ING Direct 2013 Annual Report Download - page 416

FINANCIAL ASSET
Any asset that is:
• cash;
• an equity instrument of another company;
• a contractual right to;
– receive cash or another financial asset from another company;
or
– exchange financial instruments with another company under
conditions that are potentially favourable; or
– certain contract that will or may be settled in ING’s own
equity instruments.
FINANCIAL INSTRUMENTS
Contracts that give rise to both a financial asset for one company
and a financial liability or equity instrument for another company.
FINANCIAL LIABILITY
Any liability that is a contractual obligation:
• to deliver cash or another financial asset to another company; or
• to exchange financial instruments with another company under
conditions that are potentially unfavourable; or
• certain contracts that will or may be settled in ING’s own equity
instruments.
FIRST CALL DATE
Perpetual subordinated loans have no set maturity. The first call
date is the date on which ING has the option to repay and cancel
the particular subordinated loan.
FORBEARANCE ACTIVITIES
Activities that are employed in order to maximise collection
opportunities and, if possible, avoid default, foreclosure or
repossession. Such arrangements include extended payment terms,
a reduction in interest and/or principal repayments, approved
external debt management plans, debt consolidations, the deferral
of foreclosures and other modifications.
FOREIGN EXCHANGE RATE RISK
Probability of loss occurring from an adverse movement in foreign
exchange rates.
FORWARD CONTRACTS
Commitments to exchange currencies or to buy or sell other
financial instruments at specified future dates.
FUTURE CONTRACTS
Commitments to exchange currencies or to buy or sell other
financial instruments at specified future dates. Exchanges act as
intermediaries and require daily cash settlement and collateral
deposits.
GROSS PREMIUMS WRITTEN
Total premiums (whether or not earned) for insurance contracts
written or assumed during a specific period, without deduction for
premiums ceded.
HELD FOR SALE
A business or group of assets for which the carrying amount will be
recovered principally through a sale transaction rather than through
continuing use. When a business or a group of assets are to be sold
together in a single transaction, and the sale is considered to be
highly probable, these are classified separately in the balance sheet
as Assets held for sale. A sale is highly probable when management
is demonstrably committed to the sale, which is expected to occur
within one year from the date of classification as held for sale.
Liabilities directly associated with those assets, and that are
included in the transaction are included in the balance sheet as
‘liabilities held for sale’.
HELD-TO-MATURITY INVESTMENTS
Non-derivative financial assets with fixed or determinable payments
and fixed maturity that ING Group has the positive intention and
ability to hold to maturity other than:
a. those that ING Group upon initial recognition designates as at
fair value through profit and loss;
b. those that ING Group designates as available-for-sale; and
c. those that meet the definition of loans and receivables.
HISTORICAL SIMULATION
A model to calculate Value at Risk, assuming that future changes in
risk factors will have the same distribution as they had in the past
taking into account the non-linear behaviour of financial products.
IMPAIRMENT LOSS
The amount by which the carrying amount of an asset exceeds its
recoverable amount.
INTEREST BEARING INSTRUMENT
A financial asset or a liability for which a time-proportionate
compensation is paid or received in relation to a notional amount.
INTERNAL RATE OF RETURN (IRR)
Internal rate of return is the discount rate at which the present
value of distributable earnings from new business equals the
investment in new business (i.e. the projected return on the
investment in new business) is calculated.
INTEREST RATE REBATES
Profit sharing for group life insurance business. A rebate granted to
policyholders based on the discounted value of the difference
between the interest rate used to calculate the premiums and the
expected yield on investment. The profit sharing is granted by
means of a premium discount related to the yield on government
bonds.
INTEREST RATE RISK
Probability that the market interest rates will rise significantly higher
than the interest rate earned on investments such as bonds,
resulting in their lower market value.
INTERNAL ASSESSMENT APPROACH (IAA)
Method used to calculate credit risk capital requirements for
securitisation exposures (including liquidity lines provided to asset
backed commercial paper programmes and sponsored
securitisations).
IN THE MONEY
A call option is said to be in the money if the exercise price is lower
than the price of the underlying value; a put option is said to be in
the money if the exercise price is higher than the price of the
underlying value.
Financial glossary continued
414 ING Group Annual Report 2013