Norm on the Accounting of Financial Commissions

Resolution No. CD-SIBOIF-468-2-FEBR28-2007 of date February 28, 2007

NORM ON THE ACCOUNTING OF FINANCIAL COMMISSIONS

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I

That it is necessary to establish uniform practices for the accounting record of the commissions that financial institutions charge in advance to their clients for the granting of loans to compensate for the direct costs incurred in the operation, which must be recognized in the financial results of the institution over the duration of such services.

II

That based on the powers conferred by Article 3, numeral 13 and Article 10 of Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, reformed by Law No. 552, Law of Reforms to the aforementioned Law No. 316;

In exercise of its powers,

HAS ISSUED

The following:

NORM ON THE ACCOUNTING OF FINANCIAL COMMISSIONS

Resolution No. CD-SIBOIF-468-2-FEBR28-2007

CHAPTER I OBJECT AND SCOPE

Art. 1 Object.- The purpose of this norm is to establish uniform practices for the accounting record of financial commissions that banks and financial societies charge in advance to their clients to compensate for the direct costs incurred in the operation, regardless of the name by which they are designated, with terms greater than thirty (30) days.

Art. 2 Scope.- The provisions of this norm are applicable to banks and financial societies (hereinafter, financial institutions) under the supervision and control of the Superintendence of Banks and Other Financial Institutions.

CHAPTER II RECOGNITION OF INCOME FROM COMMISSIONS

Art. 3 Financial commissions.- Financial commissions are those charged to the client as a consequence of the granting of financing, regardless of their denomination (commissions: for credit opening, formalization, disbursements, closing, evaluation and registration of guarantees, preparation and processing of documents, among others), to compensate for the direct costs incurred in the operation.

Direct costs shall be understood as those incurred by the financial institution for granting a loan, indicated below: a) Those that result directly from a loan and are essential for the transaction thereof; b) Those that are costs in which the financial institution would not have incurred if the transaction had not taken place; c) Those that are directly related, among others, to the following activities:

1. Prospectively evaluate the financial condition of the borrower;
2. Evaluate and register guarantees, collateral, and other security provisions;
3. Negotiate the terms of the agreement;
4. Prepare and process the documents;
5. Close the transaction.

Art. 4 Recording of financial commissions.- 1 Financial commissions shall be recognized as follows: a) If the loan is held until maturity, the commission shall be deferred over time and recognized in the income statement, except for the portion that compensates for direct costs, over the life of the loan, as an adjustment to its yield, using the effective interest method, in accordance with what is established in the Accounting Framework. The financial institution, to determine the direct cost for granting loans, may develop a costing or analytical accounting methodology, which must be approved by the Board of Directors of the institution. In the absence of analytical or costing accounting that identifies the direct costs of the loan, the financial institution must defer over time over the life of the loan one hundred percent (100%) of the financial commissions charged to the client, defined in Article 3 of this norm.

1 Art. 4, reformed on December 4, 2018 - Resolution CD-SIBOIF-1087-5-DIC4-2018

b) If the loan is sold, the net commission referred to in the previous letter that is pending to be deferred over the remaining time of the loan shall be recognized in the income statement at the moment it is sold.

CHAPTER III ACCOUNTING STANDARDS

Art. 5 Accounting of commissions.- 2 Commissions generated by loans must be accounted for based on the accrual method, taking into consideration their validity period as follows:

For commissions charged in advance, the financial institution must record the amount charged in the asset correction account "Accrued Commissions with Effective Interest Rate" and the accrual of commissions shall be recorded in the corresponding income statement, in accordance with the recording criteria established in the Accounting Framework.

Art. 6. Suspension of amortizations.- The suspension of amortizations may be carried out in the following cases: a) Deferred commissions from credits that are canceled before the agreed maturity shall be recognized as income. b) When loans are reclassified as past due or in judicial collection, the commission effectively charged must continue to be amortized, recognizing it as income until the completion of their term. c) When loans are recognized as losses and removed from asset accounts in accordance with what is established in the MUC, commissions charged for granting may be recognized as income.

CHAPTER IV OTHER PROVISIONS

Art. 7 Application of these provisions.- The provisions established in this norm shall be applicable to commissions generated by new credit operations carried out from January 1, 2008.

Art. 8 Validity.- This norm shall enter into force upon its notification, without prejudice to its publication in La Gaceta, Official Diary.

(f) Antenor Rosales B. (f) V. Urcuyo V. (f) Roberto Solórzano Ch. (f) Gabriel Pasos Lacayo (f) A. Cuadra G. (f) U. Cerna B.

2 Art. 5, reformed on December 4, 2018 - Resolution CD-SIBOIF-1087-5-DIC4-2018

URIEL CERNA BARQUERO Secretary of the Board of Directors SIBOIF