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HALF-YEAR REPORT 2016
Notes to the Consolidated Financial Statements
For the six months ended 30 June 2016
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32 Financial risk management and fair values
(continued)
(e) Fair values
(continued)
(iii) Estimation of fair values
As at the balance sheet date, the Group adopted the following major methods and assumptions
in estimating the fair value of financial instruments.
Debt securities and equity investments
Fair value is based on quoted market prices as at the balance sheet date for trading financial
assets and liabilities (excluding derivatives), available-for-sale financial assets, and held-to-
maturity investments if there is an active market. If an active market does not exist for available-
for-sale financial assets, the fair value is determined using valuation techniques.
Loans and advances to customers and other parties, bank and other loans
Loans and advances to customers and other parties, and bank and other loans are repriced at
market rates at least annually. Accordingly, their carrying amounts approximate their fair values.
Placements with banks and non-bank financial institutions, financial assets held/sold under resale/
repurchase agreements
Placements with banks and non-bank financial institutions, financial assets held/sold under
resale/repurchase agreements are mainly priced at market interest rates and mature within one
year. Accordingly, the carrying amounts approximate their fair values.
Derivatives
The fair values of foreign currency and interest rate contracts are either based on their listed
market prices or by discounted cash flow model at the measurement date.
Financial guarantees
The fair values of financial guarantees are determined by reference to fees charged in an arm’s
length transaction for similar services, when such information is obtainable, or is otherwise
estimated by reference to interest rate differentials, by comparing the actual rates charged
by lenders when the guarantee is made available with the estimated rates that the lenders
would have charged, had the guarantees not been available, where reliable estimates of such
information can be made.
33 Material related party
(a) Relationship of related parties
(i)
In addition to subsidiaries, related parties include parent company, holding company’s fellow
entities, associates and joint ventures of the Group.
(ii) CITIC Group, the parent and the ultimate controlling shareholder of the Group, is a state-owned
company established in Beijing in 1979.