The Saudi British Bank (SABB) has reported a reduction in its shareholders’ equity by SAR 1.65 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)

7,858

0.5

Expected credit losses

(1,643)

--

Reclassifications according to new standards

170

(181)

Opening balance (Jan. 1, 2018)

6,386

(181)

 

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

 

Impact on Shareholders Equity* (SAR mln)

Period

Before adjustment

After adjustment

Capital

15.00

15.00

Reserves

18.34

16.69

Shareholders’ equity

33.34

31.69

* Opening balance as of January 1, 2018                                                                    

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