Arab National Bank (ANB) has reported a reduction in its shareholders’ equity by SAR 634 million in Q1 2018, as a result of implementing the IFRS 9 standard.

 

Saudi-based banks applied the IFRS 9 accounting standard as of Jan. 1, 2018. The standard 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 position and shareholders' equity.

 

Impact of IFRS (9) (SAR mln)

Period

Retained earnings

Other reserves

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

3,795

(76)

Expected credit losses

(531)

0

Reclassifications according to new standards

(5)

5

Revenue recognizing adjustments

(85)

0

Expected credit losses from affiliates

(14)

0

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

3,162

(71)

 

The table below shows the changes in shareholders' equity following the enactment of the standard:

 

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

Period

Before adjustment

After adjustment

Capital

10.00

10.00

Reserves

14.37

13.74

Shareholders’ equity

24.37

23.74

* Opening balance as of Jan. 1, 2018                                                                           

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