2018 Registration document and annual fi nancial report - BNP PARIBAS260
4 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
4
Notes to the fi nancial statements
8.i FAIR VALUE OF FINANCIAL INSTRUMENTS CARRIED AT AMORTISED COST
The information supplied in this note must be used and interpreted with the greatest caution for the following reasons:
■ these fair values are an estimate of the value of the relevant instruments as at 31 December 2018. They are liable to fl uctuate from day to day as a result of changes in various parameters, such as interest rates and credit quality of the counterparty. In particular, they may differ signifi cantly from the amounts actually received or paid on maturity of the instrument. In most cases, the fair value is not intended to be realised immediately, and in practice might not be realised immediately. Consequently, this fair value does not refl ect the actual value of the instrument to BNP Paribas as a going concern;
■ most of these fair values are not meaningful, and hence are not taken into account in the management of the commercial banking activities which use these instruments;
■ estimating a fair value for fi nancial instruments carried at historical cost often requires the use of modelling techniques, hypotheses and assumptions that may vary from bank to bank. This means that comparisons between the fair values of fi nancial instruments carried at historical cost as disclosed by different banks may not be meaningful;
■ the fair values shown below do not include the fair values of fi nance lease transactions, non-fi nancial instruments such as property, plant and equipment, goodwill and other intangible assets such as the value attributed to demand deposit portfolios or customer relationships. Consequently, these fair values should not be regarded as the actual contribution of the instruments concerned to the overall valuation of the BNP Paribas Group.
In millions of euros, at 31 December 2018
Estimated fair value
Carrying valueLevel 1 Level 2 Level 3 Total
FINANCIAL ASSETS
Loans and advances to credit institutions and customers(1) 82,358 681,583 763,941 753,293
Debt securities at amortised cost (note 5.e) 54,348 17,764 2,840 74,952 75,073
FINANCIAL LIABILITIES
Deposits from credit institutions and customers 876,320 876,320 875,463
Debt securities (note 5.h) 49,233 102,511 151,744 151,451
Subordinated debt (note 5.h) 10,883 6,494 17,377 17,627
(1) Finance leases excluded.
In millions of euros, at 1 January 2018
Estimated fair value
Carrying valueLevel 1 Level 2 Level 3 Total
FINANCIAL ASSETS
Loans and advances to credit institutions and customers(1) 82,054 652,520 734,574 722,365
Debt securities at amortised cost (note 5.e) 51,649 16,524 1,903 70,076 69,426
FINANCIAL LIABILITIES
Deposits from credit institutions and customers 837,843 837,843 837,444
Debt securities (note 5.h) 49,530 100,495 150,025 148,156
Subordinated debt (note 5.h) 8,891 7,767 16,658 15,951
(1) Finance leases excluded.
The valuation techniques and assumptions used by BNP Paribas ensure that the fair value of fi nancial assets and liabilities carried at amortised cost is measured on a consistent basis throughout the Group. Fair value is based on prices quoted in an active market when these are available. In other cases, fair value is determined using valuation techniques such as discounting of estimated future cash fl ows for loans, liabilities and debt securities at amortised cost, or specifi c valuation models for other fi nancial instruments as described in note 1, Summary of signifi cant
accounting policies applied by the BNP Paribas Group . The description of the fair value hierarchy levels is also presented in the accounting principles (note 1.e.10). In the case of loans, liabilities and debt securities at amortised cost that have an initial maturity of less than one year (including demand deposits) or of most regulated savings products, fair value equates to carrying amount. These instruments have been classifi ed in Level 2, except for loans to customers, which are classifi ed in Level 3.
