2018 Registration document and annual fi nancial report - BNP PARIBAS190
4 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
4
Notes to the fi nancial statements
Gains and losses on fi nancial instruments designated as at fair value through profi t or loss are mainly related to instruments whose changes in value may be compensated by changes in the value of economic hedging trading book instruments.
Net gains on the trading book in 2018 and 2017 include a non-material amount related to the ineffective portion of cash fl ow hedges.
Potential sources of ineffectiveness can be the differences between hedging instruments and hedged items, notably generated by mismatches in the terms of hedged and hedging instruments, such as
the frequency and timing of interest rates resetting, the frequency of payment and the discounting factors, or when hedging derivatives have a non-zero fair value at inception date of the hedging relationship. Credit valuation adjustments applied to hedging derivatives are also sources of ineffectiveness.
Cumulated changes in fair value related to discontinued cash fl ow hedge relationships, previously recognised in equity and included in the 2018 profi t and loss account are not material, whether the hedged item ceased to exist or not.
In millions of euros Year to 31 Dec. 2018
IFRS 9 & IFRS 15 Year to 31 Dec. 2017
IAS 39
Net gain on debt instruments at fair value through equity 213 325
Debt securities(1) 213 325
Net gain on equity instruments at fair value through equity 102 1,386
Dividend income 102 373
Additions to impairment provisions (268)
Net disposal gains 1,281
NET GAIN ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH EQUITY 315 1,711
Net gain on fi nancial instruments at amortised cost (5) 55
Loans and receivables (5) 55
Debt securities(1) - -
NET GAIN ON FINANCIAL ASSETS AT AMORTISED COST (5) 55
(1) Interest income from debt instruments is included in Net interest income (note 3.a), and impairment losses related to potential issuer default are included in Cost of risk (note 3.h).
For the year ended 31 December 2018, net gain on fi nancial instruments at fair value through equity includes gains and losses from disposals of debt securities at fair value through equity and dividends on equity securities for which the Group applied the fair value through equity option; gains and losses on the latter are no longer recognised in profi t and loss, but directly in equity.
For the year ended 31 December 2017, additions to impairment provisions and gains and losses from disposals of equity securities were those recognised under IAS 39 on available-for-sale securities.
Unrealised gains and losses on debt securities previously recorded under Changes in assets and liabilities recognised directly in equity that may be reclassifi ed to profi t or loss and included in the pre-tax income, amount to a gain of EUR 110 million for the year ended 31 December 2018.
3.d NET GAIN ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH EQUITY AND ON FINANCIAL ASSETS AT AMORTISED COST
