HSBC 2009 Annual Report Download - page 182

HSBC HOLDINGS PLC
Report of the Directors: Impact of Market Turmoil (continued)
Fair values of financial instruments > Not carried at fair value // SPEs > HSBC-sponsored SPEs
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of similar remaining maturities. The fair value
of a deposit repayable on demand is assumed to
be the amount payable on demand at the balance
sheet date.
• Debt securities in issue and subordinated
liabilities
Fair values are determined using quoted market
prices at the balance sheet date where available,
or by reference to quoted market prices for
similar instruments.
The fair values in this note are stated at a
specific date and may be significantly different from
the amounts which will actually be paid on the
maturity or settlement dates of the instruments. In
many cases, it would not be possible to realise
immediately the estimated fair values given the size
of the portfolios measured. Accordingly, these fair
values do not represent the value of these financial
instruments to HSBC as a going concern.
For all classes of financial instruments, fair
value represents the product of the value of a single
instrument, multiplied by the number of instruments
held. No block discount or premium adjustments are
made. The fair values of intangible assets related to
the businesses which originate and hold the financial
instruments subject to fair value measurement, such
as values placed on portfolios of core deposits, credit
card and customer relationships, are not included in
the above because they are not classified as financial
instruments. Accordingly, an aggregation of fair
value measurements does not approximate to the
value of the organisation as a going concern.
The following is a list of financial instruments
whose carrying amount is a reasonable
approximation of fair value because, for example,
they are short-term in nature or reprice to current
market rates frequently:
Assets
Cash and balances at central banks
Items in the course of collection from other banks
Hong Kong Government certificates of indebtedness
Endorsements and acceptances
Short-term receivables within ‘Other assets’
Accrued income
Liabilities
Hong Kong currency notes in circulation
Items in the course of transmission to other banks
Investment contracts with discretionary participation features
within ‘Liabilities under insurance contracts’
Endorsements and acceptances
Short-term payables within ‘Other liabilities’
Accruals
Fair values of financial instruments which are not carried at fair value on the balance sheet
At 31 December 2009 At 31 December 2008
Carrying
amount
Fair
value
Carrying
amount
Fair
value
US$m US$m US$m US$m
Assets
Loans and advances to banks ....................................................................... 179,781 179,658 153,766 153,363
Loans and advances to customers ................................................................ 896,231 855,780 932,868 876,239
Financial investments: debt securities .......................................................... 17,526 18,097 14,013 15,057
Financial investments: treasury and other eligible bills ............................... 101 101 – –
Liabilities
Deposits by banks ......................................................................................... 124,872 124,856 130,084 130,129
Customer accounts ........................................................................................ 1,159,034 1,160,036 1,115,327 1,115,291
Debt securities in issue ................................................................................. 146,896 145,888 179,693 170,599
Subordinated liabilities ................................................................................. 30,478 30,307 29,433 28,381
Fair values of financial instruments held for sale which are not carried at fair value on the balance sheet
At 31 December 2009 At 31 December 2008
Carrying
amount
Fair
value
Carrying
amount
Fair
value
US$m US$m US$m US$m
Assets classified as held for sale
Loans and advances to banks and customers ............................................... 1,356 1,316 11 11
Financial investments: debt securities .......................................................... – – 37 37