4. MSSF 9 Financial Instruments
IFRS 9 Financial Instruments was published in July 2014 and endorsed for application in the EU Member States on 22 November 2016 by the Commission Regulation (EU) 2016/2067. It is mandatory for financial statements prepared for annual periods commencing on or after 1 January 2018 (with the exception of insurance companies, which may apply the standard from 1 January 2021). For the purposes of these financial statements the data of the PKO Bank Polski SA insurance companies was prepared in accordance with IFRS 9. The standard replaces IAS 39 “Financial Instruments: Recognition and Measurement”. The amendments cover the classification and measurement of financial instruments, recognition and calculation of impairment and hedge accounting.
2018
Financial Instruments
The total impact of the adjustments resulting from the implementation of IFRS 9 is presented in the table below:
| 31.12.2017 (classification under IAS 39 | Classification and measurement: reclassification | Classification and measurement: remeasurement | Impairment allowance | 01.01.2018 (classification under IFRS 9) | |
|---|---|---|---|---|---|
| FINANCIAL ASSETS | |||||
| Cash and balances with the Central Bank | 17 810 | – | – | – | 17 810 |
| Amounts due from banks | 5 233 | – | – | – | 5 233 |
| Hedging derivatives | 887 | – | – | – | 887 |
| Other derivative instruments | 1 711 | (12) | – | – | 1 699 |
| Securities | 54 075 | 4 380 | 66 | 3 | 58 524 |
| – held for trading | 431 | – | – | – | 431 |
| – financial instruments designated at fair value through profit or loss upon initial recognition | 8 157 | (8 157) | – | – | – |
| – available-for-sale investment securities | 43 675 | (43 675) | – | – | – |
| – investment securities held to maturity | 1 812 | (1 812) | – | – | – |
| – not held for trading, measured at fair value through profit or loss | 4 578 | 66 | 46 | 4 690 | |
| – measured at fair value through OCI | 47 266 | – | (43) | 47 223 | |
| – measured at amortized cost | 6 180 | – | – | 6 180 | |
| Loans and advances to customers | 205 628 | (4 368) | – | (797) | 200 463 |
| – not held for trading, measured at fair value through profit or loss | 1 055 | – | 15 | 1 070 | |
| – measured at amortized cost | 205 628 | (5 423) | – | (812) | 199 393 |
| Other financial assets | 2 377 | – | – | – | 2 377 |
| TOTAL financial assets | 287 721 | – | 66 | (794) | 286 993 |
| Deferred income tax assets | 1 767 | – | (12) | 164 | 1 919 |
| 31.12.2017 (classification under IAS 39) | Classification and measurement: reclassification | Classification and measurement: remeasurement | Impairment allowance | 01.01.2018 (classification under IFRS 9) | |
| Amounts due to the Central Bank | 6 | – | – | – | 6 |
| Amounts due to banks | 4 558 | – | – | – | 4 558 |
| Hedging derivatives | 204 | – | – | – | 204 |
| Other derivative instruments | 2 536 | – | – | – | 2 536 |
| Amounts due to customers | 220 917 | – | – | – | 220 917 |
| Debt securities in issue | 23 932 | – | – | – | 23 932 |
| Subordinated liabilities | 1 720 | – | – | – | 1 720 |
| Other financial liabilities | 4 129 | – | – | – | 4 129 |
| Deferred income tax provision | 36 | – | – | (3) | 33 |
| Provisions for financial liabilities and guarantees granted | 86 | – | – | 71 | 157 |
| TOTAL financial liabilities, provisions for liabilities and guarantees granted and deferred tax provision | 258 124 | – | – | 68 | 258 192 |
| IFRS 9 impact as at 1 January 2018: | 31.12.2017 (classification under IAS 39) |
Classification and measurement: reclassification | Classification and measurement: remeasurement | Impairment allowance | 01.01.2018 (classification under IFRS 9) |
Total change |
| Accumulated other comprehensive income | (110) | – | (78) | – | (188) | (78) |
| Retained earnings | (66) | – | 132 | (699) | (633) | (567) |
| TOTAL impact on equity | (176) | – | 54 | (699) | (821) | (645) |
Compared to the disclosure of the impact of the implementation of IFRS 9 on the annual consolidated financial statements for 2017, the impairment losses in respect of loan receivables increased by PLN 33 million (PLN 23 million after accounting for tax) in effect of more accurate estimations of impairment. To better reflect the impact of the amendments to the Corporate Income Tax Act related to the implementation of IFRS 9, the effect of a tax liability arising as of 1 January 2018 resulting from the disclosure of the release of the IBNR allowance in the tax calculation and of accounting for the initial loss on the purchased or originated credit-impaired financial assets (POCI) and the respective changes in the deferred tax asset reflecting this liability, of PLN 52 million, was recognized in Note 20 as an impact on the profit/(loss) for the period.