The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and investment contracts:
| Carrying value | Estimated fair value (i) | |||||||||||||||
| As at 31 December 2017 RMB million |
As at 31 December 2016 RMB million |
As at 31 December 2017 RMB million |
As at 31 December 2016 RMB million |
|||||||||||||
|
Held-to-maturity securities (ii) |
717,037 | 594,730 | 692,984 | 619,152 | ||||||||||||
|
Loans (iii) |
383,504 | 226,573 | 375,899 | 231,005 | ||||||||||||
|
Term deposits |
449,400 | 538,325 | 449,400 | 538,325 | ||||||||||||
|
Statutory deposits - restricted |
6,333 | 6,333 | 6,333 | 6,333 | ||||||||||||
|
Available-for-sale securities, at fair value |
789,897 | 745,586 | 789,897 | 745,586 | ||||||||||||
|
Securities at fair value through profit or loss |
136,809 | 209,124 | 136,809 | 209,124 | ||||||||||||
|
Securities purchased under agreements to resell |
36,185 | 43,538 | 36,185 | 43,538 | ||||||||||||
|
Cash and cash equivalents |
48,586 | 67,046 | 48,586 | 67,046 | ||||||||||||
|
Investment contracts (iii) |
(232,500 | ) | (195,706 | ) | (229,222 | ) | (192,373 | ) | ||||||||
|
Financial liabilities at fair value through profit or loss |
(2,529 | ) | (2,031 | ) | (2,529 | ) | (2,031 | ) | ||||||||
|
Securities sold under agreements to repurchase |
(87,309 | ) | (81,088 | ) | (87,309 | ) | (81,088 | ) | ||||||||
|
Bonds payable (iii) |
— | (37,998 | ) | — | (38,204 | ) | ||||||||||
|
Interest-bearing loans and borrowings |
(18,794 | ) | (16,170 | ) | (18,794 | ) | (16,170 | ) | ||||||||
| (i) | The estimates and judgements to determine the fair value of financial assets are described in Note 3.2. |
| (ii) | The fair value of held-to-maturity securities is determined by reference with other debt securities which are measured by fair value. Please refer to Note 4.3. The fair value of held-to-maturity securities under Level 1 was RMB55,137 million and that under Level 2 was 637,847 million as at 31 December 2017 (as at 31 December 2016: Level 1 RMB76,299 million and Level 2 RMB542,853 million). |
| (iii) | Investment contracts at fair value through profit or loss have quoted prices in active markets, and therefore, their fair value was classified as Level 1. |
The fair value of policy loans approximated its carrying value. The fair values of other loans, investment contracts at amortised cost and bonds payable were determined using valuation techniques, with consideration of the present value of expected cash flows arising from contracts using a risk-adjusted discount rate, allowing for the risk-free rate available on the valuation date, credit risk and risk margin associated with the future cash flows. The fair values of other loans and investment contracts at amortised cost, and bonds payable were classified as Level