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Derivative financial instruments | 12 Months Ended
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Dec. 31, 2020
Derivative financial instruments |
Derivative financial instruments | 13.Derivative financial instruments The following table details quantitative information on the notional amounts and carrying amounts of the derivative instruments used for hedging by type of risk hedged and type of hedge:
|  | December 31, 2020
|  |  |  | Carrying amount of
|  |  |  | hedging instruments
|  | Nominal |  |  |  |
|  | amount |  | Asset (1) |  | Liability (2)
Interest rate risk |  |  |  |  |  |
Fair value hedges |  | 85,667 |  | 1,831 |  | (233)
Cash flow hedges |  | 60,000 |  | — |  | (1,541)
Interest rate and foreign exchange risk |  |  |  |  |  |
Fair value hedges |  | 344,489 |  | 2,856 |  | (3,848)
Cash flow hedges |  | 221,508 |  | 23,091 |  | —
Foreign exchange risk |  |  |  |  |  |
Cash flow hedges |  | 71,353 |  | — |  | (3,589)
|  | 783,017 |  | 27,778 |  | (9,211)
|  | December 31, 2019
|  |  |  | Carrying amount of
|  |  |  | hedging instruments
|  | Nominal |  |  |  |
|  | amount |  | Asset (1) |  | Liability (2)
Interest rate risk |  |  |  |  |  |
Fair value hedges |  | 398,333 |  | 407 |  | (805)
Cash flow hedges |  | 123,000 |  | — |  | (1,098)
Interest rate and foreign exchange risk |  |  |  |  |  |
Fair value hedges |  | 346,844 |  | 10,125 |  | (8,527)
Cash flow hedges |  | 23,025 |  | — |  | (1,670)
Foreign exchange risk |  |  |  |  |  |
Cash flow hedges |  | 72,391 |  | 625 |  | (2,552)
Net investment hedges |  | 2,080 |  | — |  | (23)
|  | 965,673 |  | 11,157 |  | (14,675)
| (1) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - assets.
| (2) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - liabilities.
As part of the financial risk management, the Bank uses the following hedging relationships:
| - |  | Fair value hedge
| - |  | Cash flow hedge
| - |  | Net investment hedge
For control purposes, derivative instruments are recorded at their nominal amount in memoranda accounts. Interest rate swaps are made either in a single currency or cross currency for a prescribed period to exchange a series of interest rate flows, which involve fixed for floating interest payments, and vice versa. The Bank also engages in certain foreign exchange forward contracts to serve customers’ transaction needs and to manage foreign currency risk. All such positions are hedged with an offsetting contract for the same currency. The Bank manages and controls the risks on these foreign exchange trades by establishing counterparty credit limits by customer and by adopting policies that do not allow for open positions in the loan and investment portfolios. The Bank also uses foreign exchange forward contracts to hedge the foreign exchange risk associated with the Bank’s equity investment in a non-U.S. dollar functional currency foreign entity. Derivative and foreign exchange forward instruments negotiated by the Bank are executed mainly over-the-counter (OTC). These contracts are executed between two counterparties that negotiate specific agreement terms, including notional amount, exercise price and maturity. A.Fair value hedges This type of hedge is used to mitigate the risk of changes in foreign exchange currency rates, as well as changes in interest rate risk. Within the derivative financial instruments used by the Bank for fair value hedging are interest rate swap contracts whereby a series of interest rate flows in a single currency are exchanged over a prescribed period and cross currency swaps contracts that generally involve the exchange of both interest and principal amounts in two different currencies. The Bank’s exposure to interest rate risk is disclosed in Note 5(C)(i). Interest rate risk to which the Bank applies hedge accounting arises from fixed-rate euro medium term notes and other long-term notes issuances (“Certificados Bursatiles”), fixed-rate loans and advances, whose fair value fluctuates when benchmark interest rates change. The Bank hedges interest rate risk only to the extent of benchmark interest rates because the changes in fair value of a fixed-rate note or loan are significantly influenced by changes in the benchmark interest rate. Hedge accounting is applied where economic hedging relationships meet the hedge accounting criteria. Before fair value hedge accounting is applied by the Bank, the Bank determines whether an economic relationship between the hedged item and the hedging instrument exists based on an assessment of the qualitative characteristics of these items and the hedged risk that is supported by quantitative analysis. The Bank considers whether the critical terms of the hedged item and hedging instrument closely align when assessing the presence of an economic relationship. The Bank assesses whether the fair value of the hedged item and the hedging instrument respond similarly to similar risks. The Bank further supports this qualitative assessment by using regression analysis to assess whether the hedging instrument is expected to be and has been highly effective in offsetting changes in the fair value of the hedged item. The sources of ineffectiveness mainly come from forward rates, discount rates and cross currency basis (cost of the operation). The following table details the notional amounts and carrying amounts of derivative instruments used in fair value hedges by type of risk and hedged item, along with the changes during the years used to determine and recognize the ineffectiveness of the hedge:
|  | December 31, 2020
|  |  |  |  |  |  |  | Changes in fair value |  |
|  |  |  | Carrying amount of |  | used to calculate |  | Ineffectiveness
|  | Nominal |  | hedging instruments |  | hedge |  | recognized in
|  | amount |  | Asset (1) |  | Liability (2) |  | ineffectiveness (3) |  | profit or loss (3)
Interest rate risk |  |  |  |  |  |  |  |  |  |
Loans |  | 10,667 |  | — |  | (132) |  | 84 |  | 1
Securities at FVOCI |  | 5,000 |  | — |  | (101) |  | (29) |  | (20)
Borrowings and debt |  | 70,000 |  | 1,831 |  | — |  | 199 |  | (27)
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  |
Loans |  | 4,075 |  | 356 |  | — |  | 178 |  | (149)
Borrowings and debt |  | 340,414 |  | 2,500 |  | (3,848) |  | (2,524) |  | (468)
Total |  | 430,156 |  | 4,687 |  | (4,081) |  | (2,092) |  | (663)
|  | December 31, 2019
|  |  |  |  |  |  |  | Changes in fair value |  |
|  |  |  | Carrying amount of |  | used to calculate |  | Ineffectiveness
|  | Nominal |  | hedging instruments |  | hedge |  | recognized in
|  | amount |  | Asset (1) |  | Liability (2) |  | ineffectiveness (3) |  | profit or loss (3)
Interest rate risk |  |  |  |  |  |  |  |  |  |
Loans |  | 13,333 |  | — |  | (166) |  | (127) |  | (9)
Securities at FVOCI |  | 5,000 |  | — |  | (45) |  | (97) |  | (17)
Borrowings and debt |  | 380,000 |  | 407 |  | (594) |  | 5,203 |  | (65)
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  |
Loans |  | 6,430 |  | 276 |  | — |  | (482) |  | (214)
Borrowings and debt |  | 340,414 |  | 9,849 |  | (8,527) |  | 7,234 |  | 55
Total |  | 745,177 |  | 10,532 |  | (9,332) |  | 11,731 |  | (250)
| (1) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - assets.
| (2) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - liabilities.
| (3) |  | Included in the consolidated statement of profit or loss under the line Loss on financial instruments, net.
The following table details the notional amounts and carrying amounts of the fair value hedged items by type of risk and hedged item, along with the changes during the period used to determine and recognize the ineffectiveness of the hedge:
|  | December 31, 2020
|  |  |  |  |  |  |  | Accumulated amount |  | Change in fair
|  |  |  |  |  |  |  | of fair value hedge |  | value of the hedged
|  | Carrying amount of |  | Line in the consolidated statement of |  | adjustments included |  | items used to
|  | hedged items |  | financial position that includes the |  | in the carrying amount |  | calculate hedge
|  | Asset |  | Liability |  | carrying amount of the hedged items |  | of the hedged items |  | ineffectiveness (1)
Interest rate risk |  |  |  |  |  |  |  |  |  |
Loans |  | 10,837 |  | — |  | Loans, net |  | 74 |  | (83)
Securities at FVOCI |  | 5,113 |  | — |  | Securities and other financial assets, net |  | 85 |  | 9
Borrowings and debt |  | — |  | (71,937) |  | Borrowings and debt, net |  | (292) |  | (226)
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  | —
Loans |  | 3,789 |  | — |  |  |  | (654) |  | (327)
Borrowings and debt |  | — |  | (339,688) |  | Borrowings and debt, net |  | 1,083 |  | 2,056
Total |  | 19,739 |  | (411,625) |  |  |  | 296 |  | 1,429
|  | December 31, 2019
|  |  |  |  |  |  |  | Accumulated amount |  | Change in fair
|  |  |  |  |  |  |  | of fair value hedge |  | value of the hedged
|  | Carrying amount of |  | Line in the consolidated statement of |  | adjustments included |  | items used to
|  | hedged items |  | financial position that includes the |  | in the carrying amount |  | calculate hedge
|  | Asset |  | Liability |  | carrying amount of the hedged items |  | of the hedged items |  | ineffectiveness (1)
Interest rate risk |  |  |  |  |  |  |  |  |  |
Loans |  | 13,583 |  | — |  | Loans, net |  | 158 |  | 118
Securities at FVOCI |  | 5,142 |  | — |  | Securities and other financial assets, net |  | 94 |  | 80
Borrowings and debt |  | — |  | (381,587) |  | Borrowings and debt, net |  | 18 |  | (5,268)
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  |
Loans |  | 6,202 |  | — |  | Loans, net |  | (495) |  | 268
Borrowings and debt |  | — |  | (336,117) |  | Borrowings and debt, net |  | (973) |  | (7,179)
Total |  | 24,927 |  | (717,704) |  |  |  | (1,198) |  | (11,981)
| (1) |  | Included in the consolidated statement of profit or loss under the line Loss on financial instruments, net.
The following table details the maturity of the notional amount for the derivative instruments used in fair value hedges:
|  | December 31, 2020
|  |  |  | Foreign |  |
|  |  |  | exchange and |  |
|  | Interest rate |  | interest |  |
Maturity |  | swaps |  | rate risks |  | Total
Fair value hedge |  |  |  |  |  |
Less than 1 year |  | 85,667 |  | — |  | 85,667
Over 1 to 2 years |  | — |  | 271,646 |  | 271,646
Over 2 to 5 years |  | — |  | 72,843 |  | 72,843
Total |  | 85,667 |  | 344,489 |  | 430,156
|  | December 31, 2019
|  |  |  | Foreign |  |
|  |  |  | exchange and |  |
|  | Interest rate |  | interest |  |
Maturity |  | swaps |  | rate risks |  | Total
Fair value hedge |  |  |  |  |  |
Less than 1 year |  | 350,000 |  | — |  | 350,000
Over 1 to 2 years |  | 48,333 |  | — |  | 48,333
Over 2 to 5 years |  | — |  | 346,844 |  | 346,844
Total |  | 398,333 |  | 346,844 |  | 745,177
B.Cash flow hedges This type of hedge is used to mitigate the risk of changes in foreign exchange currency rates, as well as changes in interest rate risk, that could include variability in the future cash flows. Within the derivative financial instruments used by the Bank for cash flow hedging are interest rate swaps contracts whereby a series of interest rate flows in a single currency are exchanged over a prescribed period, cross currency swaps contracts that generally involve the exchange of both interest and principal amounts in two different currencies, and foreign exchange forward contracts, an agreement to purchase or sell foreign currency at a future date at agreed-upon terms. The Bank’s exposure to market risk is disclosed in Note 5 (C) (ii) and (iii). The Bank determines the amount of the exposure to which it applies hedge accounting by assessing the potential impact of changes in interest rates and foreign currency exchange rates on the future cash flows. This assessment is performed using analytical techniques, such as cash flow sensitivity analysis. As noted above for fair value hedges, by using derivative financial instruments to hedge exposures to changes in interest rates and foreign currency exchange rates, the Bank exposes itself to credit risk of the counterparties to the derivatives, which is not offset by the hedged items. This exposure is managed similarly to that of fair value hedges. The Bank determines whether an economic relationship exists between the cash flows of the hedged item and the hedging instrument based on an assessment of the qualitative characteristics of these items and the hedged risk that is supported by quantitative analysis. The Bank considers whether the critical terms of the hedged item and the hedging instrument closely align when assessing the presence of an economic relationship. The Bank assesses whether the cash flows of the hedged item and the hedging instrument respond similarly to the hedged risk, such as the benchmark interest rate or foreign currency. The Bank further supports this qualitative assessment by using sensitivity analysis to assess whether the hedging instrument is expected to be and has been highly effective in offsetting changes in the present value of the hedged item. The Bank assesses hedge effectiveness using the hypothetical derivative method, which creates a derivative instrument to serve as a proxy for the hedged transaction. The terms of the hypothetical derivative match the critical terms of the hedged item and it has a fair value of zero at inception. The sources of ineffectiveness arise mainly because of the differences in discount rates (OIS - Overnight Index Swap). The maximum length of time over which the Bank has hedged its exposure to the variability in future cash flows on forecasted transactions is 7 years. The Bank recognized the lifetime associated cost of the foreign exchange forward contracts into interest income, in profit or loss, as an adjustment to the yield on hedged items creating an accumulated reserve in OCI, reclassified to profit or loss at their maturity. The Bank estimates that approximately $508 thousand are expected to be reclassified into profit or loss during the period of 12 months ending December 31, 2021. The Bank recognized the associated costs for the forward foreign exchange contracts where the hedged item is an asset, as an integral part interest income (expense) of the underlying transaction, presented in the consolidated statement of profit or loss and as an accumulated reserve in Other comprehensive income in the consolidated statement of financial position, which at maturity of the transaction is reclassified to profit or loss. The Bank recognized the associated costs for the forward foreign exchange contracts where the hedged item is a liability, as an integral part interest expense (expense) of the underlying transaction, presented in the consolidated statement of profit or loss and as an accumulated reserve in Other comprehensive income in the consolidated statement of financial position, which at maturity of the transaction is reclassified to profit or loss. The following table details the notional amounts and carrying amounts of derivative instruments used in cash flow hedges by type of risk and hedged item, along with the changes during the period used to determine and recognize the ineffectiveness of the hedge:
|  | December 31, 2020
|  |  |  |  |  |  |  | Change in fair |  | Changes in the |  |  |  | Amount
|  |  |  | Carrying amount of |  | value used for |  | fair value of the |  | Ineffectiveness |  | reclassified
|  |  |  | hedging instruments |  | calculating |  | hedging instruments |  | recognized |  | from the hedge
|  | Nominal |  |  |  |  |  | hedge |  | recognized in |  | in profit or |  | reserve to profit
|  | amount |  | Asset (1) |  | Liability (2) |  | ineffectiveness |  | OCI (3) |  | loss (4) |  | or loss (4)
Interest rate risk |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | 60,000 |  | — |  | (1,541) |  | (443) |  | (442) |  | 1 |  | (75)
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | 221,508 |  | 23,091 |  | — |  | 23,380 |  | 23,481 |  | 101 |  | (1,697)
Foreign exchange risk |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans |  | 71,353 |  | — |  | (3,589) |  | (3,466) |  | (3,465) |  | 1 |  | (1,927)
Total |  | 352,861 |  | 23,091 |  | (5,130) |  | 19,471 |  | 19,574 |  | 103 |  | (3,699)
|  | December 31, 2019
|  |  |  |  |  |  |  |  |  | Changes in the |  |  |  |
|  |  |  |  |  |  |  | Change in fair |  | fair value of the |  |  |  | Amount
|  |  |  |  |  |  |  | value used for |  | hedging |  |  |  | reclassified
|  |  |  | Carrying amount of |  | calculating |  | instruments |  | Ineffectiveness |  | from the hedge
|  | Nominal |  | hedging instruments |  | hedge |  | recognized in |  | recognized in |  | reserve to
|  | amount |  | Asset (1) |  | Liability (2) |  | ineffectiveness |  | OCI (3) |  | profit or loss (4) |  | profit or loss (4)
Interest rate risk |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | 123,000 |  | — |  | (1,098) |  | (1,459) |  | (1,458) |  | 1 |  | 39
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | 23,025 |  | — |  | (1,670) |  | (284) |  | (283) |  | 1 |  | —
Foreign exchange risk |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans |  | 72,391 |  | 625 |  | (2,552) |  | (2,346) |  | (2,344) |  | 2 |  | (1,070)
Borrowings and debt |  | — |  | — |  | — |  | — |  | — |  | — |  | (5,545)
Total |  | 218,416 |  | 625 |  | (5,320) |  | (4,089) |  | (4,085) |  | 4 |  | (6,576)
| (1) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - assets.
| (2) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - liabilities.
| (3) |  | Included in equity in the consolidated statement of financial position under the line Other comprehensive income.
| (4) |  | Included in the consolidated statement of profit or loss under the line Loss on financial instruments, net.
The following table details the nominal amounts and carrying amounts of the cash flow hedged items by type of risk and hedged item, along with the changes during the period used to determine and recognize the ineffectiveness of the hedge:
|  | December 31, 2020
|  |  |  |  |  | Line in the consolidated |  |  |  |
|  |  |  |  |  | statement of financial |  | Change in the fair value of |  |
|  | Carrying amount of |  | position that includes the |  | the hedged items used to |  |
|  | hedged items |  | carrying amount of |  | to calculate the hedge |  | Cash flow hedge
|  | Asset |  | Liability |  | the hedged items |  | ineffectiveness (1) |  | reserve
Interest rate risk |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | — |  | (20,045) |  | Borrowings and debt, net |  | 442 |  | 1,440
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | — |  | (243,817) |  | Borrowings and debt, net |  | (23,481) |  | (1,980)
Foreign exchange risk |  |  |  |  |  |  |  |  |  |
Loans |  | 74,509 |  | — |  | Loans, net |  | 3,465 |  | 562
Total |  | 74,509 |  | (263,862) |  |  |  | (19,574) |  | 22
| (1) |  | Included in the consolidated statement of profit or loss under the line Loss on financial instruments, net.
|  | December 31, 2019
|  |  |  |  |  | Line in the consolidated |  |  |  |
|  |  |  |  |  | statement of financial |  | Change in the fair value of |  |
|  | Carrying amount of |  | position that includes the |  | the hedged items used to |  |
|  | hedged items |  | carrying amount of |  | calculate the hedge |  | Cash flow hedge
|  | Asset |  | Liability |  | the hedged items |  | ineffectiveness (1) |  | reserve
Interest rate risk |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | — |  | (70,110) |  | Borrowings and debt, net |  | 1,458 |  | 1,072
Interest rate and foreign exchange risk |  |  |  |  |  |  |  |  |  |
Borrowings and debt |  | — |  | (21,234) |  | Borrowings and debt, net |  | 283 |  | (5)
Foreign exchange risk |  |  |  |  |  |  |  |  |  |
Loans |  | 73,861 |  | — |  | Loans, net |  | 2,344 |  | 263
Total |  | 73,861 |  | (91,344) |  |  |  | 4,085 |  | 1,330
| (1) |  | Included in the consolidated statement of profit or loss under the line Loss on financial instruments, net.
The following table details the maturity of the derivative instruments used in cash flow hedges:
|  | December 31, 2020
|  |  |  |  |  | Foreign |  |
|  |  |  |  |  | exchange and |  |
|  | Foreign |  | Interest rate |  | interest |  |
Maturity |  | exchange risk |  | swaps |  | rate risks |  | Total
Cash flow hedge |  |  |  |  |  |  |  |
Less than 1 year |  | 71,353 |  | 40,000 |  | — |  | 111,353
Over 2 to 5 years |  | — |  | 20,000 |  | 197,854 |  | 217,854
More than 5 years |  | — |  | — |  | 23,654 |  | 23,654
Total |  | 71,353 |  | 60,000 |  | 221,508 |  | 352,861
|  | December 31, 2019
|  |  |  |  |  | Foreign |  |
|  |  |  |  |  | exchange and |  |
|  | Foreign |  | Interest rate |  | interest |  |
Maturity |  | exchange risk |  | swaps |  | rate risks |  | Total
Cash flow hedge |  |  |  |  |  |  |  |
Less than 1 year |  | 72,391 |  | 63,000 |  | 23,025 |  | 158,416
Over 1 to 2 years |  | — |  | 40,000 |  | — |  | 40,000
Over 2 to 5 years |  | — |  | 20,000 |  | — |  | 20,000
Total |  | 72,391 |  | 123,000 |  | 23,025 |  | 218,416
C.Net investment hedge A foreign currency exposure arises from a net investment either in a subsidiary that has a different functional currency from that of the Bank or in a financial instrument in a foreign currency designated at FVOCI. The hedge risk in the net investment hedge is the variability of the US dollar against any other foreign currency that will result in a reduction in the carrying amount. The Bank’s policy is to hedge the net investment only to the extent of the debt principal; therefore, the hedge ratio is established by aligning the principal amount in foreign currency of the debt with the carrying amount of the net investment that is designated. When the hedging instrument is a forward foreign exchange contract, the Bank establishes a hedge relationship where the notional of the forward foreign exchange contract matches the carrying amount of the designated net investment. The Bank ensures that the foreign currency in which the hedging instrument is denominated is the same as the functional currency of the net investment. The only source of ineffectiveness that is expected to arise from these hedging relationships is due to the effect of the counterparty and the Bank’s own credit risk on the fair value of the derivative. As of December 30, 2020, The Bank holds no net investment hedges. The following table details the notional amount and carrying amount of the derivative instruments used as net investment hedge at December 31, 2019 by type of risk and hedged item, along with changes during the period used to determine and recognize the ineffectiveness of the hedge:
| December 31, 2019
|  |  |  |  |  |  |  |  |  | Changes in the |  |  |  |
|  |  |  |  |  |  |  |  |  | fair value of the |  |  |  | Amount
|  |  |  |  |  |  |  | Change in fair |  | hedging |  |  |  | reclassified from
|  |  |  | Carrying amount of |  | value used for |  | instruments |  | Ineffectiveness |  | the hedge reserve
|  | Nominal |  | hedging instruments |  | calculating hedge |  | recognized in |  | recognized in |  | to profit or
|  | amount |  | Asset (1) |  | Liability (2) |  | ineffectiveness |  | OCI (3) |  | profit or loss (4) |  | loss (4)
Foreign exchange risk |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net investment |  | 2,080 |  | — |  | (23) |  | (23) |  | (23) |  | — |  | (78)
Total |  | 2,080 |  | — |  | (23) |  | (23) |  | (23) |  | — |  | (78)
Derivative instruments used in net investment hedges at December 31, 2019 have a maturity of less than 30 days.
| (1) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - assets.
| (2) |  | Included in the consolidated statement of financial position under the line Derivative financial instruments - liabilities.
| (3) |  | Included in equity in the consolidated statement of financial position under the line Other comprehensive income.
| (4) |  | Included in the consolidated statement of profit or loss under the line Loss on financial instruments, net.
The following table details the nominal value and carrying amount of the net investment hedged items at December 31, 2019, along with changes during the period used to determine and recognize the ineffectiveness of the hedge:
|  | December 31, 2019
|  |  |  |  |  |  |  | Change in |  |
|  |  |  |  |  |  |  | the fair |  |
|  |  |  |  |  | Line in the |  | value of |  |
|  |  |  |  |  | consolidated |  | the |  |
|  |  |  |  |  | statement of |  | hedged |  |
|  |  |  |  |  | financial position |  | items used |  |
|  | Carrying amount of |  | that includes the |  | to calculate |  | Cash flow
|  | hedged items |  | carrying amount of |  | the hedged |  | hedge
|  | Asset |  | Liability |  | the hedged items |  | ineffectiveness (1) |  | reserve
Foreign exchange risk |  |  |  |  |  |  |  |  |  |
Net investment |  | 1,889 |  | — |  | Securities and other financial assets, net |  | 23 |  | 23
Total |  | 1,889 |  | — |  |  |  | 23 |  | 23
| (1) |  | Included in the consolidated statement of profit or loss under the line Loss on financial instruments, net.

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- Definition The disclosure of derivative financial instruments. [Refer: Derivatives [member]] + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Name IAS -Number 1 -IssueDate 2020-01-01 -Paragraph 10 -Subparagraph e -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=1&code=ifrs-tx-2020-en-r&anchor=para_10_e&doctype=Standard -URIDate 2020-01-01 + Details
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