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Banks (IFRS 9; 2015) PDF

192 Pages·2016·15.61 MB·English
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IFRS Guide to annual fnancial statements: IFRS 9 – Illustrative disclosures for banks OCI STATEMENT SUBSIDIARY March 2016 IFRS DISPOSAL ASSETS EQUITY kpmg.com/ifrs FAIRVALUE OPERATING SEGMENTS PRESENTATION NON-CONTROLLING INTERESTS ESTIMATES PROVISIONS FINANCIAL RISK MANAGEMENT LEASES OFFSETTING JUDGEMENT ACCOUNTING POLICIES SHARE-BASED PAYMENT PERFORMANCE CARRYING AMOUNT TRANSACTIONS FINANCIAL INSTRUMENTS UPDATE SHARE-BASED PAYMENT ACCOUNTING POLICIES L OA N S B O R R O W I N G S FINANCIAL POSITION CASH FLOWS IMPAIRMENT FAIR PRESENTATION FUNCTIONAL CURRENCY PENSION PROFIT OR LOSS IFRS ASSUMPTIONS DEPOSITS BANKS FINANCIAL RISK MANAGEMENT D E R I VAT I V E S PRESENTATION G R O U P CONSOLIDATION IFRS FAIRVALUE IFRS 9NOTES BUSINESS COMBINATIONS FAIR VALUE MEASUREMENT CASH EQUIVALENTS LOANS AND ADVANCES ACCOUNTING POLICIES CONTINGENCY RELATED PARTY DERIVATIVES DEPOSITS FROM BANKS STRUCTURED ENTITY GOING CONCERNPERFORMANCE MATERIALITY DEBT PROFIT OR LOSS OFFSETTING INVENTORIES TRADING ASSETS CAPITAL COMPARATIVE VALUATION UPDATE ASSETS MATERIALITY CGU FAIRVALUE NCI PENSION PERFORMANCE BUSINESS COMBINATIONS OPERATING SEGMENTS GOODWILL ESTIMATES OFFSETTING OCI CASH FLOWS PROFIT OR LOSS LIABILITIES CONSOLIDATION GOING CONCERN UNCONSOLIDATED STRUCTURED ENTITIES FINANCIAL POSITION PRESENTATION DISCLOSURES SIGNIFICANT PROPERTY ACQUISITION ASSUMPTIONS COMPARATIVE EQUITY FINANCIAL POSITION SHARE-BASED PAYMENT EPS JOINT ARRANGEMENTS DISCLOSURES HELD-FOR-SALE PENSION Contents About this guide 2 Independent auditors’ report 4 Consolidated fnancial statements 6 Financial highlights 7 Consolidated statement of fnancial position 8 Consolidated statement of proft or loss and other comprehensive income 10 Consolidated statement of changes in equity 12 Consolidated statement of cash fows 14 Notes to the consolidated fnancial statements 16 Appendix I 185 Presentation of comprehensive income – Two-statement approach 185 Acknowledgements 187 Keeping you informed 188 Notes Basis of preparation 16 Accounting policies 152 1. Reporting entity 16 43. Basis of measurement 152 2. Basis of accounting 16 44. Changes in accounting policies 153 3. Functional and presentation currency 16 45. Signifcant accounting policies 155 4. Use of judgements and estimates 16 46. Standards issued but not yet adopted 184 Financial risk review and fair value 18 5. Financial risk review 18 6. Fair values of fnancial instruments 60 Performance for the year 72 7. Operating segments 72 8. Net interest income 76 9. Net fee and commission income 77 10. Net trading income 78 11. Net income from other fnancial instruments at FVTPL 79 12. Other revenue 80 13. Losses arising from derecognition of fnancial assets measured at amortised cost 81 14. Personnel expenses 82 15. Other expenses 89 16. Earnings per share 90 Income taxes 91 17. Income taxes 91 Asets 96 18. Financial assets and fnancial liabilities 96 19. Cash and cash equivalents 105 20. Trading assets and liabilities 106 21. Derivatives held for risk management and hedge accounting 108 22. Loans and advances to banks 118 23. Loans and advances to customers 119 24. Investment securities 121 25. Property and equipment 123 26. Intangible assets and goodwill 124 27. Other assets 126 Liabilities and equity 128 28. Deposits from banks 128 29. Deposits from customers 129 30. Debt securities issued 130 31. Subordinated liabilities 131 32. Provisions 132 33. Other liabilities 134 34. Capital and reserves 135 Group composition 136 35. Group subsidiaries 136 Other information 137 36. Involvement with unconsolidated structured entities 137 37. Transfers of fnancial assets 138 38. Contingencies 142 39. Related parties 143 40. Operating leases 144 41. Subsequent events 145 42. Financial risk management 146 2 | Guide to annual n� ancial statements : IFR 9�S – Illustrative disclosures of r bansk About this guide hT is guide has been produced by the KPMG International tS andards Group p( art o f KPMG IFRG Limited ) and the viesw epx ressed herein are those o f the KPMG International tS andards Group. It helps you to prepare n� ancial statements in accordance iw th IFR,S illustrating one possible of rmat of r n� ancial statements based on a c� titious banik ng group involved in a range o f general banik ng activities. uO r hypothetical corporation t( he Group ) has been applying IFR S of r some time – i.e. it is not a r� stt- ime adopter o f IFR.S For more inof rmation on adopting IFR S of r the r� st time, see hC apter 6.1 in the 12 th edition 2011/5 6 o f our publication Insights into IFRS. Standards covered hT is guide illustrates eax mple disclosures of r the early adoption o f IFR S 9 Financial Instruments and o f conseuq ential amendments to other standards, hw ich are reuq ired to be adopted at the same time. It assumes that the Group has not adopted the hedge accounting reuq irements o f IFR S 9 but continued to apply hedge accounting reuq irements o f IA.93 �S With the ecx eption o f IFR S ,9 other standards or amendments that are eef f ctive of r annual periods beginning atf er 1aJ � nuary 201 5 of‘( rthcoming reuq irements )’ are not illustrated in this guide. uO r IFRS: New standards – Are you ready? provides a summary o f nelw y eef f ctive and of rthcoming standards i( n addition to IFR S .)9 Accordingly, ecx ept of r the early adoption o f IFR S ,9 this guide ree� cts IFRsS in issue at 13 eD cember 201 5 that are reuq ired to be applied by an entity iw th an annual period beginning on 1 aJ nuary 201 5 c‘( urrently eef f ctive reuq irements.)’ IFR S 9 is a ne w and comple x standard, and the interpretation o f its reuq irements is subej ct to ongoing discussions betew en preparers, auditors, regulators and other staek holders. hT is guide does not intend to pree- mpt this process and provide a vie w on ho w the reuq irements o f the standard should be interpreted. Instead, it gives an indication o f possible disclosure reuq irements that ow uld apply i f a ban k interpreted the reuq irements in a particular aw y. It is intended to help bansk implement IFR S ,9 by guiding them through the decisionm- aik ng process needed to prepare the reuq iredd� isclosures. hT is guide is not intended to be seen as a complete and ehx austive summary o f all disclosure reuq irements under IFR.S Instead, it of cuses on disclosure reuq irements that are particularly relevant to bansk . For eax mples o f other disclosures, see our Guide to annual fnancial statements – Illustrative disclosures eS( ptember 201.)5 In addition, IFR S and its interpretation change over time. Accordingly, this guide should not be used as a substitute of r reef rring to the standards and interpretations themselves. An entity should also have regard to applicable legal and regulatory reuq irements. hT is guide does not consider the reuq irements o f any particular uj risdiction. For eax mple, IFR S does not reuq ire the presentation o f separate n� ancial statements of r the parent entity, and this guide includes only consolidated n� ancial statements. Other guidance In preparing this guide, ew had regard to the recommendations made by the nE hanced iD sclosure aT s k Force FTDE( ) in its report Enhancing the Risk Disclosures of Banks, issued on 2 9 cO tober 2012, and its revision issued on 7 eD cember 201,5 Impact of Expected Credit Loss Approaches on Bank Risk Disclosures. hT e purpose o f this report is to help bansk improve their communication iw th their staek holders in the area o f ris k disclosures, iw th the ultimate aim o f improving investor cond� ence. hT e recommendations ’ scope is iw der than the n� ancial statements, because they apply to all n� ancial reports, including public disclosures reuq ired by regulators and other communications iw th staek holders. In some cases, recommendations in the report may impact the manner o f presentation o f inof rmation that is already reuq ired to be disclosed under IFR.S In other cases, it recommends disclosure o f ne w inof rmation. Many regulators continue to of cus on disclosures in n� ancial statements. For eax mple, the uE ropean eS curities and Marek ts Authority MSE( A ) has published its public statement on uE ropean common enforcement priorities of r 201 .5 hT is statement identie� s specic� considerations relevant of r the banik ng sector in 201 .5 In addition, in preparing this guide ew also had regard to the recommendations made by the aB sel oC mmittee on aB nik ng uS pervision in its Guidance on credit risk and accounting for expected credit losses issued in eD cember 201.5 © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. APPENDICES NOTES PRIMARY STATEMENTS AUDITORS’ REPORT INTRODUCTION About this guide � | 3 Need for judgement hT is guide is part o f our suite o f publications – Guides to fnancial statements – and specic� ally of cuses on compliance iw th IFR.S Although it is not ehx austive, this guide illustrates the disclosures required by IFR S of r one hypothetical ban k or a similar n� ancial institution ; of r ease o f illustration, the disclosures here are generally presented iw thout regard tom� ateriality. hT is guide should not be used as a boiler plate template. hT e preparation o f an entitys’ onw n� ancial statements reuq ires uj dgement, in terms o f the choice o f accounting policies, ho w the disclosures should be tailored to ree� ct the entitys’ specic� circumstances, and the materiality o f disclosures in the contetx o f the organisation. Applying the concept of materiality to disclosures An entity needs to consider the concept o f materiality hw en preparing the notes to its n� ancial statements ; it is not appropriate simply to apply the disclosure reuq irements in a standard iw thout considering materiality. An entity does not need to provide specic� disclosures under IFR S i f the inof rmation resulting rf om that disclosure is immaterial. Also, an entity has to taek care not to reduce the understandability o f its n� ancial statements by obscuring material inof rmation iw th immaterial inof rmation or by aggregating material items that have dief f rent natures and uf nctions. For eax mple, a standard may provide specic� disclosures of r a material item in the n� ancial statements, but even i f the item is material, this does not mean that all o f the disclosures specie� d in that standard iw ll be material of r that item. An entity applies the materiality concept on a disclosureb- yd- isclosure basis. Step-up in the quality of fnancial statements Investors continue to as k of r a stepu- p in the uq ality o f business reporting so entities should be careuf l not to become buried in compliance to the ecx lusion o f relevance. In preparing its n� ancial statements, an entity needs to ek ep in mind its iw der responsibilities of r reporting this inof rmation in the most meaninguf l aw y. For more inof rmation, see our Better business reporting ew bsite. References and abbreviations Reef rences are included in the letf h- and margin o f this publication to identiyf their sources. Generally, the reef rences relate only to presentation and disclosure reuq irements. IAS 1.82(a) Paragraph 28 a( ) o f IA S 1. [IFRS 9.4.1.1] Paragraph .4 1.1 o f IFR S .9 hT e bracek ts indicate that the paragraph relates to recognition and measurement reuq irements, as opposed to presentation and disclosure reuq irements. th Insights 2.3.60.10 Paragraph 2..3 60.10 o f the 12 edition 2011/5 6 o f our publication Insights into IFRS. IFRS 7R.8 Paragraph 8 o f IFR S 7 as amended by IFR S .9 IFRS 7.8 Paragraph 8 o f IFR S 7 beof re amendments by IFR S .9 iD sclosures that are applicable only to entities in the scope o f IFR S 8 Operating Segments and IA 3 �S Earnings per Share. Footnotes in italics refer to recommendations in the EDTF report, which are not specifc requirements of IFRS. hT e of lloiw ng abbreviations are used otf en in this guide. GC U aC shg- enerating unit LCE pxE ected credit losses FTDE nE hanced iD sclosure aT s k Force PE S aE rnings per share FICO V Fair value through other comprehensive income FPTV L Fair value through prot� or loss ICN oN nc- ontrolling interests oN tes oN tes to the n� ancial statements ICO tO her comprehensive income © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. APPENDICES NOTES PRIMARY STATEMENTS AUDITORS’ REPORT INTRODUCTION 4 | Guide to annual n� ancial statements : IFR 9�S – Illustrative disclosures of r bansk [Name of auditors’ frm] Independent auditors’ report © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. APPENDICES NOTES PRIMARY STATEMENTS AUDITORS’ REPORT INTRODUCTION Independent auditors ’ report | 5 a Independent auditors ’ report on consolidated n� ancial statements [Addressee] eW have audited the accompanying consolidated n� ancial statements o f [ name of bank ] t( he aB‘ n,)’k hw ich comprise the consolidated statement o f n� ancial position as at 13 eD cember 201,5 the consolidated statements o f prot� or loss and comprehensive income, changes in euq ity and cash o� sw of r the year then ended, and notes, comprising a summary o f signic� ant accounting policies and other epx lanatory inof rmation. Management’s responsibility for the consolidated fnancial statements Management is responsible of r the preparation and af ir presentation o f these consolidated n� ancial statements in accordance iw th International Financial Reporting tS andards, and of r such internal control as management determines is necessary to enable the preparation o f consolidated n� ancial statements that are rf ee rf om material misstatement, hw ether due to rf aud or error. Auditors’ responsibility uO r responsibility is to epx ress an opinion on these consolidated n� ancial statements based on our audit. eW conducted our audit in accordance iw th International tS andards on Auditing. hT ose standards reuq ire that ew comply iw th ethical reuq irements and plan and perof rm the audit to obtain reasonable assurance about hw ether the consolidated n� ancial statements are rf ee rf om material misstatement. An audit involves perof rming procedures to obtain audit evidence about the amounts and disclosures in the consolidated n� ancial statements. hT e procedures selected depend on our uj dgement, including the assessment o f the rissk o f material misstatement o f the consolidated n� ancial statements, hw ether due to rf aud or error. In maik ng those ris k assessments, ew consider internal control relevant to the entitys’ preparation and af ir presentation o f the consolidated n� ancial statements in order to design audit procedures that are appropriate in the circumstances, but not of r the purpose o f epx ressing an opinion on the eef f ctiveness o f the entitys’ internal control. An audit also includes evaluating the appropriateness o f accounting policies used and the reasonableness o f accounting estimates made by management, as ew ll as evaluating the overall presentation o f the consolidated n� ancial statements. eW believe that the audit evidence ew have obtained is suc� f ient and appropriate to provide a basis of r our audit opinion. Opinion In our opinion, the consolidated n� ancial statements give a true and af ir vie w o f the consolidated n� ancial position o f the aB n k as at 13 eD cember 201,5 and o f its consolidated n� ancial perof rmance and its consolidated cash o� sw of r the year then ended in accordance iw th International Financial Reporting tS andards. [Name of auditors’ frm] [Date of report] [Address] a. hT is eax mple report has been prepared based on International tS andard on Auditing 07 0 Forming an Opinion and Reporting on Financial Statements. Its of rmat does not ree� ct the legal reuq irements o f any particular uj risdiction. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. APPENDICES NOTES PRIMARY STATEMENTS AUDITORS’ REPORT IRTN UDO ITC NO 6 | Guide to annual n� ancial statements : IFR 9�S – Illustrative disclosures of r bansk [Name of bank] Consolidated fnancial statements 31 December 2015 © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. APPENDICES NOTES PRIMARY STATEMENTS AUDITORS’ REPORT INTRODUCTION IlIllulussttrraattivivee d disiscclolossuurreess – P – Friinmaanrcyi asl thaitgehmligehnttss � | 7 a Financial highlights REVENUE PROFIT BEFORE BASIC EARNINGS TAX PER SHARE (million euro) (million euro) (euro) 9.6% 22.6% 0.05 2015 2014 2015 2014 2015 2014 DIVIDENDS PER CORETIER 1 CAPITAL ORDINARY SHARE (euro) (million euro) 0.00 8.0% 2015 2014 2015 2014 REVENUE BY SEGMENT REVENUE BY REGION 2015 2015 Central Treasury Asset 6% Middle East and Country Management Africa 11% of domicile 2% Investment 14% Banking Australia 32% 17% Retail Banking US 25% 37% Other 5% UK 28% Corporate Banking 23% a. aB nsk iw ll have to consider the impact o f IFR S 9 on comparability o f the n� ancial highlights and hw ether additional epx lanations are necessary. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. 4,188 3,820 0.15 0.15 824 672 4,713 4,056 0.34 0.29 APPENDICES NOTES PRIMARY STATEMENTS AUDITORS’ REPORT INTRODUCTION 8 | Guide to annual n� ancial statements : IFR 9�S – Illustrative disclosures of r bansk a, b oC nsolidated statement o f n� ancial position IAS 1.10(a), 10(ea), 31 December 31 December 38–38A, 40A–40B, 113 In millions of euro Note 2015 2014 Assets IAS 1.54(i) aC sh and cash euq ivalents 19 2,907 2,29 IAS 1.54(d) oN np- ledged trading assets 20 16,122 1,5 2 94 IAS 1.54(d), 39.37(a), Pledged trading assets 20 540 15 9 IFRS 9.3.2.23(a) IAS 1.54(d) eD rivative assets held of r ris k management 21 858 27 6 IAS 1.54(d) Loans and advances to bansk 22 5,572 ,4 07 7 IAS 1.54(d) Loans and advances to customers 23 62,347 65 ,08 5 IAS 1.54(d) Investment securities 24 6,302 ,5 26 9 IAS 1.54(n) uC rrent ta x assets 47 35 IAS 1.54(a) Property and euq ipment 25 409 873 IAS 1.54(c) Intangible assets 26 275 2 95 IAS 1.54(o) eD ef rred ta x assets 17 557 269 tO her assets 27 689 65 3 Total assets 96,625 ,7818 6 The notes on pages 16 to 184 are an integral part of these consolidated fnancial statements. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. APPENDICES NOTES PRIMARY STATEMENTS AUDITORS’ REPORT INTRODUCTION

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