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International GAAP Bank Limited Illustrative Disclosures Under IFRS 7 As Amended by IFRS 9 September 2017

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International GAAP Bank Limited Illustrative Disclosures Under IFRS 7 As Amended by IFRS 9 September 2017 International GAAP Bank Limited Illustrative disclosures under IFRS 7 as amended by IFRS 9 September 2017 International GAAP Bank Limited Illustrative disclosures under IFRS 7 as amended by IFRS 9 Foreword The impact of IFRS 9 Financial Instruments has attracted a huge amount of interest, speculation and debate. Looking at the various impact analyses a consistent theme has emerged. Provision for loss allowances will go up; and thereafter loss allowances will be more sensitive to change in the future economic outlook than we have been used to in the past. Measurement will be complex but with that the credit loss allowance will be more meaningful. And as the effective date draws closer banks are increasingly focusing on what they will disclose. Investors, on the other hand, are more focused on what they would like to be disclosed. Often when large changes are made to accounting standards it can feel that the implementation of disclosures in financial statements comes second to the elements of recognition and measurement. This is natural given how implementation projects are managed and how recognition and measurement is seen to drive many of the disclosure requirements. But this time around the balance between measurement and disclosure needs to be different. With a new classification approach for financial assets and the impairment model comes substantially different disclosure requirements in IFRS Financial7 Instruments: Disclosures. The disclosures are extensive and will require considerably more effort to complete. The basis for loss allowances will be a bank’s expectation of future economic scenarios and how these may drive losses in their loan books; which in turn will drive financial performance and balance sheet strength. This means that much more attention will be on the words, not just the numbers. I hope this publication helps you in setting your standard for implementing the disclosure requirements if you are a bank; or helps you consider what good may look like if you are an investor, auditor, or regulator. All feedback will be warmly received. Andrew Spooner Global IFRS Lead for Financial Instruments September 2017 1 International GAAP Bank Limited Illustrative disclosures under IFRS 7 as amended by IFRS 9 Key contacts Global IFRS Leader Global IFRS Lead for Financial Instruments Veronica Poole Andrew Spooner [email protected] [email protected] IFRS centres of excellence Americas Canada Karen Higgins [email protected] LATCO Miguel Millan ifrs‑[email protected] United States Robert Uhl iasplus‑[email protected] Asia‑Pacific Australia Anna Crawford [email protected] China Stephen Taylor [email protected] Japan Shinya Iwasaki [email protected] Singapore James Xu ifrs‑[email protected] Europe‑Africa Belgium Thomas Carlier ifrs‑[email protected] Denmark Jan Peter Larsen [email protected] France Laurence Rivat [email protected] Germany Jens Berger [email protected] Italy Massimiliano Semprini ifrs‑[email protected] Luxembourg Eddy Termaten [email protected] Netherlands Ralph Ter Hoeven [email protected] Russia Michael Raikhman [email protected] South Africa Nita Ranchod [email protected] Spain Cleber Custodio [email protected] United Kingdom Elizabeth Chrispin [email protected] Acknowledgments We would like to extend our thanks to Evi Chatzitsakou and the IFRS centres of excellence in France, Germany, United States, Canada and the United Kingdom for their review. 2 International GAAP Bank Limited Illustrative disclosures under IFRS 7 as amended by IFRS 9 Deloitte’s IAS Plus (www.iasplus.com) is one of the most comprehensive sources of global financial reporting news on the Web. It is a central repository for information about International Financial Reporting Standards (IFRSs) as well as the activities of the International Accounting Standards Board (IASB). The site, which is also available in German, includes portals tailored to the United Kingdom and the United States, each with a focus on local GAAP and jurisdiction-specific corporate reporting requirements. Canadian portals in English and French were added in 2015. They feature news and publications related to all Canadian financial reporting frameworks, including IFRS. IAS Plus features: • news about global financial reporting developments, presented intuitively with related news, publications, events and more; • summaries of all standards, interpretations and projects, with complete histories of developments and standard-setter discussions together with related news and publications; • rich jurisdiction-specific information, including background and financial reporting requirements, links to country-specific resources, related news and publications and a comprehensive history of the adoption of IFRSs around the world; • detailed personalisation of the site, which is available by selecting particular topics of interest and viewing tailored views of the site; • dedicated resource pages for research and education, sustainability and integrated reporting, accounting developments in Europe, global financial crisis, XBRL and Islamic accounting; • important dates highlighted throughout the site for upcoming meetings, deadlines and more; • a library of IFRS-related publications available for download and subscription including our popular IFRS in Focus newsletter and other publications; • model IFRS financial statements and checklists, with many versions available tailored to specific jurisdictions; • an extensive electronic library of both global and jurisdiction-specific IFRS resources; • expert analysis and commentary from Deloitte subject matter experts, including webcasts, podcasts and interviews; • e-learning modules for most International Accounting Standards (IASs) and IFRSs; • enhanced search functionality, allowing easy access to topics of interest by tags, categories or free text searches, with search results intuitively presented by category with further filtering options; • Deloitte comment letters to the IASB and numerous other bodies; and • a mobile-friendly interface and updates through Twitter and RSS feeds. 3 International GAAP Bank Limited Illustrative disclosures under IFRS 7 as amended by IFRS 9 Introduction This publication includes illustrative financial instruments disclosures for banks applying IFRS 9. It is not a full set of financial statements. The illustrative disclosures outlined in this publication are in accordance with IFRSs, disclosures required by regulatory bodies have not been included. The relevant IFRS disclosure requirements are also included. Local regulatory requirements may limit the application of certain accounting policy choices or disclosures presented in this publication and preparers should tailor the disclosures they provide to their specific circumstances. The illustrative disclosures are prepared assuming International GAAP Bank Limited (‘the Group’) already applies IFRS 9 and therefore the transitional disclosures are not included. This publication does not include consolidated statement of cash flows, because IFRS 9 did not introduce any changes to the statement of cash flows. This publication includes the following: • a consolidated statement of profit or loss for the year ended 31 December 20XX; • a consolidated statement of comprehensive income for the year ended 31 December 20XX; • a consolidated statement of financial position for the year ended 31 December 20XX; • a consolidated statement of changes in equity for the year ended 31 December 20XX; • IFRS 7 disclosures in the notes of the financial statements as amended by IFRS 9; and • comparative information in respect of the preceding period, i.e. the year ended 31 December 20YY. To enhance understanding of the financial instruments specific disclosures some disclosures required by IAS 1 are also included, such as the disclosure of significant accounting policies and critical judgements and estimates. The entity only accounts for International GAAP Bank Limited have not been included as this publication aims to illustrate how the financial instruments disclosures of a banking group are affected by IFRS 9. 4 International GAAP Bank Limited Illustrative disclosures under IFRS 7 as amended by IFRS 9 Contents Glossary 6 Consolidated statement of profit or loss 8 Consolidated statement of comprehensive income 14 Consolidated statement of financial position 18 Consolidated statement of changes in equity 22 Notes to the consolidated financial statements 24 [The following list of notes in this publication is included for ease of reference] – Note 1 Significant accounting policies 25 – Note 2 Critical accounting judgements and key sources of estimation uncertainty 58 – Note 3 Credit risk 62 – Note 4 Liquidity risk 142 – Note 5 Market risk 154 – Note 6 Capital risk 180 – Note 7 Fair value of financial assets and liabilities 184 – Note 8 Net interest income 103 – Note 9 Net fee and commission income 216 – Note 10 Net trading income 217 – Note 11 Net income from financial instruments designated at FVTPL 218 – Note 12 Other revenue 219 – Note 13 Net gain/(loss) from derecognition of financial assets measured at amortised cost 220 – Note 14 Cash and cash equivalents 221 – Note 15 Trading assets 222 – Note 16 Derivative financial instruments 224 – Note 17 Loans and advances to banks 252 – Note 18 Loans and advances to customers 252 – Note 19 Investment securities 254 – Note 20 Trading liabilities 259 – Note 21 Deposits from banks 259 – Note 22 Deposits from customers 261 – Note 23 Debt securities in issue 261 – Note 24 Subordinated
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