Annual Financial Statements 2020
58
ANNUAL FINANCIAL STATEMENTS NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
19.
19.2
Assets and liabilities at fair value continued
Assets and liabilities not measured at fair value for which fair value is disclosed
19.2.1 Fair value hierarchy of items for which fair value is disclosed
2020
2019¹
Level 1
N$'000
Level 2
N$'000
Level 3
N$'000
Total
N$'000
Level 1
N$'000
Level 2
N$'000
Level 3
N$'000
Total
N$'000
Assets
Cash and
balances with
the central bank
Financial
investments
Loans and
advances
Total
Liabilities
Deposits from
305 478
305 478
724 676
724 676
54 732
54 732
54 754
54 754
24 994 388
360 210
24 994 388
24 994 388
25 354 598
27 174 075
27 174 075
779 430
27 174 075
27 953 505
banks
1 909 497
1 909 497
2 328 818.
2 328 818
Deposits from
customers
24 521 561
24 521 561
26 071 317
26 071 317
Debt securities
issued
1 657 018
1 657 018
1 052 916
1 052 916
Total
28 088 076
28 088 076
29 453 051
29 453 051
1 The fair value hierarchy of deposits from banks and customers and debt securities issued for 2019 comparatives have been updated to level 2 which
is deemed to be the appropriate fair value hierarchy level of these instruments.
The hierarchy of levels is explained below:
Level 1:
Level 2:
Level 3:
Quoted unadjusted prices in active markets for identical assets or liabilities that the company can access
at measurement date.
Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly
or indirectly.
Unobservable inputs for the asset or liability.
Significant unobservable inputs
The fair value of level 3 assets and liabilities is determined using valuation techniques that include reference to recent arm's
length transactions, discounted cash flow analyses, pricing models and other valuation techniques commonly used by market
participants. However, such techniques typically have unobservable inputs that are subject to management judgement. These
inputs include credit spreads on illiquid issuers, implied volatilities on thinly traded stocks, correlation between risk factors,
prepayment rates and other illiquid risk drivers.
Exposure to such illiquid risk drivers is typically managed by:
⚫ using bid-offer spreads that are reflective of the relatively low liquidity of the underlying risk driver;
raising day one profit provisions in accordance with IFRS;
•
quantifying and reporting the sensitivity to each risk driver;
limiting exposure to such risk drivers; and
⚫ analysing this exposure on a regular basis.
STANDARD BANK NAMIBIA LIMITED
Annual financial statements 2020
59
20.
Financial instruments subject to offsetting, enforceable master netting
arrangements or similar agreements
IFRS requires a financial asset and a financial liability to be offset and the net amount presented in the statement of financial
position when, and only when, the company has a current legally enforceable right to set off recognised amounts, as well as the
intention to settle on a net basis or to realise the asset and settle the liability simultaneously. There are no other instances
apart from the cash management accounts, where the company has a current legally enforceable right to offset as well as the
intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
The following table sets out the impact of offset, as well as the required disclosures for financial assets and financial liabilities
that are subject to an enforceable master netting arrangements or similar agreements, irrespective of whether they have been
offset in accordance with IFRS. It should be noted that the information below is not intended to represent the company's actual
credit exposure, nor will it agree to that presented in the statement of financial position.
Gross
amount of
recognised
financial
assets¹
N$'000
Financial
liabilities
set off in the
statement
of financial
position²
N$'000
Net amount
of financial
assets
subject
to netting
agreements³
N$'000
Collateral
received4
N$'000
Net
amount
N$'000
2020
Assets
Derivative assets
372 288
Loans and advances5
Total
24 931 346
25 303 634
Gross
amount of
recognised
financial
liabilities¹
N$'000
(2 145 470)
(2 145 470)
Financial
assets
set off in the
statement
of financial
position²
N$'000
372 288
22 785 876
23 158 164
Net amounts
of financial
liabilities
subject
to netting
agreements³
N$'000
(372 288)
(18 578 205)
(18 950 493)
4 207 671
4 207 671
Net
Collateral
pledged
N$'000
amount
N$'000
2020
Liabilities
Derivative liabilities
(362 123)
Deposits and current accounts5
(26 420 850)
Total
(26 782 973)
(2 145 470)
(2 145 470)
(362 123)
(28 566 320)
(28 928 443)
362 123
(28 566 320)
362 123
(28 566 320)
1 Gross amounts are disclosed for recognised financial assets and financial liabilities that are either offset in the statement of financial position
or are subject to a master netting arrangement or a similar agreement, irrespective of whether the IFRS offsetting criteria is met.
2
3
4
5
Gross amounts of recognised financial assets or financial liabilities that qualify for offset in accordance with the criteria per IFRS. The offsetting has not
been applied.
Related amounts not offset in the statement of financial position that are subject to a master netting arrangement or similar agreement.
This is the total collateral value held for loans and adavnaces. This could include financial collateral (whether recognised or unrecognised), cash
collateral as well as exposures that are available to the company to be offset in the event of default. In most cases the company is allowed to sell or
repledge collateral received.
The most material amounts offset in the statement of financial position pertain to cash management accounts. The cash management accounts allow
holding companies (or central treasury functions) to manage the cash flows of its company by linking the current accounts of multiple legal entities
within a group. This allows for cash balances of the different legal entities to be offset against each other to arrive at a net balance for those groups.
6 In most instances, the counterparty may not sell or repledge collateral pledged by the company..View entire presentation