ING Direct 2015 Annual Report Download - page 121

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
2014
Real estate
invest-
ments
Property in
own use
Total non-
financial
assets
Opening balance
55
1,143
1,198
Amounts recognised in the profit and loss account during the year
3
–80
–77
Revaluation recognised in equity during the year
–13
–13
Purchase of assets
63
63
Sale of assets
–28
–28
Reclassifications
22
–26
–4
Exchange rate differences
1
1
Changes in the composition of the group and other changes
–40
–40
Closing balance
80
1,020
1,100
2015
Held at
balance
sheet date
Dere-
cognised
during the
year Total
Non-financial assets
Real estate investments
Property in own use
–19
–19
–19
–
–19
2014
Held at
balance
sheet date
Dere-
cognised
during the
year
Total
Non-financial assets
Real estate investments
3
3
Property in own use
–58
–22
–80
–55
–22
–77
37 Derivatives and hedge accounting
Use of derivatives and hedge accounting
As described in the sections ‘Risk management – Credit risk and Market risk’, ING Bank uses derivatives (principally interest rate swaps
and cross currency interest rate swaps) for economic hedging purposes in the management of its asset and liability portfolios and
structural positions. The objective of economic hedging is to enter into positions with an opposite risk profile to an identified exposure
to reduce that exposure. The impact of ING Bank’s hedging activities is to optimise the overall cost to the Bank of accessing debt
capital markets and to mitigate the market risk which would otherwise arise from structural imbalances in the duration and other
profiles of its assets and liabilities. In addition, hedging activities are undertaken to hedge against the interest rate risk in the mortgage
offer period in relation to retail mortgages and to lock in the interest margin in relation to interest bearing assets and the related
funding.
The accounting treatment of hedge transactions varies according to the nature of the instrument hedged and whether the hedge
qualifies under the IFRS-EU hedge accounting rules. Derivatives that qualify for hedge accounting under IFRS-EU are classified and
accounted for in accordance with the nature of the instrument hedged and the type of IFRS-EU hedge model that is applicable. The
three models applicable under IFRS-EU are: fair value hedge accounting, cash flow hedge accounting and net investment hedge
accounting. These are described under the relevant headings below. The company’s detailed accounting policies for these three hedge
models are set out in Note 1 ‘Accounting policies’ in the section ‘Principles of valuation and determination of results’.
Changes in Level 3 non-financial assets
Amounts recognised in the profit and loss account during the year (Level 3)
Amounts recognised in the profit and loss account during the year (Level 3)
ING Bank Annual Report 2015 119