6. Finance costs
| 2017 $m |
2016 $m |
2015 $m |
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Financial income |
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Interest income on deposits |
1 | 3 | 2 | |||||||||
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Interest income on loans and receivables |
3 | 3 | 3 | |||||||||
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| 4 | 6 | 5 | ||||||||||
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Financial expenses |
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Interest expense on borrowings |
69 | 74 | 74 | |||||||||
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Finance charge payable under finance leases |
20 | 20 | 20 | |||||||||
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Capitalised interest |
— | (1 | ) | (2 | ) | |||||||
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| 89 | 93 | 92 | ||||||||||
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Interest income and expense relate to financial assets and liabilities held at amortised cost, calculated using the effective interest rate method.
Included within interest expense is $7m (2016: $3m, 2015: $2m) payable to the IHG Rewards Club loyalty programme relating to interest on the accumulated balance of cash received in advance of the redemption of points awarded.
The rate used for capitalisation of interest was 3.0% (2016: 3.8%, 2015: 3.4%).