Alawwal Bank has reported a reduction in its shareholders’ equity by SAR 451 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.

 

Impact of IFRS (9) (SAR mln)

Period

Retained earnings

Other reserves

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

1,298

13.1

Expected credit losses

(443)

--

Reclassifications according to new standards

(18)

--

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

12.4

(12.4)

 

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

 

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

Period

Before adjustment

After adjustment

Capital

11.43

11.43

Reserves

2.17

1.73

Shareholders’ equity

13.60

13.16

* opening balance as of Jan. 1, 2018                                                                         

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