Inhoudsopgave Voorwoord Bestuursverslag Corporate governance
Consolidated Financial Statements Company Financial Statements Pillar 3
2.11 Offsetting financial assets and liabilities
Where there is legal right to offset recognised amounts and it is
intended to settle the expected future cash flows on a net basis
or to realise the asset and settle the liability simultaneously,
financial assets and liabilities are offset and the net amount is
recognised in the statement of financial position. This relates
mainly to current accounts and derivatives. The offsetting of
taxes is addressed in Paragraph 2.24.
2.12 Foreign currency
Foreign entities
Transactions and balances included in the financial statements
of individual entities within Rabobank Group are reported in the
currency that best reflects the economic reality of the individual
entity's underlying operating environment (the functional
currency).
The consolidated financial statements are presented in
euros, which is the parent company's functional currency.
The statements of income and cash flows of foreign operations
are translated into Rabobank's presentation currency at the
exchange rates prevailing on the transaction dates, which
approximate the average exchange rates for the reporting
period, and the statements of financial position are translated
at the rates prevailing at the end of the reporting period.
Exchange differences arising on net investments in foreign
operations and on loans and other currency instruments
designated as hedges of these investments are recognised in
other comprehensive income. On sale of a foreign operation,
these translation differences are transferred to the statement of
income as part of the profit or loss on the sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are recognised as the assets and liabilities of
the foreign entity, and are translated at the rate prevailing at the
end ofthe reporting period.
Foreign-currency transactions
Transactions in foreign currencies are translated into the
functional currency at the exchange rates prevailing on the
transaction dates. Differences arising on the settlement of
transactions or on the translation of monetary assets and
liabilities denominated in foreign currencies are recognised
in the statement of income and differences that qualify as net
investment hedges are recognised in other comprehensive
income.Translation differences on debt securities and other
monetary financial assets carried at fair value are included
under foreign exchange gains and losses. Translation differences
on non-monetary items such as equity instruments held for
trading are recognised as part ofthe fair value gains or losses.
Translation differences on non-monetary available-for-sale
items are included in the revaluation reserves for available-for-
sale financial assets.
2.13 Interest
Interest income and expense arising on interest-bearing
instruments is recognised in the statement of income
on an accruals basis using the effective interest method.
Interest income includes coupons relating to fixed interest
financial assets and financial assets held for trading, as well
as the cumulative premiums and discounts on government
treasury securities and other cash equivalent instruments.
Impaired loans are written down to their recoverable amounts,
and interest income thereon is recognised, based on the
discount rate used in the original calculation ofthe present
value of future cash flows (excluding future credit losses) for
determining the recoverable amounts. Interest on derivatives
held for economic hedging purposes are shown under
interest income, both the receive and pay leg ofthe derivative.
This amount is presented as negative interest income because
the net interest-risk position ofthe banking book is a long
receiver-position.
2.14 Fees and commissions
Rabobank earns fee and commission income from a diverse
range of services it provides to its customers. Commissions
earned for the provision of services are generally recognised
on an accrual basis. Commission received for negotiating
a transaction or for involvement in negotiations on behalf of
third parties (for example the acquisition of a portfolio of loans,
shares or other securities or the sale or purchase of companies)
is recognised upon completion ofthe underlying transaction.
2.15 Loans and advances to customers and loans and
advances to banks
Loans and advances to customers and banks are non-
derivatives with fixed or definable payments and are not
listed on an active market, except for assets that Rabobank
classifies as held for trading or that were initially recognised
at fair value and for which value adjustments are recognised
in the statement of income or as available-for-sale financial
assets. Loans and advances to customers and banks are initially
recognised at fair value (including transaction costs) and
thereafter at amortised cost (including transaction costs).
Loans are subject to either individual or collective impairment
analyses. A loan impairment allowance is recognised if there is
objective evidence that not all amounts due under the original
terms ofthe contract will be recoverable.The amount ofthe
allowance is the difference between the carrying amount
267 Notes to the company financial statements