Barclays 2015 Annual Report Download - page 297

home.barclays/annualreport Barclays PLC Annual Report 2015 I 295
20 Loans and advances to banks and customers
Accounting for financial instruments held at amortised cost
Loans and advances to customers and banks, customer accounts, debt securities and most financial liabilities are held at amortised cost. That is,
the initial fair value (which is normally the amount advanced or borrowed) is adjusted for repayments and the amortisation of coupon, fees and
expenses to represent the effective interest rate of the asset or liability.
In accordance with IAS 39, where the Group no longer intends to trade in financial assets, it may transfer them out of the held for trading
classification and measure them at amortised cost if they meet the definition of a loan. The initial value used for the purposes of establishing
amortised cost is fair value on the date of the transfer.
As at 31 December 2015
£m
2014
£m
Gross loans and advances to banks 41,349 42,111
Less: allowance for impairment – –
Loans and advances to banks 41,349 42,111
Gross loans and advances to customers 404,138 433,222
Less: allowance for impairment (4,921) (5,455)
Loans and advances to customers 399,217 427,767
Further information on the Group’s loans and advances to banks and customers and impairment allowances is included on pages 150 and 151.
Prior to 2010, the Group reclassified certain financial assets, originally classified as held for trading, that were deemed to be not held for trading
purposes to loans and advances. The carrying value and fair value of securities reclassified into loans and advances is £975m (2014: £1,862m) and
£958m (2014: £1,834m) respectively.
If the reclassifications had not been made, the Group’s income statement for 2015 would have included a net gain on the reclassified trading assets
of £12m (2014: gain of £57m).
21 Finance leases
Accounting for finance leases
The Group applies IAS 17 Leases in accounting for finance leases, both where it is the lessor or the lessee. A finance lease is a lease which confers
substantially all the risks and rewards of the leased assets on the lessee. Where the Group is the lessor, the leased asset is not held on the balance
sheet; instead a finance lease receivable is recognised representing the minimum lease payments receivable under the terms of the lease,
discounted at the rate of interest implicit in the lease. Where the Group is the lessee, the leased asset is recognised in property, plant and
equipment and a finance lease liability is recognised, representing the minimum lease payments payable under the lease, discounted at the rate of
interest implicit in the lease.
Interest income or expense is recognised in interest receivable or payable, allocated to accounting periods to reflect a constant periodic rate of
return.
Finance lease receivables
Finance lease receivables are included within loans and advances to customers. The Group engages in asset-based lending and works with a broad
range of international technology, industrial equipment and commercial companies to provide customised finance programmes to assist
manufacturers, dealers and distributors of assets.
2015 2014
Gross
investment
in finance
lease
receivables
£m
Future
finance
income
£m
Present
value of
minimum
lease
payments
receivable
£m
Un-
guaranteed
residual
values
£m
Gross
investment
in finance
lease
receivables
£m
Future
finance
income
£m
Present
value of
minimum
lease
payments
receivable
£m
Un-
guaranteed
residual
values
£m
Not more than one year 1,826 (230) 1,596 117 2,139 (304) 1,835 125
Over one year but not more than five years 3,569 (555) 3,014 275 4,159 (682) 3,477 293
Over five years 224 (32) 192 21 213 (40) 173 17
Total 5,619 (817) 4,802 413 6,511 (1,026) 5,485 435
The impairment allowance for uncollectable finance lease receivables is £56m (2014: £82m).
Notes to the financial statements
Financial instruments held at amortised cost
The notes included in this section focus on assets that are held at amortised cost arising from the Group’s retail and wholesale lending
including loans and advances, finance leases, repurchase and reverse repurchase agreements and similar secured lending. Detail regarding
the Group’s capital and liquidity position can be found on pages 187 to 204.
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