ING Direct 2009 Annual Report Download - page 182

40 VALUATION RESULTS ON NON-TRADING DERIVATIVES
Valuation results on non-trading derivatives
Banking operations Insurance operations Total
2009 2008 2007 2009 2008 2007 2009 2008 2007
Change in fair value of derivatives relating to
– fair value hedges –1,321 –5,299 924 191 –193 –227 –1,130 –5,492 697
– cash-flow hedges (ineffective portion) –2 –4 –8 22 –5 –10 22 –9
– hedges of net investment in foreign entities
(ineffective portion) 1 –6 –14 1–6 –14
– other non-trading derivatives –237 –28 36 –3,722 2,412 –753 –3,959 2,384 –717
Net result on non-trading derivatives –1,560 –5,327 956 –3,538 2,235 –999 –5,098 –3,092 –43
Change in fair value of assets and liabilities
(hedged items) 1,201 5,533 –886 –226 164 223 975 5,697 –663
Valuation results on assets and liabilities designated as
at fair value through profit and loss (excluding trading) –557 127 56 4–432 89 –553 –305 145
Net valuation results –916 333 126 –3,760 1,967 –687 –4,676 2,300 –561
Valuation results on non-trading derivatives is mainly a result of negative fair value changes on derivatives used to hedge direct and indirect
equity exposures without applying hedge accounting. Indirect equity exposures relate to certain guaranteed benefits in insurance liabilities
in the US, Japan, and the Netherlands. In 2009 the fair value changes on these derivatives were negative, as stock market returns became
positive. The fair value changes on the derivatives related to the indirect equity exposures are generally offset by an opposite amount in
underwriting expenditure (reference is made to Note 43 ‘Underwriting expenditure’).
The Valuation results on assets and liabilities designated at fair value through profit and loss are mainly a result of changes in fair value of
financial liabilities, designated at fair value through profit and loss, due to market circumstances; it includes fair value changes on issued
debt securities, designated at fair value through profit and loss, including fair value changes attributable to changes in own credit risk as
disclosed in Note 20 ‘Financial liabilities at fair value through profit and loss’.
41 NET TRADING INCOME
Net trading income
Banking operations Insurance operations Total
2009 2008 2007 2009 2008 2007 2009 2008 2007
Securities trading results 331 130 –2,147 155 –239 246 486 –109 –1,901
Foreign exchange transactions results –158 274 401 167 –90 174 9184 575
Derivatives trading results 815 –766 2,469 79 30 815 –687 2,499
Other –185 –43 26 –94 –80 –185 –137 –54
803 –405 749 322 –344 370 1,125 –749 1,119
Securities trading results includes the results of making markets in instruments such as government securities, equity securities, corporate
debt securities, money-market instruments, and interest rate derivatives such as swaps, options, futures and forward contracts. Foreign
exchange transactions results include gains and losses from spot and forward contracts, options, futures, and translated foreign currency
assets and liabilities.
The portion of trading gains and losses for the year ended 31 December 2009 relating to trading securities still held as at 31 December
amounted to EUR 105 million (2008: EUR –246 million; 2007: EUR –60 million).
The majority of the risks involved in security and currency trading is economically hedged with derivatives. The securities trading results are
partly offset by results on these derivatives. The result of these derivatives is included in Derivatives trading results.
2.1 Consolidated annual accounts
ING Group Annual Report 2009
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Notes to the consolidated profit and loss account of ING Group (continued)