About this Report Chairman's Foreword Management Report Appendices Corporate Governance Consolidated Financial Statements Company Financial Statements through the additions ofthe 12-month ECL category (stage 1) and the Lifetime ECL Non-Credit-Impaired (stage 2), generally leading to increases in overall impairment allowances. Reconciliation of Impairment Allowances Under IAS 39 and Provision Under IAS 37 to Expected Credit Losses Under IFRS 9 Amounts in millions of euros Impairment allowances IAS 39 and IAS 37 as at December 31,2017 Reclassification of Impairment financial assets a t Remeasuremen ts allowances IFRS 9 as at amortised cost January 1,2018 Loans and advances to banks Loans and advances to customers Financial assets at fair value through other comprehensive income Other assets Treasury related assets Credit related contingent liabilities Total 17 5,446 26 85 20 5,594 (1,304) (1,304) 2 134 8 (24) 107 227 19 4,276 8 2 85 127 4,517 Loans and advances to banks Loans and advances to customers Financial assets at fair value through other comprehensive income Other assets Credit related contingent liabilities Total impairment allowances IFRS 9 as at January 1 2018 Stage 1 1 320 3 33 357 Stage 2 1 287 5 12 305 Stage 3 17 3,754 2 82 3,855 Total 19 4,361 8 2 127 4,517 Going Concern The Managing Board considers it appropriate to adopt the going concern basis of accounting in preparing these financial statements based on a forecast analysis which supports the going concern assumption. Judgments and Estimates In preparing the consolidated financial statements management applied judgement with respect to estimates and assumptions that affect the amounts reported for assets and liabilities, the reporting of contingent assets and liabilities on the date ofthe consolidated financial statements, and the amounts reported for income and expenses during the reporting period. The accounting principles listed below require critical estimates that are based on assessments and assumptions. Although management estimates are based on the most careful assessment of current circumstances and activities on the basis of available financial data and information, the actual results may deviate from these estimates. Impairment Allowances on Financial Assets Rabobank applies the three-stage expected credit loss impairment models for measuring and recognizing expected credit losses which involve a significant degree of management judgement. The impairment methodology results in the recognition of allowances measured at an amount equal to 12- month expected credit losses (stage 1); allowances measured at an amount equal to lifetime expected credit losses for financial assets for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets (stage 2); and financial assets that are credit-impaired (stage 3). Rabobank uses estimates and management judgement in the determination ofthe expected credit loss for the following attributes (refer to section 2.16 Impairment allowances on financial assets for further details): Significant increase in credit risk: judgment is required to transfer assets from stage 1 to stage 2. Forward-looking information: the estimation of expected credit losses for each stage and the assessment of significant increases in credit risk consider information about past events and current conditions as well as reasonable and supportable forecasts of future events and economic conditions (forward looking information). The estimation of forward-looking information requires judgment. Macro-economic scenarios: Rabobank uses three global macroeconomic scenarios (consisting of a baseline, a baseline minus and a baseline plus scenario, which are probability weighted) in their ECL models to determine the expected credit losses. The expected credit loss on a financial asset is based on an unbiased probability-weighted amount that is determined by evaluating a range of possible and reasonable outcomes and reflects information available on current conditions and forecasts of future economic conditions for the Annual Report 2018 - Consolidated Financial Statements 136

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Annual Reports Rabobank | 2018 | | pagina 138