ING Direct 2015 Annual Report Download - page 108

Contents
Who we are
Report of the
Management
Board
Corporate
Governance
Consolidated
annual accounts
Parent company
annual accounts
Other
information
Additional
information
Notes to the Consolidated annual accounts of ING Bank - continued
Debt securities
Fair values for debt securities are based on quoted market prices, where available. Quoted market prices may be obtained from an
exchange, dealer, broker, industry group, pricing service or regulatory service. If quoted prices in an active market are not available,
fair value is based on an analysis of available market inputs, which may include values obtained from one or more pricing services or
by a valuation technique that discounts expected future cash flows using a market interest rate curves, referenced credit spreads,
maturity of the investment and estimated prepayment rates where applicable.
Loans and receivables
Reference is made to Loans and advances to customers below.
Loans and advances to customers
For loans and advances that are repriced frequently and have had no significant changes in credit risk, carrying amounts represent a
reasonable estimate of the fair value. The fair value of other loans is estimated by discounting expected future cash flows using a
discount rate that reflects credit risk, liquidity and other current market conditions. The fair value of mortgage loans is estimated by
taking into account prepayment behaviour. Loans with similar characteristics are aggregated for calculation purposes.
Other assets
The other assets are stated at their carrying value which is not significantly different from their fair value.
a.2) Financial liabilities
Subordinated loans
The fair value of publicly traded subordinated loans are based on quoted market prices when available. Where no quoted market
prices are available, fair value of subsordinated loans is estimated using discounted cash flows based on interest rates and credit
spreads that apply to similar instruments.
Amounts due to banks
The fair values of payables to banks are generally based on quoted market prices or, if not available, on estimates based on
discounting future cash flows using available market interest rates and credit spreads for payables to banks with similar
characteristics.
Customer deposits and other funds on deposit
The carrying values of customer deposits and other funds on deposit with no stated maturity approximate their fair values. The fair
values of deposits with stated maturities have been estimated based on discounting future cash flows using the interest rates
currently applicable to deposits of similar maturities.
Financial liabilities at fair value through profit and loss
The fair values of securities in the trading portfolio and other liabilities at fair value through profit and loss are based on quoted market
prices, where available. For those securities not actively traded, fair values are estimated based on internal discounted cash flow
valuation techniques using interest rates and credit spreads that apply to similar instruments. Reference is made to Financial assets at
fair value through profit and loss above.
Debt securities in issue and other borrowed funds
The fair value of debt securities in issue and other borrowed funds is generally based on quoted market prices or, if not available, on
estimated prices by discounting expected future cash flows using a current market interest rate and credit spreads applicable to the
yield, credit quality and maturity.
Other liabilities
The other liabilities are stated at their carrying value which is not significantly different from their fair value.
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