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37. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)
Fair values (cont’d)
(i) Determination of fair values (cont’d)
Derivative financial assets/liabilites
The fair value is based on quoted market price or marked to model valuation.
Loans, advances and financing
Loans, advances and financing are net of charges for impairment. The estimated fair value represents the discounted
amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market
rates to determine fair value.
Borrowings (Non-hedged items)
The fair value of variable rate non-concessional borrowings is estimated to approximate the carrying amount.
Management is of the view that all concessionary borrowings bear interest rate which approximates the market rate
for similar concessionary borrowings granted to other development financial institutions. Therefore, the fair value of
concessionary borrowings is estimated to approximate the carrying amount.
Borrowings (Hedged items)
The fair value is based on marked to model valuation.
(ii) Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (ie. as prices) or indirectly (ie. derived from prices)
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
EXIM Bank Annual Report 2013
181