Annual Report 2010 - Muenchener Hypothekenbank eG

münchener hypothekenbank eg | annUaL report 2010 notes 72 | 73 otHer obliGationS the irrevocable loan commitments contained in this item consist almost solely of mortgage loan commitments made to customers. net exPenSeS oF traDinG book the Bank’s future transactions are carried in the trading book. the results of these transactions are netted and shown in the net expenses of the trading book. otHer oPeratinG exPenSeS this position contains accrued interest effects of € 1,992 (thousands) for established provisions. extraorDinarY exPenSeS the initial application of the Bilmog by the calculation of provisions resulted in an effect of € 1,053 (thousand), which is carried under “extraordinary expenses”. ForWarD traDeS anD DeriVatiVeS the following derivative transactions were made to hedge swings in interest rates or hedge against exchange rate risks. these figures do not include derivatives embedded in underlying basic transactions stated on the balance sheet. nominal amounts (in millions of €) residual term ≤ one year residual term > one year ≤ five years residual term > five years total counterparty risk *) neg. (-) interest-rate-related transactions interest rate swaps 6,284 22,921 22,340 51,545 -1,025 interest rate options - calls 60 93 85 238 8 - puts 0 45 20 65 -3 other interest rate contracts 100 175 260 535 7 currency-related transactions cross-currency swaps 2,256 213 998 3,467 17 *) valuation methods: interest rate swaps are valued using the present value method on the date of record using the current interest rate curve. in doing so the cash flows are discounted using market interest rates appropriate for the related risks and remaining terms to maturity, interest that has been accrued but not yet paid is not taken into consideration. this approach is known as “clean price” valuation. the value of options is calculated using option price models using generally accepted basic assumptions. in general the price of the underlying value, its volatility, the agreed strike price, a risk-free interest rate, and the remaining term to the expiration date are used to calculate the particular value of an option. the derivative financial instruments noted involve premiums stemming from option trades in the amount of € 1.8 million (previous year € 1.8 million) which are contained in the balance sheet items “other assets”.