2003 How IFRS will impact reported earnings as of next year Guido Segers, Managing Director.
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2 0 0 3 How IFRS will impact reported earnings as of next year Guido Segers, Managing Director
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Transcript of 2003 How IFRS will impact reported earnings as of next year Guido Segers, Managing Director.
2 0 0 3
How IFRS will impact reported earnings as of next year
Guido Segers, Managing Director
2
Investor Day
2 0 0 3IFRS time schedule for KBC
First external IFRS reporting : results of 1Q 2004
Comparative figures of 2003
Transition to IFRS : 01.01.2003
Corrections due to first time application of IFRS valuation rules : in opening balance sheet of equity on 01.01.2003
!!! Possibility of reschudeling depending on timing of approval of most important standards !!!
3
Investor Day
2 0 0 3Important uncertainties
Insurance contracts : no accounting standard available
Financial instruments (IAS 32/39) : disagreement between IASB and European Banking Federation about existing standards and about proposed amendments : Obligation to measure all derivatives
at fair value
4
Investor Day
2 0 0 3Important uncertainties
Financial instruments (IAS 32/39) : disagreement between IASB and European Banking Federation about existing standards and about proposed amendments : Hedge accounting rules Application of fair value option Loan impairment rules Line to be drawn between insurance products falling
within the scope of IAS 39 and other insurance products (within the scope of the expected standard for insurance contracts)
5
Investor Day
2 0 0 3Impact on presentation of
financial statements KBC IFRS financial statements consist of :
Accounting policies Income statement + balance sheet :
Integrated scheme vs current functional scheme Based on format of IAS 30 + specific insurance items
Statement of changes in equity Cash flow statement : using indirect method Segment reporting : based on organisational structure :
Primary reporting format : business segments : banking, insurance, asset management, holding
Secondary reporting format : geographical segments : Belgium, Central Europe, Western Europe, rest of the world
Notes to the financial statements
6
Investor Day
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Bel GAAP IFRS Reported
Loans and receivables Pro rata Pro rata
Investment portfolio
Bonds held to maturity
Bonds available for sale
Bonds at fair value
Shares
Pro rata
Pro rata
Pro rata
Locom / cost
Pro rata
Fair value
Fair value
Fair value
Equity
P&l
Equity
Trading portfolio Fair value Fair value P&l
Derivatives
In banking books
In trading books
Pro rata
Fair value
Fair value
Fair value
P&l
P&l
Impact on B/S and off balance items
7
Investor Day
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Bel GAAP IFRS Reported
Funding liabilities Pro rata Pro rata
Liabilities at fair value Pro rata Fair value P&l
Trading liabilities Fair value Fair value P&l
* !! All first time application corrections will be reported in equity !!
Valuation of financial liabilities* :
Impact on B/S and off balance items
8
Investor Day
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Valuation of insurance contracts : according to the current valuation rules until publication of insurance accounting standard
Valuation of post employment benefits - defined benefit plans* : present value of defined benefit obligations less fair value of plan assets
Provisions* : only to be recognized in case of present or constructive obligation
*!! All first time application corrections will be reported in equity!!
Impact on B/S and off balance items
9
Investor Day
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Deferred taxes* : Liabilities : always to be recognized Assets : to be recognized under certain conditions
(foreseeable taxable profit)
Changing rules for loan impairment and impairment of equity investments*
*!! All first time application corrections will be reported in equity!!
Impact on B/S and off balance items
10
Investor Day
2 0 0 3Impact on B/S and off balance items
!! The figures on the next slide only relate to first time application corrections for the banking business – they will be reported in the opening balance sheet of equity on 01.01.2003 !! Moreover, these figures are conditional.
11
Investor Day
2 0 0 3
Fair valuing of bonds and shares available for sale : + 634 m Fair valuing of derivatives and
financial instruments at fair value : - 41 m (including derivatives KBC Bank EUR - 775 m
and bonds at fair value KBC Bank EUR + 901 m)
Deduction own shares : - 55 m
Underfunding of defined benefit pension plans : - 286 m
Reversal of provisions : + 116 m
Deferred taxes : - 55 m
Bonds convertible in KBC shares : + 679 m
Profit appropriation : + 362 m
Total correction of equity : + 1.367 m
Impact on B/S and off balance items
12
Investor Day
2 0 0 3Impact on B/S and off balance items
!! The figures on the next slide only relate to first time application corrections of the insurance business in Belgium (*) – they will be reported in the opening balance sheet of equity on 01.01.2003 !! Moreover, these figures are conditional.
(*) KBC Insurance NV - non-consolidated
13
Investor Day
2 0 0 3
Additional impairments shares available for sale : EUR - 342 m
Fair valuing of bonds and shares available for sale : EUR + 424 m
Deduction own shares : EUR - 4 m
Underfunding of defined benefit pension plans : EUR - 20 m
Reversal of provisions : EUR + 122 m
Deferred taxes : EUR - 99 m
Profit appropriation : EUR + 191 m
Total correction of equity : EUR + 272 m
Impact on B/S and off balance items
14
Investor Day
2 0 0 3Impact on the consolidation scope
Special purpose vehicles will be included in the consolidation scope
An interest in subsidiaries, associates or joint ventures that is acquired and held exclusively with a view to its subsequent disposal after twelve months from its acquisition = venture capital
15
Investor Day
2 0 0 3Impact on equity / tier 1-capital
The Belgian Supervising Authority has not yet published any rules concerning solvency requirements under IFRS
Will probably increase
KBC will use the current rules for the reporting of equity / tier 1-capital until new rules will be published
