HSBC 2012 Annual Report Download - page 458

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
20 – Financial investments
456
The gains and losses on ineffective portions of such derivatives are recognised immediately in ‘Net trading income’.
During the year to 31 December 2012 a gain of US$35m (2011: gain of US$26m; 2010: loss of US$9m) was
recognised due to hedge ineffectiveness.
Hedges of net investments in foreign operations
The Group applies hedge accounting in respect of certain consolidated net investments. Hedging is undertaken using
forward foreign exchange contracts or by financing with currency borrowings.
At 31 December 2012, the fair values of outstanding financial instruments designated as hedges of net investments
in foreign operations were assets of US$3m (2011: US$121m) and liabilities of US$50m (2011: US$36m) and
notional contract values of US$2,654m (2011: US$3,920m).
The ineffectiveness recognised in ‘Net trading income’ in the year ended 31 December 2012 that arose from hedges
in foreign operations was nil (2011 and 2010: nil).
20 Financial investments
At 31 December
2012 2011
US$m US$m
Financial investments:
– not subject to repledge or resale by counterparties .......................................................................... 399,613 364,906
– which may be repledged or resold by counterparties ...................................................................... 21,488 35,138
421,101 400,044
Carrying amount and fair value of financial investments
At 31 December 2012 At 31 December 2011
Carrying
amount
Fair
value
Carrying
amount
Fair
value
US$m US$m US$m US$m
Treasury and other eligible bills ................................................... 87,550 87,550 65,223 65,223
– available for sale .................................................................. 87,550 87,550 65,042 65,042
– held to maturity .................................................................... – – 181 181
Debt securities .............................................................................. 327,762 329,807 327,611 329,093
– available for sale .................................................................. 304,349 304,349 306,593 306,593
– held to maturity .................................................................... 23,413 25,458 21,018 22,500
Equity securities ........................................................................... 5,789 5,789 7,210 7,210
– available for sale .................................................................. 5,789 5,789 7,210 7,210
Total financial investments ........................................................... 421,101 423,146 400,044 401,526
Financial investments at amortised cost and fair value
Amortised
cost1
Fair
value2
US$m US$m
At 31 December 2012
US Treasury .............................................................................................................................................. 60,657 61,925
US Government agencies3 ........................................................................................................................ 22,579 23,500
US Government sponsored entities3 ......................................................................................................... 5,262 5,907
UK Government ........................................................................................................................................ 17,018 17,940
Hong Kong Government .......................................................................................................................... 42,687 42,711
Other government ..................................................................................................................................... 146,507 149,179
Asset-backed securities4 ........................................................................................................................... 29,960 26,418
Corporate debt and other securities .......................................................................................................... 86,099 89,777
Equities ..................................................................................................................................................... 4,284 5,789
415,053 423,146