Page 150 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
144
Notes to the Financial Statements
(Expressed in Renminbi unless otherwise indicated)
38 Financial Risk Management and Fair Values (Continued)
(c) Interest rate risk
The Group has interest rate risk as certain existing interest-bearing borrowings are at variable rates and therefore
expose the Group to cash flow interest rate risk. These borrowings mainly include deferred consideration payable
for the acquisition of subsidiaries in 2002 and 2004. The interest rates and terms of repayment of the interest-
bearing borrowings of the Group are disclosed in note 31.
The following table sets out the interest rate profile of the Group’s floating interest-bearing borrowings at the
balance sheet date:
The Group The Company
2012 2011 2012 2011
Effective
interest
rate
RMB
million
Effective
interest
rate
RMB
million
Effective
interest
rate
RMB
million
Effective
interest
rate
RMB
million
Deferred consideration
for acquisition of
subsidiaries in 2002 0.88% 9,976 1.12% 9,976 0.88% 9,976 1.12% 9,976
Deferred consideration
for acquisition of
subsidiaries in 2004 0.90% 13,657 1.24% 13,657 0.90% 13,657 1.24% 13,657
As at 31 December 2012, if the two-year US dollar LIBOR swap rate interest rate per annum increases/
decreases by 100 basis points, the effective interest rate for deferred consideration payable would increase/
decrease by 100 basis points, and the profit for the year and total equity of the Group and of the Company
would decrease/increase by RMB236,000,000 (2011: RMB236,000,000).
The sensitivity analysis above indicates the instantaneous change in the Group’s profit after tax (and retained
profits) and other components of consolidated equity that would arise assuming that the change in interest rates
had occurred at the balance sheet date and had been applied to those financial instruments held by the Group
which expose the Group to interest rate risk at the balance sheet date. The assumption of increase or decrease
of interest rate of the two-year US dollar LIBOR swap rate represents management’s estimation of a reasonably
possible change in interest rates over the period until the next interest rate re-pricing date.
As at 31 December 2012, total cash and bank balances of the Group amounted to RMB408,321,000,000 (2011:
RMB333,100,000,000). The interest income for 2012 was RMB12,313,000,000 (2011: RMB7,866,000,000) and
the average interest rate was 3.32% (2011: 2.51%). Assuming the total cash and bank balances are stable in the
coming year and interest rate increases/decreases by 100 basis points, the profit for the year and total equity
would approximately increase/decrease by RMB3,077,000,000 (2011: RMB2,508,000,000).