Derivative assets and liabilities

12 Months Ended

Dec. 31, 2025

Derivative assets and liabilities

Derivative assets and liabilities

5.3. Derivative assets and liabilities

Accounting policies

Fair value

All derivatives are recognized initially at fair value on the date

a derivative contract is entered into and subsequently

remeasured at fair value. The method of recognizing the

resulting gain or loss varies according to whether the

derivatives are designated and qualify under hedge accounting.

Foreign exchange forward contracts are valued at market-

forward exchange rates. Changes in fair value are measured

by comparing these rates with the original contract-forward

rate. Currency options are valued at each reporting date by

using the Garman & Kohlhagen option valuation model.

Interest rate swaps and cross-currency swaps are valued

using the discounted cash flow method.

Hedge accounting

Nokia applies hedge accounting on certain foreign exchange

forward contracts, options or option strategies, and interest

rate derivatives. Qualifying options and option strategies

have zero net premium, or a net premium paid. For option

structures, the critical terms of the purchased and written

options are the same and the notional amount of the written

option component is not greater than that of the purchased

option.

In the fair valuation of foreign exchange forward contracts,

Nokia separates the forward element and considers it to be

the cost of hedging for foreign exchange forward contracts.

In the fair valuation of foreign exchange option contracts,

Nokia separates the time value and considers it to be the cost

of hedging for foreign exchange option contracts. In the fair

valuation of cross-currency swaps, Nokia separates the

foreign currency basis spread and considers it to be the cost

of hedging for cross-currency swaps.

Hedge effectiveness is assessed at inception and

subsequently on a quarterly basis during the hedge

relationship to ensure that an economic relationship exists.

As Nokia only enters in hedge relationships where the critical

terms match, the assessment of effectiveness is done on a

qualitative basis with no significant ineffectiveness expected.

Presentation in the statement of cash flows

The cash flows of a hedge are classified as cash flows from

operating activities in cases where the underlying hedged items

relate to Nokia’s operating activities. When a derivative contract

is accounted for as a hedge of an identifiable position relating to

financing or investing activities, the cash flows of the contract

are classified in the same way as the cash flows of the position

being hedged. Cash flows of derivatives used in hedging the

foreign exchange risk of Nokia’s cash position are presented in

cash flows from investing activities.

Cash flow hedges: hedging of forecast foreign currency

denominated sales and purchases

Nokia applies cash flow hedge accounting primarily to foreign

exchange exposure that arises from highly probable forecast

operative business transactions. The risk management strategy

is to hedge material net exposures (identified standard net sales

exposure minus identified standard costs exposure) by using

foreign exchange forwards and foreign exchange options in a

layered hedging style that follows defined hedging level ranges

and hedge maturities in quarterly time buckets. The hedged item

must be highly probable and present an exposure to variations in

cash flows that could ultimately affect profit or loss.

For qualifying foreign exchange forwards and foreign exchange

options, the change in fair value that reflects the change in spot

exchange rates on a discounted basis is recognized in hedging

reserve through other comprehensive income (refer to Note 5.1.

Equity). The changes in the forward element of the foreign

exchange forwards and the time value of the options that relate

to hedged items are deferred in the cost of hedging reserve

through other comprehensive income (refer to Note 5.1. Equity)

and are subsequently accounted for in the same way as the spot

element or intrinsic value.

In each quarter, Nokia evaluates whether the forecast sales and

purchases are still expected to occur. If a portion of the hedged

cash flow is no longer expected to occur, the hedge accounting

criteria are no longer met and all related deferred gains or losses

are derecognized from fair value and other reserves and

recognized in other operating income and expenses in the

income statement.

If the hedged cash flow ceases to be highly probable, but is

still expected to occur, accumulated gains and losses remain

in fair value and other reserves until the hedged cash flow

affects profit or loss.

Nokia’s risk management objective is to hedge forecast cash

flows until the related revenue has been recognized. Each

hedge relationship is discontinued during the quarter when

the hedge matures, which is also the quarter that it had been

designated to hedge. At this point, the accumulated gain or

loss of cash flow hedges is reclassified to other operating

income and expenses in the income statement. In cases

where the forecast amount of revenue is not recognized

during a quarter, the full accumulated gain or loss of cash

flow hedges designated for said quarter is still reclassified

and the portion related to forecast revenue that was not

recognized is disclosed as hedge ineffectiveness.

As cash flow hedges primarily mature in the same quarter as

the hedged item, there is no significant ineffectiveness

resulting from the time value of money. Nokia will validate the

magnitude of the impact of discounting related to the

amount of gain or loss recognized in fair value and other

reserves on a quarterly basis.

Cash flow and fair value hedges: hedging of foreign

exchange risk of future interest cash flows

Nokia also applies cash flow hedging to future interest cash

flows in foreign currency related to issued bonds. These

future interest cash flows are hedged with cross-currency

swaps that have been bifurcated and designated partly as fair

value hedges (see Fair value hedges: hedging of interest rate

exposure below) to hedge both the foreign exchange and

interest rate benchmark risk component of the issued bond,

and partly as cash flow hedges to hedge the foreign exchange

risk related to the remaining portion of interest cash flows on

the issued bond. The accumulated gain or loss for the part of

these cross-currency swaps designated as cash flow hedges

is initially recorded in hedging reserve through other

comprehensive income and reclassified to profit or loss at

the time when the related interest cash flows are settled.

Fair value hedges: hedging of interest rate exposure

Nokia applies fair value hedge accounting to reduce exposure

to fair value fluctuations of interest-bearing liabilities due to

changes in interest rates and foreign exchange rates. Nokia

uses interest rate swaps and cross-currency swaps aligned

with the hedged items to hedge interest rate risk and

associated foreign exchange risk.

Nokia has entered into long-term borrowings mainly at fixed

rates and has swapped most of them into floating rates in

line with a defined target interest profile. Nokia aims to

mitigate the adverse impacts from interest rate fluctuations

by continuously managing net interest exposure resulting

from financial assets and liabilities by setting appropriate risk

management benchmarks and risk limits. The hedged item is

identified as a proportion of the outstanding loans up to the

notional amount of the swaps as appropriate to achieve the

risk management objective. Nokia enters into interest rate

swaps that have similar critical terms to the hedged item,

such as reference rate, reset dates, payment dates,

maturities and notional amount and hence Nokia expects that

there will be no significant ineffectiveness. Nokia has not

entered into interest rate swaps where it would be paying

fixed rates.

Nokia’s borrowings are carried at amortized cost. Changes in

the fair value of derivatives designated and qualifying as fair

value hedges, together with any changes in the fair value of

hedged liabilities attributable to the hedged risk, are recorded

in financial income and expenses in the income statement.

Nokia separates the foreign currency basis spread from cross-

currency swaps and excludes it from the hedged risk as cost

of hedging that is initially recognized and subsequently

measured at fair value and recorded in the cost of hedging

reserve through other comprehensive income. If a hedge

relationship no longer meets the criteria for hedge

accounting, hedge accounting ceases, the cost of hedging

recorded in the cost of hedging reserve is immediately

expensed and any fair value adjustments made to the carrying

amount of the hedged item while the hedge was effective are

recognized in financial income and expenses in the income

statement based on the effective interest method.

Hedges of net investments in foreign operations

Nokia applies hedge accounting for its foreign currency hedging

of selected net investments. The hedged item can be an amount

equal to or less than the carrying amount of the net assets of

the foreign operation in the statement of financial position. The

risk management strategy is to protect the euro counter value

of the portion of this exposure expected to materialize as non-

euro cash repatriation in the foreseeable future.

For qualifying foreign exchange forwards, foreign exchange

options and option strategies, the change in fair value that

reflects the change in spot exchange rates is recognized in

translation differences in shareholders’ equity (refer to Note 5.1.

Equity). The changes in the forward element of foreign exchange

forwards as well as the changes in the time value of options

(collectively known as the “cost of hedging”) is recognized in the

cost of hedging reserve through other comprehensive income.

The cost of hedging at the date of designation of the foreign

exchange forward or option contract as a hedging instrument is

amortized to financial income and expenses in the income

statement over the duration of the contract. Hence, in each

reporting period, the change in fair value of the forward element

of the foreign exchange forward contract or the time value of the

option contract is recorded in the cost of hedging reserve through

other comprehensive income, while the amortization amount is

reclassified from the cost of hedging reserve to profit or loss.

The cumulative amount or proportionate share of changes in

the fair value of qualifying hedges deferred in translation

differences is recognized as gain or loss on disposal of all or part

of a foreign subsidiary.

Derivatives not designated in hedge accounting

relationships carried at fair value through profit and loss

For derivatives not designated under hedge accounting, but

hedging identifiable forecast exposures such as anticipated

foreign currency denominated sales and purchases, the gains

and losses are recognized in other operating income and

expenses in the income statement. The gains and losses on

all other derivatives not designated under hedge accounting

are recognized in financial income and expenses.

Embedded derivatives included in contracts are identified and

monitored by Nokia. For host contracts that are not financial

assets containing embedded derivatives that are not closely

related, the embedded derivatives are separated and

measured at fair value at each reporting date with changes in

fair value recognized in financial income and expenses in the

income statement. For host contracts that are financial

assets containing embedded derivatives, the whole contract

is measured at fair value at each reporting date with changes

in fair value recognized in financial income and expenses in

the income statement.

Derivatives

	2025				2024
	Assets		Liabilities		Assets		Liabilities
EURm	Fair value(1)	Notional(2)	Fair value(1)	Notional(2)	Fair value(1)	Notional(2)	Fair value(1)	Notional(2)
Cash flow hedges
Foreign exchange forward contracts	30	807	(5)	351	7	381	(19)	733
Currency options bought	4	563	—	—	—	90	—	—
Cash flow and fair value hedges(3)
Cross-currency swaps	—	—	(178)	851	15	241	(97)	722
Fair value hedges
Interest rate swaps	22	1 255	(3)	375	28	1 130	(10)	792
Hedges on net investment in foreign subsidiaries
Foreign exchange forward contracts	1	88	(2)	460	3	527	(8)	971
Derivatives not designated in hedge accounting relationships carried at fair value through profit and loss
Foreign exchange forward contracts	65	5 184	(70)	3 815	110	7 129	(165)	6 124
Currency options bought	—	—	—	—	15	770	—	—
Embedded derivatives(4)	5	311	(8)	183	19	996	—	—
Total	127	8 208	(266)	6 035	197	11 264	(299)	9 342

(1)Included in other current financial assets and other financial liabilities in the statement of financial position.

(2)Includes the gross amount of all notional values for contracts that have not yet been settled or canceled. The amount of notional value outstanding is not necessarily a measure or indication of market risk as the exposure of certain contracts may be offset by that of other

contracts.

(3)Cross-currency swaps have been designated partly as fair value hedges and partly as cash flow hedges.

(4)Embedded derivatives are related to customer contracts.

To manage interest rate and foreign exchange risks related to Nokia’s interest-bearing liabilities, Nokia has designated the following cross-currency swaps as hedges under both fair value hedge accounting

and cash flow hedge accounting, and interest rate swaps as hedges under fair value hedge accounting at 31 December:

				Notional (million in currency)		Fair value EURm
Entity	Instrument	Currency	Maturity	2025	2024	2025	2024
Nokia Corporation	Interest rate swaps	EUR	5/2025	—	292	—	3
Nokia Corporation	Interest rate swaps	EUR	3/2026	630	630	8	(1)
Nokia Corporation	Cross-currency swaps	USD	6/2027	500	500	(29)	9
Nokia Corporation	Interest rate swaps	EUR	5/2028	500	500	(2)	(7)
Nokia Corporation	Interest rate swaps	EUR	8/2031	500	500	13	22
Nokia Corporation	Cross-currency swaps	USD	5/2039	500	500	(149)	(92)
Total						(159)	(66)