47 2018 ANNUAL REPORT return on net assets, expected indexation and on mortality and disability rates, employment turnover and retirement Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. In order to assure consistency in the calculation, the assumptions used are in line with assumptions from previous years. We refer to note 19 for the calculation of pension liability and the assumptions used. 2d. Derecognition A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when: – the rights to receive cash flows from the asset have expired; or – the bank has the right to transfer the assets at any given time to a third party in exchange for the balance of any and all remaining amounts due by a debtor to the bank; or – the bank has transferred substantially all the risks and rewards of the asset. The net result is the result gained on the transactions in derecognized assets and liabilities and is included in the commission income (refer to note 28). The derecognized assets are disclosed in note 25. The result on transactions in assets for which the parent bank has provided MBE hedges, guarantees and other risk mitigating services is booked as interest income as MBE is the controlling party of the assets. 2e. Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is an enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. 2f. Credit risk mitigating products MBE seeks to use several products, where possible, to mitigate its credit exposure. The products come in various forms such as letters of credit, parental guarantees, and guarantees from other Mizuho offices, collateralized deposits from customers and credit enhancements such as pledge agreements. The value of these products is generally assessed, at a minimum, at inception and on an annual basis. However, on a daily basis MBE uses active market data to review whether there are any indications for deterioration of the value of these products. 2g. Impairment of financial assets MBE assesses at each balance sheet date whether there is any objective evidence that a financial asset, or group of financial assets, is impaired. A financial asset, or a group of financial assets, is deemed to be impaired if, and only if, there is objective evidence if impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. In 2015 the bank developed a policy for monitoring its forbearance portfolio. Forborne exposures are debt contracts in respect of which forbearance measures have been extended. Forbearance measures consist of following concessions towards a debtor facing or about to face difficulties in meeting its financial commitments that may or may not lead to a loss as the bank: – A modification of the previous terms and conditions of a contract the debtor is considered unable to comply with due to its financial difficulties (“troubled debt”) to allow for sufficient debt service ability, that would not have been granted had the debtor not been in financial difficulties; – A total or partial refinancing of a troubled debt contract, which would not have been granted had the debtor not been in financial difficulties.