2.11. Interest income and expenses

The profit or loss statement includes all interest income on financial instruments measured at amortized cost using the effective interest rate, financial assets measured at fair value through other comprehensive income but also income with its characterestics similar to interest income on financial assets and liabilities measured at fair value through profit or loss.

The effective interest rate is the rate used to estimate future payments or incomes throughout the expected life of financial assets or financial liabilities, discounted to the gross balance sheet value of a financial asset or to the amortized cost of a financial liability. The calculation of the effective interest rate includes all commissions paid and received by the parties, transaction costs and any other bonuses and discounts that are an integral part of the effective interest rate.

Interest income is calculated using the effective interest rate based on the balance sheet amount of financial assets except for these that are impaired due to credit risk. At the moment of recognition of financial assets impairment (reclassification of a financial asset to Stage 3), interest income is accrued on the net value of the financial asset and is recognized at the effective interest rate.