Al Rajhi Bank has reported a reduction in its shareholders’ equity by SAR 2.88 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 Jan. 1, 2018. The standard requires banks to set aside provisions for credit impairment on anticipation of customer default, not when actual default happens.
IFRS 9 has a direct impact on banks' solvency positions 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) |
13,906 |
5,282 |
|
Expected credit losses |
(2,883) |
-- |
|
Reclassifications according to new standards |
129 |
(129) |
|
Opening bal. as of Jan. 1, 2018 as per IFRS (9) |
11,154 |
5,152 |
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 |
16.25 |
16.25 |
|
Reserves |
39.50 |
36.62 |
|
Shareholders’ equity |
55.75 |
52.87 |
* Opening balance as of Jan. 1, 2018
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