35 IFRS 7 (Financial Instruments)

The table below shows the carrying amounts of financial instruments by measurement category:

  (XLS:) Download

CARRYING AMOUNT OF FINANCIAL INSTRUMENTS BY IFRS 9 MEASUREMENT CATEGORY

€ million

 

Dec. 31, 2019

 

Dec. 31, 2018

 

 

 

 

 

Financial assets at fair value through profit or loss

 

16,331

 

15,556

Financial assets at fair value through other comprehensive income (debt instruments)

 

3,139

 

3,542

Financial assets at fair value through other comprehensive income (equity instruments)

 

68

 

148

of which classified as held for sale

 

3

 

Financial assets measured at amortized cost

 

149,203

 

143,466

of which classified as held for sale

 

158

 

Financial liabilities at fair value through profit or loss

 

1,760

 

1,484

Financial liabilities measured at amortized cost

 

229,229

 

225,989

of which classified as held for sale

 

44

 

CLASSES OF FINANCIAL INSTRUMENTS

Financial instruments are divided into the following classes at the Volkswagen Group:

  • financial instruments measured at fair value;
  • financial instruments measured at amortized cost;
  • derivative financial instruments within hedge accounting;
  • not allocated to any measurement category; and
  • credit commitments and financial guarantees (off-balance sheet).

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS

The following table shows the reconciliation of the balance sheet items to the relevant classes of financial instruments, broken down by the carrying amount and fair value of the financial instruments.

The fair value of financial instruments measured at amortized cost, such as receivables and liabilities, is calculated by discounting using a market rate of interest for a similar risk and matching maturity. For reasons of materiality, the fair value of current balance sheet items is generally deemed to be their carrying amount.

For reconciliation to the carrying amounts, the “Not allocated to a measurement category” column in the table also includes items other than financial instruments.

The risk variables governing the fair value of the receivables are risk-adjusted interest rates.

“Financial instruments measured at fair value” also include shares in partnerships and corporations.

  (XLS:) Download

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2018

 

 

MEASURED AT FAIR VALUE

 

MEASURED AT AMORTIZED COST

 

DERIVATIVE FINANCIAL INSTRUMENTS WITHIN HEDGE ACCOUNTING

 

NOT ALLOCATED TO A MEASUREMENT CATEGORY

 

BALANCE SHEET ITEM AT DEC. 31, 2018

€ million

 

Carrying amount

 

Carrying amount

 

Fair value

 

Carrying amount

 

Carrying amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity-accounted investments

 

 

 

 

 

8,434

 

8,434

Other equity investments

 

134

 

 

 

 

1,340

 

1,474

Financial services receivables

 

286

 

46,905

 

47,789

 

 

31,501

 

78,692

Other financial assets

 

772

 

4,240

 

4,252

 

1,510

 

 

6,521

Tax receivables

 

 

 

 

 

476

 

476

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

17,537

 

17,537

 

 

352

 

17,888

Financial services receivables

 

22

 

36,529

 

36,529

 

 

17,665

 

54,216

Other financial assets

 

1,094

 

9,150

 

9,150

 

1,341

 

1

 

11,586

Tax receivables

 

 

29

 

29

 

 

1,850

 

1,879

Marketable securities

 

16,940

 

140

 

140

 

 

 

17,080

Cash, cash equivalents and time deposits

 

 

28,938

 

28,938

 

 

 

28,938

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent financial liabilities

 

 

100,727

 

100,964

 

 

399

 

101,126

Other noncurrent financial liabilities

 

767

 

2,085

 

2,087

 

368

 

 

3,219

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Put options and compensation rights granted to noncontrolling interest shareholders

 

 

1,853

 

1,853

 

 

 

1,853

Current financial liabilities

 

 

89,707

 

89,707

 

 

51

 

89,757

Trade payables

 

 

23,607

 

23,607

 

 

 

23,607

Other current financial liabilities

 

718

 

7,977

 

7,977

 

721

 

 

9,416

Tax payables

 

 

33

 

33

 

 

423

 

456

  (XLS:) Download

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2019

 

 

MEASURED AT FAIR VALUE

 

MEASURED AT AMORTIZED COST

 

DERIVATIVE FINANCIAL INSTRUMENTS WITHIN HEDGE ACCOUNTING

 

NOT ALLOCATED TO A MEASUREMENT CATEGORY

 

BALANCE SHEET ITEM AT DEC. 31, 2019

€ million

 

Carrying amount

 

Carrying amount

 

Fair value

 

Carrying amount

 

Carrying amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity-accounted investments

 

 

 

 

 

8,169

 

8,169

Other equity investments

 

54

 

 

 

 

1,848

 

1,902

Financial services receivables

 

288

 

51,404

 

52,581

 

 

35,281

 

86,973

Other financial assets

 

1,012

 

3,625

 

3,628

 

916

 

 

5,553

Tax receivables

 

 

 

 

 

341

 

341

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

1

 

17,940

 

17,940

 

 

 

17,941

Financial services receivables

 

22

 

39,936

 

39,936

 

 

18,656

 

58,615

Other financial assets

 

1,477

 

10,120

 

10,120

 

619

 

 

12,216

Tax receivables

 

 

9

 

9

 

 

1,181

 

1,190

Marketable securities

 

16,681

 

88

 

88

 

 

 

16,769

Cash, cash equivalents and time deposits

 

 

25,923

 

25,923

 

 

 

25,923

Assets held for sale

 

3

 

158

 

158

 

 

634

 

795

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent financial liabilities

 

 

108,348

 

110,679

 

 

5,208

 

113,556

Other noncurrent financial liabilities

 

943

 

2,549

 

2,554

 

1,007

 

 

4,499

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current financial liabilities

 

 

86,911

 

86,911

 

 

1,002

 

87,912

Trade payables

 

 

22,745

 

22,745

 

 

 

22,745

Other current financial liabilities

 

817

 

8,614

 

8,614

 

1,427

 

 

10,858

Tax payables

 

 

19

 

19

 

 

389

 

408

Liabilities associated with assets held for sale

 

 

44

 

44

 

 

326

 

370

The carrying amount of lease receivables was €53.9 billion (previous year: €49.2 billion) and their fair value (fair value hierarchy level 3) was €55.0 billion (previous year: €49.8 billion).

Uniform valuation techniques and inputs are used to measure fair value. The fair value of Level 2 and 3 financial instruments is measured in the individual divisions on the basis of Group-wide specifications. The measurement techniques used are explained in the section entitled “Accounting policies”. The fair value of Level 3 receivables was measured by reference to individual expectations of losses; these are based to a significant extent on the Company’s assumptions about counterparty credit quality. The inputs used are not observable in an active market.

The following tables contain an overview of the financial assets and liabilities measured at fair value by level:

  (XLS:) Download

FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE BY LEVEL

€ million

 

Dec. 31, 2018

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

 

 

 

Other equity investments

 

134

 

56

 

25

 

53

Financial services receivables

 

286

 

 

 

286

Other financial assets

 

772

 

 

357

 

415

Current assets

 

 

 

 

 

 

 

 

Financial services receivables

 

22

 

 

 

22

Other financial assets

 

1,094

 

 

880

 

214

Marketable securities

 

16,940

 

16,940

 

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

Other noncurrent financial liabilities

 

767

 

 

250

 

516

Current liabilities

 

 

 

 

 

 

 

 

Other current financial liabilities

 

718

 

 

419

 

299

  (XLS:) Download

€ million

 

Dec. 31, 2019

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

 

 

 

Other equity investments

 

54

 

43

 

0

 

11

Financial services receivables

 

288

 

 

 

288

Other financial assets

 

1,012

 

 

595

 

417

Current assets

 

 

 

 

 

 

 

 

Other financial assets

 

1

 

 

 

1

Financial services receivables

 

22

 

 

 

22

Other financial assets

 

1,477

 

 

1,304

 

173

Marketable securities

 

16,681

 

16,681

 

 

Assets held for sale

 

3

 

 

 

3

Noncurrent liabilities

 

 

 

 

 

 

 

 

Other noncurrent financial liabilities

 

943

 

 

425

 

518

Current liabilities

 

 

 

 

 

 

 

 

Other current financial liabilities

 

817

 

 

570

 

247

  (XLS:) Download

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT AMORTIZED COST BY LEVEL

€ million

 

Dec. 31, 2018

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Fair value of financial assets measured at amortized cost

 

 

 

 

 

 

 

 

Financial services receivables

 

84,319

 

 

 

84,319

Trade receivables

 

17,537

 

 

17,537

 

Other financial assets

 

13,403

 

378

 

5,004

 

8,020

Tax receivables

 

29

 

 

29

 

Cash, cash equivalents and time deposits

 

28,938

 

28,115

 

823

 

Fair value of financial assets measured at amortized cost

 

144,226

 

28,493

 

23,394

 

92,339

 

 

 

 

 

 

 

 

 

Fair value of financial liabilities measured at amortized cost

 

 

 

 

 

 

 

 

Put options and compensation rights granted to noncontrolling interest shareholders

 

1,853

 

 

 

1,853

Trade payables

 

23,607

 

 

23,607

 

Financial liabilities

 

190,671

 

59,089

 

131,316

 

266

Other financial liabilities

 

10,064

 

1,297

 

8,535

 

233

Tax payables

 

33

 

 

33

 

Fair value of financial liabilities measured at amortized cost

 

226,228

 

60,386

 

163,491

 

2,352

  (XLS:) Download

€ million

 

Dec. 31, 2019

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Fair value of financial assets measured at amortized cost

 

 

 

 

 

 

 

 

Financial services receivables

 

92,518

 

 

 

92,518

Trade receivables

 

17,940

 

 

17,940

 

Other financial assets

 

13,748

 

456

 

4,534

 

8,758

Tax receivables

 

9

 

 

9

 

Cash, cash equivalents and time deposits

 

25,923

 

24,912

 

1,010

 

Assets held for sale

 

158

 

4

 

154

 

Fair value of financial assets measured at amortized cost

 

150,296

 

25,372

 

23,648

 

101,276

 

 

 

 

 

 

 

 

 

Fair value of financial liabilities measured at amortized cost

 

 

 

 

 

 

 

 

Trade payables

 

22,745

 

 

22,745

 

Financial liabilities

 

197,590

 

42,828

 

152,329

 

2,433

Other financial liabilities

 

11,168

 

707

 

10,069

 

392

Tax payables

 

19

 

 

19

 

Liabilities associated with assets held for sale

 

44

 

 

44

 

Fair value of financial liabilities measured at amortized cost

 

231,566

 

43,535

 

185,205

 

2,825

  (XLS:) Download

DERIVATIVE FINANCIAL INSTRUMENTS WITHIN HEDGE ACCOUNTING BY LEVEL

€ million

 

Dec. 31, 2018

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

 

 

 

Other financial assets

 

1,510

 

 

1,510

 

Current assets

 

 

 

 

 

 

 

 

Other financial assets

 

1,341

 

 

1,341

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

Other noncurrent financial liabilities

 

368

 

 

368

 

0

Current liabilities

 

 

 

 

 

 

 

 

Other current financial liabilities

 

721

 

 

721

 

  (XLS:) Download

€ million

 

Dec. 31, 2019

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

 

 

 

Other financial assets

 

916

 

 

916

 

Current assets

 

 

 

 

 

 

 

 

Other financial assets

 

619

 

 

619

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

Other noncurrent financial liabilities

 

1,007

 

 

1,007

 

Current liabilities

 

 

 

 

 

 

 

 

Other current financial liabilities

 

1,427

 

 

1,427

 

The allocation of fair values to the three levels in the fair value hierarchy is based on the availability of observable market prices. Level 1 is used to report the fair value of financial instruments for which a price is directly available in an active market. Examples include marketable securities and other equity investments measured at fair value that are listed and traded on a public market. Fair values in Level 2, for example of derivatives, are measured on the basis of market inputs using market-based valuation techniques. In particular, the inputs used include exchange rates, yield curves and commodity prices that are observable in the relevant markets and obtained through pricing services. Fair Values in Level 3 are calculated using valuation techniques that incorporate inputs that are not directly observable in active markets. In the Volkswagen Group, long-term commodity futures are allocated to Level 3 because the prices available on the market must be extrapolated for measurement purposes. This is done on the basis of observable inputs obtained for the different commodities through pricing services. Options on equity instruments, residual value protection models, customer financing receivables, receivables from vehicle financing programs and other equity investments are also reported in Level 3. In this process, the relevant corporate plans and company-specific discount rates in particular are used for measuring the equity instruments. The significant inputs used to measure fair value for the residual value protection models include forecasts and estimates of used vehicle residual values for the appropriate models. The measurement of vehicle financing programs requires in particular the use of the corresponding vehicle price.

The table below provides a summary of changes in Level 3 balance sheet items measured at fair value:

  (XLS:) Download

CHANGES IN BALANCE SHEET ITEMS MEASURED AT FAIR VALUE BASED ON LEVEL 3

€ million

 

Financial assets measured at fair value

 

Financial liabilities measured at fair value

 

 

 

 

 

Balance at Jan. 1, 2018

 

823

 

765

Foreign exchange differences

 

−33

 

−3

Changes in consolidated Group

 

−184

 

Total comprehensive income

 

78

 

204

recognized in profit or loss

 

27

 

204

recognized in other comprehensive income

 

51

 

Additions (purchases)

 

339

 

28

Sales and settlements

 

−2

 

−183

Transfers into Level 2

 

−32

 

5

Balance at Dec. 31, 2018

 

990

 

816

 

 

 

 

 

Total gains or losses recognized in profit or loss

 

27

 

−204

Net other operating expense/income

 

31

 

−203

of which attributable to assets/liabilities held at the reporting date

 

58

 

−235

Financial result

 

−4

 

0

of which attributable to assets/liabilities held at the reporting date

 

−5

 

  (XLS:) Download

€ million

 

Financial assets measured at fair value

 

Financial liabilities measured at fair value

 

Financial assets held for sale

 

 

 

 

 

 

 

Balance at Jan. 1, 2019

 

990

 

816

 

Foreign exchange differences

 

22

 

9

 

Changes in consolidated Group

 

0

 

 

Total comprehensive income

 

154

 

293

 

recognized in profit or loss

 

157

 

293

 

recognized in other comprehensive income

 

−3

 

 

Additions (purchases)

 

13

 

 

3

Sales and settlements

 

−215

 

−301

 

Transfers into Level 2

 

−46

 

−51

 

Classified as held for sale

 

−3

 

 

Balance at Dec. 31, 2019

 

913

 

765

 

3

 

 

 

 

 

 

 

Total gains or losses recognized in profit or loss

 

157

 

−293

 

Net other operating expense/income

 

161

 

−292

 

of which attributable to assets/liabilities held at the reporting date

 

115

 

−238

 

Financial result

 

−4

 

−1

 

of which attributable to assets/liabilities held at the reporting date

 

−4

 

 

The transfers between the levels of the fair value hierarchy are reported at the respective reporting dates. The transfers out of Level 3 into Level 2 comprise commodity futures for which observable quoted prices are now available for measurement purposes due to the decline in their remaining maturities; consequently, no further extrapolation is required. There were no transfers between other levels of the fair value hierarchy.

Commodity prices are the key risk variable for the fair value of commodity futures. Sensitivity analyses are used to present the effect of changes in commodity prices on earnings after tax and equity.

If commodity prices for commodity futures classified as Level 3 had been 10% higher (lower) as of December 31, 2019, earnings after tax would have been €168 million (previous year: €59 million) higher (lower). The equity is not affected.

The key risk variable for measuring options on equity instruments held by the Company is the relevant enterprise value. Sensitivity analyses are used to present the effect of changes in risk variables on earnings after tax.

If the assumed enterprise values at December 31, 2019 had been 10% higher, earnings after tax would have been €3 million (previous year: €3 million) higher. If the assumed enterprise values at December 31, 2019 had been 10% lower, earnings after tax would have been €3 million (previous year: €3 million) lower.

Residual value risks result from hedging agreements with dealers under which earnings effects caused by market-related fluctuations in residual values that arise from buyback obligations under leases are borne in part by the Volkswagen Group.

The key risk variable influencing the fair value of the options relating to residual value risks is used car prices. Sensitivity analyses are used to quantify the effects of changes in used car prices on earnings after tax.

If the prices of the used cars covered by the residual value protection model had been 10% higher as of December 31, 2019, earnings after tax would have been €354 million (previous year: €325 million) higher. If the prices of the used cars covered by the residual value protection model had been 10% lower as of December 31, 2019, earnings after tax would have been €374 million (previous year: €352 million) lower.

If the risk-adjusted interest rates applied to receivables measured at fair value had been 100 basis points higher as of December 31, 2019, earnings after tax would have been €3 million (previous year: €1 million) lower. If the risk-adjusted interest rates as of December 31, 2019 had been 100 basis points lower, earnings after tax would have been €3 million (previous year: €4 million) higher.

If the corresponding vehicle prices used in the vehicle financing programs had been 10% higher as of December 31, 2019, earnings after tax would have been €5 million (previous year: €8 million) higher. If the corresponding vehicle prices used in the vehicle financing programs had been 10% lower as of December 31, 2019, earnings after tax would have been €5 million (previous year: €8 million) lower.

If the result of operations of equity investments measured at fair value had been 10% better as of December 31, 2019, the equity would have been €0.2 million (previous year: €2.8 million) higher. If the result of operations had been 10% worse, the equity would have been €0.2 million (previous year: €2.8 million) lower.

OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The following tables contain information about the effects of offsetting in the balance sheet and the potential financial effects of offsetting in the case of instruments that are subject to a legally enforceable master netting arrangement or a similar agreement.

  (XLS:) Download

 

 

 

 

 

 

 

 

AMOUNTS THAT ARE NOT SET OFF IN THE BALANCE SHEET

 

 

€ million

 

Gross amounts of recognized financial assets

 

Gross amounts of recognized financial liabilities set off in the balance sheet

 

Net amounts of financial assets presented in the balance sheet

 

Financial instruments

 

Collateral received

 

Net amount at Dec. 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

3,979

 

0

 

3,979

 

−1,819

 

−171

 

1,989

Financial services receivables

 

132,909

 

 

132,909

 

 

−77

 

132,831

Trade receivables

 

17,537

 

0

 

17,537

 

0

 

 

17,536

Marketable securities

 

17,080

 

 

17,080

 

 

 

17,080

Cash, cash equivalents and time deposits

 

28,938

 

 

28,938

 

 

 

28,938

Other financial assets

 

14,307

 

−15

 

14,291

 

 

 

14,291

  (XLS:) Download

 

 

 

 

 

 

 

 

AMOUNTS THAT ARE NOT SET OFF IN THE BALANCE SHEET

 

 

€ million

 

Gross amounts of recognized financial assets

 

Gross amounts of recognized financial liabilities set off in the balance sheet

 

Net amounts of financial assets presented in the balance sheet

 

Financial instruments

 

Collateral received

 

Net amount at Dec. 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

3,396

 

−146

 

3,250

 

−2,010

 

−45

 

1,195

Financial services receivables

 

146,218

 

−630

 

145,588

 

 

−98

 

145,490

Trade receivables

 

17,952

 

−11

 

17,941

 

0

 

 

17,941

Marketable securities

 

16,769

 

 

16,769

 

 

 

16,769

Cash, cash equivalents and time deposits

 

25,923

 

 

25,923

 

 

 

25,923

Other financial assets

 

14,436

 

146

 

14,581

 

0

 

 

14,581

Other financial assets include receivables from tax allocations of €9 million (previous year: €29 million).

  (XLS:) Download

 

 

 

 

 

 

 

 

AMOUNTS THAT ARE NOT SET OFF IN THE BALANCE SHEET

 

 

€ million

 

Gross amounts of recognized financial liabilities

 

Gross amounts of recognized financial assets set off in the balance sheet

 

Net amounts of financial liabilities presented in the balance sheet

 

Financial instruments

 

Collateral pledged

 

Net amount at Dec. 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Put options and compensation rights granted to noncontrolling interest shareholders

 

1,853

 

 

1,853

 

 

 

1,853

Derivatives

 

2,573

 

0

 

2,573

 

−1,738

 

−1

 

834

Financial liabilities

 

190,883

 

 

190,883

 

 

−1,953

 

188,931

Trade payables

 

23,607

 

0

 

23,607

 

0

 

 

23,607

Other financial liabilities

 

10,111

 

−15

 

10,095

 

 

 

10,095

  (XLS:) Download

 

 

 

 

 

 

 

 

AMOUNTS THAT ARE NOT SET OFF IN THE BALANCE SHEET

 

 

€ million

 

Gross amounts of recognized financial liabilities

 

Gross amounts of recognized financial assets set off in the balance sheet

 

Net amounts of financial liabilities presented in the balance sheet

 

Financial instruments

 

Collateral pledged

 

Net amount at Dec. 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

4,195

 

0

 

4,195

 

−1,900

 

−53

 

2,241

Financial liabilities

 

201,468

 

 

201,468

 

 

−1,729

 

199,740

Trade payables

 

22,756

 

−11

 

22,745

 

0

 

 

22,745

Other financial liabilities

 

11,812

 

−630

 

11,182

 

 

 

11,182

The “Financial instruments” column shows the amounts that are subject to a master netting arrangement but were not set off because they do not meet the criteria for offsetting in the balance sheet. The “Collateral received” and “Collateral pledged” columns show the amounts of cash collateral and collateral in the form of financial instruments received and pledged for the total assets and liabilities that do not meet the criteria for offsetting in the balance sheet.

Other financial liabilities include liabilities from tax allocations of €19 million (previous year: €33 million).

ASSET-BACKED SECURITIES TRANSACTIONS

Asset-backed securities transactions with financial assets amounting to €27.8 billion (previous year: €27.9 billion) entered into to refinance the financial services business are included in bonds, commercial paper and notes, and liabilities from loans. The corresponding carrying amount of the receivables from the customer and dealer financing and the finance lease business amounted to €34.1 billion (previous year: €32.7 billion). Collateral of €47.9 billion (previous year: €47.9 billion) in total was furnished as part of asset-backed securities transactions. The expected payments were assigned to structured entities and the equitable liens in the financed vehicles were transferred. These asset-backed securities transactions did not result in the receivables from financial services business being derecognized, as the Group retains nonpayment and late payment risks. The difference between the assigned receivables and the related liabilities is the result of different terms and conditions and the share of the securitized paper and notes held by the Volkswagen Group itself, as well as the proportion of vehicles financed within the Group.

Most of the public and private asset-backed securities transactions of the Volkswagen Group can be repaid in advance (clean-up call) if less than 9% or 10%, as appropriate, of the original transaction volume is outstanding. The assigned receivables cannot be assigned again or pledged elsewhere as collateral. The claims of the holders of commercial paper and notes are limited to the assigned receivables and the receipts from those receivables are earmarked for the repayment of the corresponding liability.

As of December 31, 2019, the fair value of the assigned receivables still recognized in the balance sheet was €34.8 billion (previous year: €32.9 billion). The fair value of the related liabilities was €30.1 billion (previous year: €30.1 billion) at that reporting date.

Companies of the Volkswagen Financial Services subgroup are contractually obliged, under certain conditions, to transfer funds to the structured entities that are included in its financial statements. Since the receivables are transferred to the special purpose entity by way of undisclosed assignment, the situation may occur in which the receivable has already been reduced in a legally binding manner at the originator, for example if the obligor effectively offsets it against receivables owed to it by a company belonging to the Volkswagen Group. In this case, collateral must be furnished for the resulting compensation claims against the special purpose entity, for example if the rating of the Group company concerned declines to a contractually agreed reference value.

ADDITIONAL INCOME STATEMENT DISCLOSURES IN ACCORDANCE WITH IFRS 7 (FINANCIAL INSTRUMENTS)

The table below shows net gains and losses on financial assets and financial liabilities by measurement category, followed by a detailed explanation of key aspects:

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NET GAINS OR LOSSES FROM FINANCIAL INSTRUMENTS BY IFRS 9 MEASUREMENT CATEGORY

€ million

 

2019

 

2018

 

 

 

 

 

Financial instruments at fair value through profit or loss

 

−242

 

−763

Financial assets measured at amortized cost

 

6,282

 

6,241

Financial assets at fair value through other comprehensive income (debt instruments)

 

7

 

17

Financial liabilities measured at amortized cost

 

−4,420

 

−4,963

 

 

1,628

 

531

Net gains and losses in the category at "financial instruments at fair value through profit or loss" are mainly composed of the fair value measurement gains and losses on derivatives, including interest and gains and losses on currency translation.

Net gains and losses from financial assets measured at fair value through other comprehensive income (debt instruments) relate to interest income from fixed-income securities.

Net gains and losses from financial assets and liabilities measured at amortized cost mainly comprise interest income and expenses calculated according to the effective interest method pursuant to IFRS 9, currency translation effects, and the recognition of loss allowances. Interest also includes interest income and expenses from the lending business of the Financial Services Division.

The table below presents total interest income and expenses from financial assets and liabilities measured at amortized cost, separately from financial assets measured at fair value through other comprehensive income:

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TOTAL INTEREST INCOME AND EXPENSES ATTRIBUTABLE TO FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS

€ million

 

2019

 

2018

 

 

 

 

 

Financial assets and liabilities measured at amortized cost

 

 

 

 

Interest income

 

7,563

 

5,022

Interest expenses

 

4,120

 

3,183

Financial assets (debt instruments) and liabilities measured at fair value through other comprehensive income

 

 

 

 

Interest income

 

8

 

17

Interest expenses

 

 

1

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GAINS AND LOSSES ON THE DISPOSAL OF FINANCIAL ASSETS MEASURED AT AMORTIZED COST

€ million

 

2019

 

2018

 

 

 

 

 

Gains arising from the derecognition of financial assets measured at amortized cost

 

845

 

1,001

Losses arising from the derecognition of financial assets measured at amortized cost

 

−978

 

−1,073

 

 

−133

 

−72

In the fiscal year, €2 million (previous year: €2 million) was recognized as an expense and €44 million (previous year: €51 million) as income from fees and commissions for trust activities and from financial assets and liabilities not measured at fair value that are not accounted for using the effective interest method.