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12. Interest income calculated using the effective interest rate

PZU AR 2020 > Results > Supplementary information and notes > 12. Interest income calculated using the effective interest rate
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12.1 Accounting policy

Interest income is recognized on an accrual basis based on the effective interest rate.

Interest income comprises interest on financial instruments measured at amortized cost and at fair value through other comprehensive income.

The effective interest rate is the rate that discounts estimated future cash flows to the gross carrying amount of the financial asset. 

Interest income is calculated on the gross carrying amount, except for credit-impaired assets and purchased or originated credit-impaired (POCI) financial assets. For such assets, interest income is calculated on the gross carrying amount less allowances for expected credit losses.

12.2 Quantitative data

Interest income calculated using the effective interest rate 1 January – 31 December 2020 1 January – 31 December 2019
Loan receivables from clients 7,571 9,119
Debt securities measured at fair value through other comprehensive income 980 1,017
Debt securities measured at amortized cost 1,296 1,268
Buy-sell-back transactions 25 73
Term deposits in credit institutions 37 99
Loans 223 254
Receivables purchased 100 136
Receivables 12 2
Cash and cash equivalents 18 47
Interest income calculated using the effective interest rate, total 10,262 12,015