About this
Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
will be amortized over the length of the lease and the financial
liability will be measured at amortized cost. Lessor accounting
remains substantially the same as it was under IAS 17.
Rabobank has finished its IFRS 16 program to collect all lease
contracts of Rabobank and to ensure implementation of IFRS 16
calculations. Rabobank will apply the modified retrospective
approach which retains the prior period figures as reported under
the previous standard and recognizes the cumulative effect of
IFRS 16 as an increase to the opening balance of equity as per
January 1, 2019. The introduction of IFRS 16 does not have an
impact on equity of Rabobank and will lead to an increase of
assets and liabilities as per January 1, 2019 for an amount of
approximately EUR 610 million.
Other Amendments to IFRS
Minor amendments have been made to IAS 28, IAS 19, IFRS 9,
IFRIC 23, and the issue of the Annual Improvements to IFRS
Standards 2015-2017 Cycle. Although these new requirements
are currently being analyzed and their impact is not yet known,
Rabobank does not expect that the implementation of these
amendments will significantly affect profit or equity.
New Standards Issued by the International Accounting
Standards Board (IASB) But Not Yet Endorsed by the
European Union
IFRS 17 Insurance Contracts
In May 2017, the IASB issued 'IFRS 17 Insurance Contracts' with
an effective date of annual periods beginning on or after January
1,2021IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts
within the scope of the standard. The objective of IFRS 17 is to
ensure that an entity provides relevant information that faithfully
represents those contracts. This information gives a basis for
users of financial statements to assess the effect that insurance
contracts have on the entity's financial position, financial
performance and cash flows. Rabobank is currently assessing the
impact of this standard.
Changes in Accounting Principles and Presentation
Classification
From January 12018, Rabobank classifies its financial assets in the
following measurement categories:
those to be measured subsequently at fair value (either
through OCI, or through profit or loss), and
those to be measured at amortized cost
The classification depends on:
1. Business model assessment; Rabobank assesses its business
models at a level that reflects how financial assets are
managed seen from a strategic point of view. Rabobank
considers all relevant evidence available at the assessment
date, such as how the performance of the business model and
the financial assets held in that model is evaluated and
reported and how the risks affecting the performance of the
business model are managed. This assessment results in the
following business models:
FHold to collect: where the financial asset is held within a
business model whose objective is to hold financial assets
in order to collect contractual cash flows; or
Flold to collect and sell: where the financial asset is held
within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial
assets; or
Other business model.
2. Contractual cash flow assessment; Rabobank assesses
whether the cash flows of the financial assets are solely
payment of principal and interest on the principal amount
outstanding (SPPI test) and, hence, consistent with basic
lending arrangements. In basic lending arrangements, the
consideration for the time value of money and credit risk are
typically the most significant elements of interest. Flowever in
such arrangements, interest may also include consideration
for other basic lending risks (such as liquidity risk) and costs
(such as administrative costs) associated with holding financial
assets for a particular period oftime. Additionally, interest may
include a profit margin consistent with a basic lending
arrangement.
Measurement
At initial recognition, Rabobank measures a financial asset at its
fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets measured at fair value through profit or
loss are expensed in profit or loss. Financial assets with embedded
derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and
interest. Derivative financial instruments are initially recognized
and subsequently measured at fair value through profit or loss.
Impairment Allowances on Financial Assets
The rules included in IFRS 9 governing impairments apply to
financial assets at amortized cost and financial assets at fair value
through OCI, as well as to lease receivables, contract assets, trade
receivables, certain loan commitments and financial guarantees.
At initial recognition, an allowance is recognized for the amount
of the expected credit losses from possible defaults in the coming
12 months ('12-months expected credit loss' (ECL)). If credit risk
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