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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