Annual report 2004 (PDF, 4141 kB) - Unicredit Bank

Loans and advances to customers
Loans and advances are net of specific and portfolio provisions for impairment. The estimated
fair value of loans and advances represents the discounted amount of estimated future cash
flows expected to be received. Expected cash flows are discounted at current market rates to
determine fair value. A substantial majority of the loans and advances to customers reprice
within relatively short time spans; therefore, it is assumed that their carrying values
approximate their fair value.
Due to other banks
The carrying values of current account balances are, equal to their fair values. For other
amounts due to banks with equal or less then one year remaining maturity, it is assumed their
carrying values approximate their fair values.
Due to customers
The fair values of current accounts as well as term deposits with equal to or less then one year
remaining maturity approximate their carrying values. The fair values of other term deposits
are estimated by discounting their future cash flows using rates currently offered for deposits
of similar remaining maturity. A substantial majority of the term deposits reprice within
relatively short time spans; therefore, it is assumed that their carrying values approximate
their fair value.
Debt securities in issue
The fair values of issued bonds are estimated by discounting their future cash flows using
rates currently offered for bond similar remaining maturities. The carrying values of
promissory notes approximate their fair value as all matured within three months.
(i)
Fiduciary activities
The Group provides custody, trustee, corporate administration, investment management and
advisory services to third parties which involve the Group making allocation and purchase
and sale decisions in relation to a wide range of financial instruments. Those assets that are
held in a fiduciary capacity are not included in these financial statements. Some of these
arrangements involve the Group accepting targets for benchmark levels of returns for the
assets under the Group’s care. These services give rise to the risk that
the Group will be accused of mal-administration or under-performance. The amount of assets
under management and under custody at 31 December 2004 is CZK 41 305 million (31
December 2003: CZK 10 461 million). At the balance sheet date the Group had investment
custody and fund depository accounts amounting to approximately CZK 39 777 million
(31 December 2003: CZK 24 983 million).
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