The National Commercial Bank (NCB) has reported a reduction in its shareholders’ equity by SAR 1.27 billion 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) (SAR mln) |
||
|
Period |
Retained earnings |
Other reserves |
|
Closing balance (Dec. 31 2017) |
18,159 |
132 |
|
Expected credit losses |
(1,711) |
-- |
|
Amendment as per new standard |
-- |
442 |
|
Opening balance (Jan. 1, 2018) |
16,448 |
574 |
The table below trackes the changes in shareholders' equity following the enactment of the standard:
|
Impact on Shareholders' Equity* (SAR mln) |
||
|
Period |
Before adjustment |
After adjustment |
|
Capital |
20.00 |
20.00 |
|
Reserves |
36.04 |
34.77 |
|
Shareholders’ equity |
56.04 |
54.77 |
* Opening balance as of Jan. 1, 2018
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