2.6 Day 1 profit

Discrepancies between the transaction price and fair value may arise if valuation techniques are applied at the time of the transaction. Such a discrepancy is referred to as ‘Day 1 profit’. Rabobank recognises this profit directly under ‘Trading income’ provided that the valuation technique is based on observable data inputs (from active markets). If unobservable data inputs were used, the Day 1 profit is amortised over the term of the transaction and recognised under Other liabilities. Profit is subsequently accounted for if the financial instrument in question is sold or if the data input has subsequently become observable.