread. The fair value of many of these instruments approximates to their carrying value because they
are of short maturity or reprice frequently.
(4) The fair value of short-term debt securities in issue is close to their carrying value. The fair value of other debt securities in issue is based on quoted prices; where these are unavailable fair value
is estimated using other valuation techniques.
(5) The fair value of subordinated liabilities in issue is based on quoted prices; where these are unavailable fair value is estimated using other valuation techniques.
(6) The fair value of amounts due from and to subsidiaries is equal to their carrying value.
On the initial recognition of financial assets and liabilities valued using
valuation techniques incorporating information other than observable
market data, any difference between the transaction price and that
derived from the valuation technique is deferred. Such amounts are
recognised in profit or loss over the life of the transaction; when market
data become observable; or when the transaction matures or is closed
out as appropriate. At 31 December 2008, net gains of £102 million
(2007 – £72 million) were carried forward in the balance sheet. During
the year net gains of £89 million (2007 – £67 million) were deferred and
£65 million (2007 – £10 million) released to profit or loss.