Alinma Bank has reported a reduction in its shareholders’ equity by SAR 608 million in Q1 2018, as a result of the application of IFRS 9 standard.

 

Saudi-based banks applied the IFRS 9 accounting standard as of January 1, 2018, that requires banks to set aside provisions for credit impairment on anticipation of customer default, not when actual default happens.

 

The standard has a direct impact on banks' solvency positions and shareholders' equity.

 

Impact of IFRS (9) on Retained Earnings(SAR mln)

RE closing bal. as of Dec. 31,2017 as per IFRS (39)

1,896

Expected credit losses (IFRS 9)

(723)

Reclassifications

114

Opening bal. as of Jan. 1, 2018 as per IFRS (9)

1,288

 

The table below cites the changes in the bank's shareholders' equity following the enactment of the standard:

 

Impact of IFRS (9) on Shareholders Equity* (SAR mln)

Period

Before adjustment

After adjustment

Capital

15.00

15.00

Reserves

5.60

4.99

Shareholders’ equity

20.60

19.99

* opening balance as of Jan. 1, 2018                                                                         

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