Regulatory Alerts2018-04-09
Banking Circular No. 3 of 2018
The Central Bank of Kenya (CBK) has issued a guidance note on the implementation of the International Financial Reporting Standard (IFRS) 9, which became effective in January 2018. This is done to guide commercial banks and mortgage finance companies on how IFRS 9 relates to regulatory capital during a five-year transition period. Institutions will add back provisions relating to performing facilities/loans outstanding as at December 31, 2017 and those issued in 2018 while disclosing their core and total capital ratios in the quarterly unaudited/audited annual financial statements template. A new monthly return – IFRS 9 Implementation Transition Return has also been developed to help in monitoring provisions over the next five years. The purpose of this circular is therefore to issue the guidance note on the implementation of IFRS 9 for reference by commercial banks and mortgage finance companies in computing regulatory capital.