Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
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 of the 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 of the 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 are 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 of the 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 of the derivative.
This amount is presented as negative interest income because
the net interest-risk position of the 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 of the 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 of the contract will be recoverable. The amount of the
allowance is the difference between the carrying amount
and the recoverable amount (the present value of expected
future cash flows), including any expected interest income and
repayments and amounts recoverable under guarantees and
securities discounted to present value at the original effective
interest rate. For individual impaired loans a specific allowance
is determined and for retail exposures a collective assessment is
made if it is not economically justified to recognise the loss on
an individual basis. In these cases the collective assessment is
made based on homogenous groups of loans with a similar risk
profile with the purpose of identifying the need to recognise an
allowance for loan losses.
Examples of objective evidence for value adjustments are the
following:
Significant financial difficulties on the part of the borrower;
Default in making interest and/or redemption payments on
the part of the borrower;
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