Disclosures for Banks and Similar Financial Institutions (IAS 30) | WILEY IAS 2003: Interpretation and Application of International Accounting Standards

A. Income Statement

The income statement of a bank should be presented in a manner that groups income and expenses by nature and discloses the amounts of the principal types of income and expenses.

(IAS 30, Para 18)
In addition to the requirements of other IAS, the disclosures in the income statement or in the footnotes should include, but are not limited to, the following items:
1. Interest and similar income
2. Interest expense and similar charges
3. Dividend income
4. Fee and commission income
5. Fee and commission expense
6. Gains less losses arising from dealing securities
7. Gains less losses arising from investment securities
8. Gains less losses arising from dealing in foreign currencies
9. Other operating income
10. Losses on loans and advances
11. General and administrative expenses
12. Other operating expenses
(IAS 30, Paras 9 and 10)

B. Balance Sheet

The balance sheet of a bank should group assets and liabilities by nature and list them in the order of their respective liquidity. These are to be made either on the face of the balance sheet or in footnotes.

(IAS 30, Para 18)
In addition to the requirements of the other IAS, the disclosures in the balance sheet or notes to the financial statements should include, but are not limited to
1. Assets
  1. Cash and balances with the central bank.
  2. Treasury bills and other bills eligible for rediscounting with the central bank.
  3. Government and other securities held for dealing purposes.
  4. Placements with, and loans and advances to, other banks.
  5. Other money market placements.
  6. Loans and advances to customers.
  7. Investment securities.
2. Liabilities
  1. Deposits from other banks.
  2. Other money market deposits.
  3. Amounts owed to other depositors.
  4. Certificates of deposits.
  5. Promissory notes and other liabilities evidenced by paper.
  6. Other borrowed funds.
(IAS 30, Para 19)
The fair values of each class of financial assets and financial liabilities, as required by IAS 32 and 39, should be disclosed. According to IAS 39, the four classifications of financial assets are: loans and receivables originated by the enterprise, held-to-maturity investments, financial assets held for trading, and available-for-sale financial assets. A bank should disclose the fair value of its financial assets for these four classifications, as a minimum.

(IAS 30, Paras 24 and 25)

C. Contingencies and Commitments Including Off-Balance-Sheet Items

The disclosures required in this regard are the following:

The nature and amount of commitments to extend credit that are irrevocable because they cannot be withdrawn at the discretion of the bank without incurring significant penalty or expenses.
The nature and amount of contingencies and commitments arising from off-balance-sheet items, including those relating to
1. Direct credit substitutes, which include general guarantees of indebtedness, bank acceptances, and standby letters of credit, which serve as financial backup for loans and securities;
2. Transaction-related contingencies, which include performance bonds, bid bonds, warranties, and standby letters of credit related to particular transactions;
3. Trade-related contingencies, which are self-liquidating and short-term trade-related contingencies arising from the movement of goods, such as documentary credit wherein the underlying goods are used as security for the bank credit; sometimes referred to as trust receipts, or simply as "TR";
4. Sales and repurchase agreements that are not reflected or recognized on the bank's balance sheet;
5. Interest and foreign exchange rate related items, which include items such as options, futures, and swaps; and
6. Other commitments, including other off-balance-sheet items such as revolving underwriting facilities and note issuance facilities.
(IAS 30, Para 26)

D. Maturities of Assets and Liabilities

An analysis of assets and liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date should be disclosed.

(IAS 30, Para 30)

E. Concentrations of Assets and Liabilities

Any significant concentration of assets, liabilities, and off-balance-sheet items should be disclosed. Such disclosures should be made in terms of geographical areas, customer or industry groups, or other concentrations of risk.
The amount of significant net foreign currency exposures should be disclosed.

(IAS 30, Para 40)

F. Losses on Loans and Advances

The following disclosures are prescribed with respect to "losses on loans and advances":
1. The accounting policy describing the basis on which uncollectible loans and advances are recognized as an expense and written off;
2. Details of the movements in the provision for losses on loans and advances during the period, disclosing separately the amount charged to income in the period for losses on uncollectible loans and advances, the amount charged in the period for loans and advances written off and the amount credited in the period for loans and advances previously written off that have been recovered;
3. The aggregate amount of the provision for losses on loans and advances at the balance sheet date; and
4. The aggregate amount included in the balance sheet for loans and advances on which interest is not being accrued and the basis used to determine the carrying amount of such loans and advances.
(IAS 30, Para 43)
Any amounts set aside in respect of losses on loans and advances in addition to those losses that have been specifically identified, or potential losses which experience indicates are present in the portfolio of loans and advances, should be accounted for as appropriations of retained earnings. Any credits resulting from the reduction of such amounts should be treated as increases in retained earnings and not included in the determination of net income.

(IAS 30, Para 44)

G. General Banking Risks

Any amounts set aside in respect of general banking risks, including future losses and other unforeseeable risks or contingencies in addition to those for which accrual must be made under IAS 10, should be separately disclosed as appropriations of retained earnings. Any credits resulting from the reduction of such amounts result in an increase in retained earnings and are not included in the determination of net income.

(IAS 30, Para 50)

H. Assets Pledged as Security

The aggregate amount of secured liabilities and the nature and carrying amount of the assets pledged as security should be disclosed.

(IAS 30, Para 53)

I. Related-Party Transactions

When a bank has entered into transactions with related parties, the nature of the relationship, the type of transaction, and the elements of the transaction should be disclosed. The elements that are to be disclosed include the bank's lending policy to related parties and, in respect of related-party transactions, the amount included in or the proportion of

Each of the loans and advances, deposits and acceptances, and promissory notes—disclosures may include the aggregate amounts outstanding at the beginning and end of the year as well as changes in these accounts during the year;
Each of the principal types of income, interest expense, and commissions paid;
The amount of the expense recognized in the period for the losses on loans and advances and the amount of the provision at the balance sheet date; and
Irrevocable commitments and contingencies and commitments from off-balance-sheet items.

(IAS 30, Para 58)

J. Trust Activities

If a bank is engaged in significant trust activities, wherein banks commonly act as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans, and other institutions, and such relationships are legally supported, disclosure of that fact and an indication of the extent of those activities should be made.

(IAS 30, Para 55)