Geschäftsbericht 2015, englisch - Notes

münchener Hypothekenbank eg | annual report 2015 58 Notes General information on accounting policies The Münchener Hypothekenbank eG annual financial statement as of December 31, 2015 was prepared in accordance with the provi- sions of the German Commercial Code (HGB), in conjunction with the accounting regulation for banks and financial service institu- tions (RechKredV), and in accordance with the rules contained in the Cooperatives Act (GenG) and the Pfandbrief Act (PfandBG). All claims are stated at nominal amounts in accordance with Art. 340e (2) of the German Commercial Code. The difference between the amounts disbursed and the nominal amount is shown under deferred items. All identifiable individual credit risks are covered by specific value adjustments and provisions set up against claims for repayment of principal and payment of interest. Contingent risks are covered by general value adjustments. In addition, contin- gency reserves were formed pursuant to Art. 340f of the German Commercial Code. Securities held in the liquidity portfolio are strictly valued at the lower of cost or market principle. The present value corresponds to the current exchange or market price. Securities held as fixed assets, which were mainly acquired as cover for Public Pfandbriefe and for other coverage purposes, are valued at their cost of purchase. Discounts and premiums are recognised as interest income or expense over the residual life of the securities. Securities associated with swap agreements are valued together with these agreements as a single item. To the extent that deri­ vatives are used to hedge risks they are not valued individually. As in the previous year, securities held as fixed assets in the business year, and which were not subject to a sustained decrease in value, are valued in accordance with the modified lower of cost or market principle. In cases involving securities treated as fixed assets where a permanent decrease in value is anticipated, the write-down to the fair value takes place on the balance sheet date. In accordance with the rules pertaining to the valuation of fixed assets, participations and holdings in affiliated companies are val- ued at their cost of purchase. Depreciation is taken on those assets where the reduction in value is expected to be long-term. Intangible assets and tangible assets are valued at cost or produc- tion costs less accumulated depreciation. Planned depreciation was taken in accordance with normal useful lifetimes. Minor value assets were treated in accordance with tax rules. Existing deferred taxes arising due to temporary differences be- tween values calculated for trading and tax purposes are cleared. A backlog of deferred tax assets is not recorded in the balance sheet. Liabilities are shown at their settlement value. Zero bonds are carried in the accounts at the issuing price plus earned interest based on the yield at the time of purchase in accordance with the issuing conditions. The difference between the nominal amount of liabilities and the amount disbursed is shown under deferred items. Based on the principles of prudent business practice, pro- visions have been made for uncertain liabilities in the amount of settlement value of these liabilities. Provisions with a remaining term of more than one year were discounted using the commen- surate average rate of market interest rates. Provisions made for pension obligations are calculated based on the Projected Unit Credit Method, a discount rate of 3.89 percent and a 2.5 percent rate of salary growth, as well as a 2.0 percent rate of pension growth. The calculation is made on the basis of “Guideline tables 2005 G” prepared by Prof. Klaus Heubeck. In accordance with the terms of Art. 253 (2) 2s of the German Commercial Code, the av- erage market rate of interest is used for discount purposes with an assumed remaining term to maturity of 15 years. Per the terms of Art. 256a of the German Commercial Code, mone- tary assets and liabilities denoted in foreign currencies are trans- lated at the European Central Bank’s exchange rate valid on the balance sheet date. Income realised from the translation of par- ticularly covered foreign currency positions is carried under net interest income. Costs and income are valued at the individual daily exchange rate. Negative interest on financial assets or financial liabilities has been deducted from the related interest income items or interest ex- pense items shown on the Income Statement. The classification method used for the Income Statement for the year under review has been changed from the account form to vertical form. Notes 2015

Pages Overview