Ársskýrsla Landsbankans - Landsbankinn

Notes to the Consolidated Financial Statements
6. Classification and fair value of financial assets and liabilities (continued)
The following table shows the classification of the Group's financial assets and liabilities according to IAS 39 and their fair values as at 31 December
2009:
Designated
as at fair
Liabilities at
amortised
Other
liabilities at
Total
carrying
amount Fair value
Loans and Held for
Financial assets
receivables trading value cost fair value
Cash and balances with Central Bank 26,174 - - - - 26,174 26,174
Bonds and debt instruments 100,661 32,305 32,755 - - 165,721 165,721
Equities and equity instruments - 1,615 21,796 - - 23,411 23,411
Derivative instruments - 971 - - - 971 971
Loans and advances to financial institutions 83,129 - - - - 83,129 83,129
Loans and advances to customers 667,122 - - - - 667,122 684,118
Other financial assets 6,990 - - - - 6,990 6,990
Total 884,076 34,891 54,551 0 0 973,518 990,514
Financial liabilities
Due to financial institutions and Central Bank - - - 98,228 - 98,228 98,228
Deposits from customers - - - 452,655 - 452,655 452,655
Derivative instruments and short positions - 5,943 - - - 5,943 5,943
Secured bonds - - - 306,493 - 306,493 306,493
Contingent bond - - - - 10,241 10,241 10,241
Other financial liabilities - - - 2,138 - 2,138 2,138
Total 0 5,943 0 859,514 10,241 875,698 875,698
The fair value of financial assets and liabilities was determined based on the following methods and assumptions. For all financial assets and
liabilities the foreign currency exchange rates used are from observable markets both for spot and forward contracts and futures in the world’s major
currencies.
Balances with Central Bank
The carrying amount of balances with Central Bank is a reasonable approximation of their fair value.
Bonds and debt instruments
Quoted prices are generally available for government bonds and certain corporate securities. Where this information is not available, fair value is
estimated by adding credit spreads to quoted market rates for similar bonds or relevant interest rate curves.
For bonds issued by defaulting or greatly distressed parties recovery values are used for estimating the fair value. These are published by the
defaulting issuers resolution committee or equivalent, estimated based on statement of financial position information or expert opinion.
Interest rates are principally benchmark interest rates such as the London Inter-Bank Offered Rate (LIBOR) and quoted interest rates in the swap,
bond and futures markets.
Where available, credit spreads are derived from prices of credit default swaps (CDS) or other credit based instruments, such as debt securities. For
others, credit spreads are obtained from pricing services. Counterparty credit spreds are estimated based on the creditworthness of the counterparty
when differing from the assumed counterparty in the market.
Equities and equity instruments
Quoted prices are generally readily available for equity shares listed on the world’s major stock exchanges and for major indices on such shares.
When this information is not available the fair value is estimated based on market prices and earning multiples from similar securities, recent
transactions or by using discounted cash flow methods.
Derivative instruments
The fair value of derivative instruments is determined using valuation methods whose most significant inputs is volatility, which are obtained from
broker quotations, pricing services or derived from option prices.
Loans and advances to financial institutions
Loans and advances to banks include inter-bank placements and items in the course of collection. The carrying amount of floating rate placements
and overnight deposits is a reasonable approximation of their fair value.
NBI hf. Consolidated Financial Statements 2010 27
All amounts are in ISK million
Allar upphæðir eru í milljónum króna Ársreikningur 2010 127