Investment Return (40.74 vs. 20.22)

kybazzi

On 40.74, IR = NII - Provision for Credit Losses

On 20.22, the Investment Return is surrounded by additional items:

I wanted to understand how the following incorporated into the calculation:

• Interest revenue on financial assets not measured at FVTPL
• Net investment income excluding segregated funds
• Net investment income - segregated funds

Furthermore, how do the formulas reconcile between 40.74 and 20.22?

Thanks

Staff-T1

They reconcile exactly because it is stated (column on the left) that the Net investment income from 40.74 comes from 20.22

Interest revenue on financial assets comes from 40.72
Both the net investment income items comes from page 40.74. I think the allocation of the sub items between segregated funds and non-segregated funds is an accounting thing and is not needed for this exam

kybazzi

Thanks for your reply. I'm still unsure on this. It seems to me that:

• 40.74.499 "Investment return" is fully done on 40.74 as sum of line items:

  • NII = GII - IE - Tax
  • IR = NII - Prov.Credit

• On 20.22, Investment Return isn't actually calculated - it's just equal to 40.74.499 (Investment Return).

• On 20.22, the items "Interest revenue on financial assets...", "NII excl SF", "NII - SF" are just accounting allocations of items on 40.74 that we don't need to worry about.

An implication of above: Suppose we are given all the values on 40.74, but we are also given "Interest revenue on financial assets not measured at FVTPL", "NII excl SF", "NII - SF". To calculate Investment Return, we would ignore these additional three values.

Please let me know if this all correct. Thanks again.

Staff-T1

That's a fair assumption to make. I doubt the exam would go into this much detail though!