Note 45 - Transition disclosure IFRS 9
| The following table shows changes in classification of financial instruments as a result of adopting IFRS 9 | ||||
| Group Financial instruments |
Category IAS 39 | Amount IAS 39 |
Category IFRS 9 | Amount IFRS 9 |
| Cash and balances with central banks | Loans and receivables | 3,313 | Amortised cost | 3,313 |
| Deposits with and loans to credit institutions | Loans and receivables | 4,214 | Amortised cost | 4,214 |
| Net loans to and receivables from customers | Loans and receivables | 107,681 | Fair value over other comprehensive income | 60,600 |
| Amortised cost | 47,060 | |||
| Fair value through profit & loss (FVO) | 3,278 | Fair value through profit & loss | 3,278 | |
| Fixed-income CDs and bonds | Fair value through profit & loss (FVO) | 19,736 | Fair value through profit & loss | 19,736 |
| Derivatives | Fair value through profit & loss | 4,351 | Fair value through profit & loss | 4,351 |
| Shares, units and other equity interests | Available for sale | 66 | Fair value through profit & loss | 1,825 |
| Fair value through profit & loss (FVO) | 557 | |||
| Fair value through profit & loss | 1,202 | |||
| Deposits from and debt to credit institutions | Amortised cost | 9,607 | Amortised cost | 9,607 |
| Deposits from and debt to customers | Amortised cost | 76,476 | Amortised cost | 76,476 |
| Debt created by issue of securities | Amortised cost | 42,194 | Amortised cost | 42,194 |
| Derivatives | Fair value through profit & loss | 3,343 | Fair value through profit & loss | 3,343 |
| Subordinated loan capital | Amortised cost | 2,201 | Amortised cost | 2,201 |
| The following table show the effects of adopting ifrs 9 | |||||
| Group | |||||
Financial assets |
Note | Carrying amount under IAS 39 31 December 2017 |
Reclassification | Remeasurement | Carrying amount under IFRS 9 1 January 2018 |
| Amortised cost | |||||
| Cash and balances with central banks | 3,313 | - | - | 3,313 | |
| Deposits with and loans to credit institutions | 4,214 | - | - | 4,214 | |
| Net loans to and receivables from customers | A | 107,680 | -60,561 | -59 | 47,060 |
| total amortised cost | 115,207 | -60,561 | -59 | 54,587 | |
| Fair value over profit & loss | |||||
| Net loans to and receivables from customers | 3,278 | - | - | 3,278 | |
| Fixed-income CDs and bonds | C | 19,736 | - | - | 19,736 |
| Derivatives | 4,351 | - | - | 4,351 | |
| Shares, units and other equity interests | B | 1,759 | 66 | - | 1,825 |
| Total fair value over profit & loss | 29,124 | 66 | - | 29,190 | |
| Fair value over OCI- with recycling | |||||
| Net loans to and receivables from customers | A | - | 60,561 | 39 | 60,600 |
| Shares, units and other equity interests | B | 66 | -66 | - | - |
| Total fair value over OCI- with recycling | 66 | 60,495 | 39 | 60,600 | |
| Total financial assets | D | 144,397 | 0 | -20 | 144,378 |
| Financial liabilities | |||||
| Amortised cost | |||||
| Deposits from credit institutions | 9,607 | - | - | 9,607 | |
| Deposits from and debt to customers | 76,476 | - | - | 76,476 | |
| Debt created by issue of securities | 42,194 | - | - | 42,194 | |
| Subordinated loan capital | 2,201 | - | - | 2,201 | |
| total amortised cost | 130,478 | - | - | 130,478 | |
| Fair value over profit & loss | |||||
| Derivatives | 3,343 | - | - | 3,343 | |
| Equity instruments | 244 | - | - | 244 | |
| Total fair value over profit & loss | 3,586 | - | - | 3,586 | |
| Total Financial liabilities | 134,064 | - | - | 134,064 | |
Note A
SpareBank 1 SMN utilises co-owned bond-issuing residential mortgage companies as funding tools. This entails that when the bank grants a mortgage secured on residential property that meets given criteria, it can be sold to the residential mortgage company either at once or at a later point in time. Sale of the loan to SpareBank 1 Boligkreditt entails derecognition of the mortgage at SpareBank 1 SMN and recognition of the mortgage at SpareBank 1 Boligkreditt. Mortgages carrying floating interest are measured under IAS 39 at amortised cost. Under IFRS 9 only debt instruments forming part of a business model that entails holding the instruments in order to receive contractual cash flows shall be measured at amortised cost. Mortgages forming part of a business model that entails that the instruments are held both in order to receive contractual cash flows and for sale shall be measured at fair value with value changes over OCI. Interest income and write-downs shall be reflected in profit/loss, and value changes entered against OCI shall be reclassified to profit/loss upon sale or the disposal (derecognition) of the mortgages.
SpareBank1 SMN has therefore reclassified all residential mortgages from amortisert cost to fair value over OCI from 1 January 2018.
Note B The "Available- for-sale" category under IAS 39 no longer exists under IFRS 9. Equity instruments classified as available for sale under IAS 39 has been reclassified to fair value over profit & loss.
Note C Short-term money market paper and bonds constitute parts of the bank’s liquidity reserve. The portfolio is managed and measured on a fair value basis and shall under IFRS 9 be classified at fair value with value changes over profit/loss.
Note D The impact of adopting IFRS 9 as at 1 january 2018 will be taken to equity net after tax. Total change in equity due to adopting IFRS 9 as a result of changed loss provision is NOK -15 million.
| Change in impairment allowances | Loan loss provision under IAS 39 31 December 2017 |
Reclassification | Remeasurement | Expected credit losses under IFRS 9 1 January 2018 |
||||
| Loans and receivables and instruments held to maturity under IAS 39 to be measured at amortised cost under IFRS 9 | -1,113 | 112 | 8 | -993 | ||||
| Debt instruments measured at amortised cost under IFRS 9 | -1,113 | 112 | 8 | -993 | ||||
| Loans and receivables and instruments held to maturity under IAS 39 to be measured at fair value over OCI under IFRS 9 | - | -112 | 39 | -73 | ||||
| Debt instruments measured at FVOCI under IFRS 9 | - | -112 | 39 | -73 | ||||
| Financial guarantees | -4 | - | -58 | -63 | ||||
| Loan commitments | - | - | -7 | -7 | ||||
| Letters of credit for customers | - | - | -1 | -1 | ||||
| Total Guarantees, loan commitments and letters of credit | -4 | - | -66 | -70 | ||||
| Total changes in impairment allowances | -1,117 | - | -20 | -1,137 | ||||
| 31 Dec 2017 | |||||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Individual | Collective | Total | ||||
| Loan loss provision at 1. January 2018 | -74 | -217 | -776 | - | -1,067 | -765 | -347 | -1,113 | |||
| Guarantees, loan commitments and letters of credit | -13 | -52 | -6 | - | -70 | -4 | - | -4 | |||
| Total | -86 | -269 | -782 | - | -1,137 | -769 | -347 | -1,117 | |||
