Region

Jurisdiction

Regulator

2016-05-13 | DOF 5437137

Added 2026-09-01

Resolution modifying the General Provisions applicable to general warehouse companies, exchange houses, credit unions and multiple-object financial companies regulated

The National Banking and Securities Commission amends Articles 6 and 93 and substitutes Annex 4 of the General Provisions applicable to credit unions to update accounting criteria. Credit unions must comply with these changes starting January 1, 2017, though they may voluntarily apply the B-5 "Credit Portfolio" criterion from July 1, 2016, provided they notify the Commission by June 30, 2016. Early adopters are required to disclose specific information regarding the nature of the accounting change and its financial effects in their financial statement notes.

Mexico

Secretaria de Hacienda y Credito Publico

If the document is presented incomplete on the right margin, it is because it contains tables that exceed the default width. If this is the case, click here to view it correctly.

DOF: 13/05/2016

RESOLUTION modifying the General Provisions applicable to general warehouse companies, exchange houses, credit unions and multiple-object financial companies regulated

At the margin, a seal with the National Coat of Arms, which says: United Mexican States.- Ministry of Finance and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, based on the provisions of Articles 65 and 74 of the Credit Unions Law, as well as Articles 4, fractions IV, XXXVI and XXXVIII, and 16, fraction I of the National Banking and Securities Commission Law, and

CONSIDERING

That it is necessary to make adjustments to the accounting criteria according to which credit unions must record the operations they carry out so that this National Banking and Securities Commission has the necessary and reliable information to allow it to verify due compliance with the provisions within its supervisory functions, has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS APPLICABLE TO

GENERAL WAREHOUSE COMPANIES, EXCHANGE HOUSES, CREDIT UNIONS AND MULTIPLE-OBJECT FINANCIAL COMPANIES REGULATED

SOLE.- Articles 6 and 93, last paragraph, are REFORMED, and Annex 4 of the "General Provisions applicable to general warehouse companies, exchange houses, credit unions and multiple-object financial companies regulated", published in the Official Gazette of the Federation on January 19, 2009, modified by Resolutions published in the said Official Gazette on July 1 and 30, 2009, February 18, 2010, February 4, April 11 and December 22, 2011, February 3 and June 27, 2012, January 31, 2013, December 3, 2014, January 8 and 12, May 19, October 19 and 28, 2015 and January 22, 2016, are SUBSTITUTED, to read as follows:

TITLES FIRST to EIGHT . . .

Annexes

1 to 3 . . .

Annex 4

Accounting Criteria for Credit Unions

Annexes

5 to 27 . . .

" Article 6.- Credit unions shall adhere to the accounting criteria attached to these provisions as Annex 4, which are divided into the series and criteria indicated below:

Series A

Criteria relating to the general scheme of accounting for credit unions.

A-1.

Basic scheme of the set of accounting criteria applicable to credit unions.

A-2

Application of particular rules.

A-3

Application of general rules.

A-4

Supplementary application to accounting criteria.

Series B

Criteria relating to the concepts that make up the financial statements.

B-1

Liquidity.

B-2

Investments in securities.

B-3

Repurchase agreements.

B-4

Derivatives and hedging operations.

B-5

Credit portfolio.

B-6

Adjudicated assets.

B-7

Guarantees.

B-8

Asset management.

B-9

Trusts.

B-10

Receivables.

Series C

Criteria applicable to specific concepts.

C-1

Recognition and derecognition of financial assets.

C-2

Related parties.

Series D

Criteria relating to the basic financial statements.

D-1

Balance sheet.

D-2

Statement of income.

D-3

Statement of changes in equity.

D-4

Statement of cash flows. "

" Article 93.- . . .

. . .

Regarding restructuring, renewal and assignment of credits that, on the date of obtaining the corresponding rating, are overdue according to the Accounting Criteria, credit unions must grant an initial rating to said credits, at least of risk grade C-2, which may be modified if there is evidence of sustained payment, in accordance with what is established in Criterion B-5 "Credit Portfolio", of said Criteria. "

TRANSITORY PROVISIONS

FIRST.- This Resolution shall enter into force the day following its publication, except for what is provided in the SECOND Transitory Article below.

SECOND.- Credit unions shall comply with what is provided in Articles 6 and 93 that are reformed, as well as with Annex 4 that is substituted by this Resolution, starting from January 1, 2017.

Notwithstanding the foregoing, starting from July 1, 2016, they may opt to apply the accounting criterion B-5 "Credit Portfolio" contained in Annex 4 that is substituted by this instrument.

Credit unions that opt to use the accounting criterion B-5 "Credit Portfolio" must notify the National Banking and Securities Commission no later than June 30, 2016.

In these cases, credit unions must disclose in notes to the financial statements the main changes in the accounting regulations applicable to the credit portfolio that affected or could have significantly affected their financial statements, as well as, if applicable, the status of the credit union regarding the implementation of the B-5 "Credit Portfolio" accounting criterion attached to this Resolution. The said disclosure must comprise, at least, the following information:

The fact that the credit union opted to apply the B-5 criterion in advance

"Credit Portfolio", as well as an explanation of why it took this option.

II.

The nature of the accounting change and that it has been carried out in accordance with this Transitory Article.

III.

The effect that the advance application of the B-5 criterion referred to above will have on the balance sheet items, as well as on the results of the credit union's fiscal year.

Respectfully,

Mexico City, April 27, 2016. - The President of the National Banking and Securities Commission, Jaime González Aguadé.- Rubric.

ANNEX 4

CONTENT

Series A.

Criteria relating to the general scheme of accounting for credit unions

A - 1

Basic scheme of the set of accounting criteria applicable to credit unions

A - 2

Application of particular rules

A - 3

Application of general rules

A - 4

Supplementary application to accounting criteria

Series B.

Criteria relating to the concepts that make up the financial statements

B - 1

Liquidity

B - 2

Investments in securities

B - 3

Repurchase agreements

B - 4

Derivatives and hedging operations

B - 5

Credit portfolio

B - 6

Adjudicated assets

B - 7

Guarantees

B - 8

Asset management

B - 9

Trusts

B - 10

Receivables

Series C.

Criteria applicable to specific concepts

C - 1

Recognition and derecognition of financial assets

C - 2

Related parties

Series D.

Criteria relating to the basic financial statements

D - 1

Balance sheet

D - 2

Statement of income

D - 3

Statement of changes in equity

D - 4

Statement of cash flows

A-1

BASIC SCHEME OF THE SET OF ACCOUNTING CRITERIA APPLICABLE TO CREDIT UNIONS

Objective

This criterion aims to define the basic scheme of the set of accounting guidelines applicable to credit unions (the entities).

Concepts that make up the basic structure of accounting in the entities

The accounting of the entities shall adhere to the basic structure that, for the application of the Financial Information Standards (NIF), was defined by the Mexican Council of Financial Information Standards, A.C. (CINIF), in NIF A-1 "Structure of financial information standards".

Therefore, the entities shall consider in the first instance the standards contained in Series NIF A "Conceptual framework", as well as what is established in criterion A-4 "Supplementary application to accounting criteria".

In this way, the entities shall observe the accounting guidelines of the NIF, except when, in the judgment of the National Banking and Securities Commission (CNBV), it is necessary to apply a specific regulation or accounting criterion, taking into consideration that the entities carry out specialized operations.

The CNBV regulation referred to in the previous paragraph shall be at the level of recognition, valuation, presentation and, if applicable, disclosure standards, applicable to specific items within the entities' financial statements, as well as those applicable to their preparation.

The application of accounting criteria, nor the concept of supplementarity, shall not proceed in the case of operations that by express legislation are not permitted or are prohibited, or are not expressly authorized to the entities.

A-2 APPLICATION OF PARTICULAR RULES

Objective and scope

This criterion aims to specify the application regarding the particular standards of the NIF, as well as clarifications to them.

The subject matter of this criterion is:

the application of some of the particular standards made known in the NIF, and

the clarifications to the particular standards contained in the NIF.

Financial Information Standards

In accordance with what is established in criterion A-1 "Basic scheme of the set of accounting criteria applicable to credit unions", the entities shall observe, until there is an express pronouncement by the CNBV, the particular standards contained in the bulletins or NIFs detailed below, or in the NIFs that replace or modify them:

Series NIF B "Standards applicable to financial statements as a whole"

Accounting changes and corrections of errors ................................................... B-1

Business combinations ........................................................................... B-7

Consolidated or combined financial statements ............................................... B-8

Financial information at interim dates ..................................................... B-9

Effects of inflation ................................................................................. B-10

Subsequent events after the date of the financial statements ..................................... B-13

Earnings per share ...................................................................................... B-14

Conversion of foreign currencies ....................................................................... B-15

Series NIF C "Standards applicable to specific concepts of the financial statements"

Accounts receivable ..................................................................................... C-3

Inventories ............................................................................................... C-4

Prepayments ...................................................................................... C-5

Property, plant and equipment ........................................................................ C-6

Investments in associates, joint ventures and other

permanent investments ............................................................................. C-7

Intangible assets ..................................................................................... C-8

Liabilities, provisions, contingent assets and

liabilities and commitments ............................................................................................ C-9

Equity ......................................................................................... C-11

Financial instruments with characteristics of liability and

equity .................................................................. . ........................................... C-12

Impairment of long-lived assets and

disposal .......................................................................................... C-15

Obligations associated with the retirement of property,

plant and equipment ............................................................ ......................................... C-18

Joint control agreements .......................................... ..................................... C-21

Series NIF D "Standards applicable to income determination problems"

Employee benefits .......................................................................... D-3

Income taxes ................................................................................. D-4

Leases ......................................................................................... D-5

Capitalization of comprehensive financing result ........................................ D-6

Share-based payments ......................................................................... D-8

Additionally, the entities shall observe the NIFs issued by CINIF on topics not foreseen in the accounting criteria for credit unions, provided that:

they are in force as definitive;

they are not applied in advance;

they do not contravene the philosophy and general concepts established in the accounting criteria for credit unions, and

there is no express pronouncement by the CNBV, among others, regarding clarifications to the particular standards contained in the NIF that is issued, or regarding its non-applicability.

Clarifications to the particular standards contained in the NIF

Taking into consideration that the entities carry out specialized operations, it is necessary to establish clarifications that adapt the particular standards of recognition, valuation, presentation and, if applicable, disclosure, established by CINIF. Therefore, the entities, when observing what is established in the previous paragraph, shall adhere to the following:

B-8

Consolidated or combined financial statements

Regarding those specific purpose entities (SPE) created prior to February 4, 2011 where control has been maintained, they shall not be obligated to apply the provisions contained in NIF B-8, regarding the said SPE.

B-9

Financial information at interim dates

The provisions of NIF B-9 must be applicable to the financial information issued at interim dates, including the quarterly information that must be published or disseminated through the electronic page on the worldwide network called Internet that corresponds to the entity itself, under the terms of the general provisions applicable to the financial information of credit unions published by the CNBV.

For the purposes of disclosing the information issued at interim dates, the entities shall observe the provisions regarding the disclosure of financial information contained in criterion A-3 "Application of general rules".

B-10

Effects of inflation

Determination of the monetary position

Regarding an inflationary environment based on what is stated by NIF B-10, the following shall be attended to:

The entities shall disclose the initial balance of the main monetary assets and liabilities that were used for the determination of the monetary position of the period, differentiating, if applicable, those that affect from those that do not affect the financial margin.

Price index

The entity shall use the value of the Investment Unit (UDI) as the price index.

Result from monetary position

The result from monetary position (REPOMO) that has not been presented directly in equity nor capitalized in terms of what is established in NIF B-10, must be presented in the statement of income in a specific item within the financial margin when it comes from financial margin items; otherwise, it shall be presented within the item of other income (expenses) of the operation.

The REPOMO related to items whose valuation adjustments are recognized in equity, shall be presented in the equity account corresponding to its nature, for example, the REPOMO attributable to the valuation effect of available-for-sale securities shall be presented in the item similar to it.

B-15

Conversion of foreign currencies

Scope

In the application of NIF B-15, the exchange rate to be used to establish the equivalence of the national currency with the United States dollar shall be the FIX exchange rate published by the Bank of Mexico in the Official Gazette of the Federation on the next business day following the date of the transaction or preparation of the financial statements, as applicable.

In the case of currencies other than the United States dollar, the respective currency must be converted to United States dollars. To carry out this conversion, they shall consider the quotation that governs the corresponding currency in relation to said dollar in international markets, as established by the Bank of Mexico in the applicable regulation.

Likewise, the amount of operations denominated in foreign currency by the most relevant currencies for the entity, as well as the exchange rate used and its equivalent in national currency, shall be disclosed in notes to the financial statements, in accordance with what is stated in the two previous paragraphs.

C-3

Accounts receivable

Scope

For the purposes of Bulletin C-3, accounts receivable derived from the operations referred to in criteria B-3 "Repurchase agreements", B-4 "Derivatives and hedging operations", B-5 "Credit portfolio" and B-10 "Receivables", issued by the CNBV, as well as those arising from operating lease transactions indicated in paragraphs 49 to 51 of this criterion, shall not be included, since the recognition, valuation, presentation and disclosure standards applicable are contemplated therein.

Loans to officials and employees

Interest derived from loans to officials and employees shall be presented in the statement of income in the item of other income (expenses) of the operation.

Estimation for uncollectibility or difficult collection

The estimation for uncollectibility or difficult collection corresponding to items directly related to the credit portfolio such as litigation expenses, shall be determined by applying the same risk percentage assigned to the associated credit, in accordance with what is established in criterion B-5.

For the loans that the entities grant to their officials and employees, for the receivables, as well as for those accounts receivable other than those indicated in the previous paragraph and those of paragraph 22, relating to identified debtors whose maturity is agreed from origin to a term greater than 90 natural days, they shall create, if applicable, an estimation that reflects their degree of uncollectibility.

Such estimation shall be obtained by conducting a study that serves as a basis to determine the different future quantifiable events that could affect the amount of those accounts receivable, thereby showing the estimated recovery value of the enforceable rights.

Regarding operations with immediate collection documents not collected referred to in criterion B-1 "Liquidity", after 15 natural days following the date on which they have been transferred as various debtors, these shall be classified as overdue debts and their estimation for uncollectibility shall be constituted simultaneously for their total amount.

The estimation of accounts receivable that are not included in paragraphs 19, 20 and 22 above, shall be constituted for the total amount of the debt according to the following terms:

at 60 natural days following their initial registration, when they correspond to unidentified debtors, and

at 90 natural days following their initial registration, when they correspond to identified debtors.

No estimation for uncollectibility or difficult collection shall be constituted in the following cases:

tax balances in favor;

creditable value added tax, and

liquidating accounts.

The concepts resulting from operations between the parent company and branches shall be cleared at least by the close of each month, so they shall not present a balance on that date.

C-4

Inventories

What is established in Bulletin C-4 shall be applicable to the commercialization and transformation activities of goods, merchandise and diverse articles carried out by the entities, having to present said goods in the balance sheet in the item of merchandise inventory, while in the statement of income they shall present their income and cost of sales in the item of other income (expenses) of the operation.

C-9

Liabilities, provisions, contingent assets and liabilities and commitments

Scope

For the purposes of Bulletin C-9, liabilities relating to the operations referred to in criteria B-3 and B-4 are not included, since these are contemplated in said criteria.

Likewise, what is established in Bulletin C-9 shall not be applicable for the determination of guarantees granted, in which case the indication in criterion B-7 "Guarantees" shall be followed.

Securities liabilities

Securities liabilities, that is, those arising from fundraising through the securities market, shall be distinguished according to the following classification:

securities placed at par value, and

securities placed at a price different from par value (with premium or at a discount).

Securities placed at par value shall be registered taking as a basis the contractual value of the obligation, recognizing accrued interest directly in the results of the fiscal year as an interest expense.

Those securities placed at a price different from par value, in addition to what is established in the previous paragraph, shall recognize a deferred charge or credit for the difference between the par value of the security and the amount of cash received for it. Likewise, when securities are placed at a discount and do not accrue interest (zero coupon), they shall be registered at the time of issuance taking as a basis the amount of cash received for them.

The amount of issuance expenses, as well as the discount or premium in the placement, shall be registered as a deferred charge or credit, as applicable, and shall be recognized in the results of the fiscal year as interest expenses or income, as applicable, as they accrue, taking into consideration the term of the security that gave rise to it, under the terms referred to in Bulletin C-9.

For presentation purposes, the premium or discount on placement must be shown within the liability that gave rise to it and the deferred charge for issuance expenses shall be presented within the item of other assets.

In addition to the disclosure required in the aforementioned Bulletin C-9, the characteristics of the issuance of the credit securities issued must be disclosed in notes to the financial statements: amount;

number of securities in circulation; par value; discount or premium; rights and form of

redemption; guarantees; maturity; interest rate; effective interest rate; amortized amount of discount or premium in results; amount of issuance expenses and other related expenses, and the proportion that the authorized amount bears to the issued amount.

Bank loans, loans from members, and from other organizations

For their recognition, they shall adhere to what is established in paragraph 30.

They shall disclose in notes to the financial statements the total amount of bank loans, from their members, as well as that of other organizations, indicating for each the type of currency, as well as the maturity terms, guarantees, and weighted average interest rates to which, if applicable, they are subject.

In the case of credit lines received by the entity in which not all the authorized amount is utilized, the unused portion thereof shall not be presented in the balance sheet. However, entities shall disclose via notes to the financial statements the unused amount, in accordance with what is established in criterion A-3, regarding the disclosure of financial information.

Commissions paid derived from loans received by the entity or from the placement of debt shall be recorded on the date they are generated in the results of the period, under the item of commissions and fees paid.

Letters of credit

With respect to those letters of credit that the entity issues upon prior receipt of their amount, they are subject to Bulletin C-9.

The liability generated by the issuance of the letters of credit referred to in the preceding paragraph shall be presented in the balance sheet, within the item of other accounts payable.

C-11

Equity

At the end of the balance sheet, they shall disclose the historical amount of share capital.

D-3

Employee benefits

The liability generated by employee benefits shall be presented in the balance sheet within the item other accounts payable.

Additionally, via notes to the financial statements, it shall be disclosed:

the manner in which the Workers' Participation in Profits (PTU) was determined, explaining the bases used for its calculation, and

the identification of obligations for employee benefits in the short and long term.

Prepayments arising from the application of this NIF shall form part of the item of other assets.

D-4

Income taxes

For the case of income taxes incurred, it shall be disclosed via notes to the financial statements the manner in which these were determined, explaining the bases used for their calculation.

With respect to the disclosure required in NIF D-4 regarding the concepts of temporary differences, additionally, those related to the financial margin and to the main operations of the entities shall be disclosed, for example, those originated by the preventive estimate for credit risks and by the valuation of shares.

D-5

Leases

Capitalizable leases

Scope

What is established in this Bulletin shall not apply to credits granted by the entity for capitalizable lease operations, which is the subject of criterion B-5.

Requirements

For the purposes of the requirements established in paragraph 33 of Bulletin D-5, it shall be understood that the lease period is substantially equal to the remaining useful life of the leased asset, if said contract covers at least 75% of its useful life. Likewise, the present value of minimum payments shall be substantially equal to the market value of the leased asset, if said present value constitutes at least 90% of that value.

Operating leases

Accounting for the lessor

For the amount of amortizations that have not been settled within 30 natural days following the payment due date, the lessor shall create the corresponding estimate, suspending the accumulation of rents, keeping its control in off-balance sheet accounts under the item of other registration accounts.

The lessor shall present in the balance sheet the receivable account under the item of other accounts receivable, and the lease income under the item of other income (expenses) of the operation in the statement of results.

In addition to the disclosure required in paragraph 62 of Bulletin D-5, the lessor shall disclose in notes to the financial statements the amount of lease income recognized in the results of the period.

Accounting for the lessee

For presentation purposes, the lessee shall include in the balance sheet the lease liability as part of the item of various creditors and other accounts payable, and in the statement of results the lease expense under the item of administration and promotion expenses.

Subleases and similar transactions

Accounting for the original lessee

The effects on the results of the period referred to in paragraph 76 of Bulletin D-5, relative to the termination of the original lease, shall be presented under the item of other income (expenses) of the operation in the statement of results.

D-6

Capitalization of the comprehensive financing result

For the purposes of this NIF, Comprehensive Financing Result shall be understood as the following concepts: a) interest; b) result from monetary position; c) gain or loss in changes, and d) the other costs associated with those referred to in NIF D-6. These concepts may be capitalized to qualifying assets, instead of being recognized in the statement of results as interest income or expenses or other income (expenses) of the operation, as applicable, based on what is established in the cited NIF D-6.

The foregoing shall not apply to qualifying assets for which a specific accounting criterion issued by the CNBV establishes a different treatment.

A-3 APPLICATION OF GENERAL STANDARDS

Objective and scope

The present criterion aims to clarify the establishment of general application norms that entities must observe.

The subject matter of this criterion is the establishment of general norms that must be considered in the recognition, valuation, presentation, and disclosure applicable for accounting criteria for credit unions.

Restricted assets

These are considered as all those assets regarding which there are circumstances by which they cannot be disposed of or used, and must remain in the same item from which they originated. Likewise, those assets resulting from operations that do not settle on the same day, i.e., received with a value date different from the transaction date, shall be considered part of this category. In the case of margin accounts that entities grant to the clearing house for derivative operations carried out in recognized markets or exchanges, they shall adhere to criterion B-4 "Derivatives and hedging operations".

For this type of assets, it shall be disclosed in a note to the financial statements this fact and the balance thereof by type of operation.

Assets promised for sale or with retention of title

In cases where a promise of sale contract or a sale with retention of title is entered into, the asset shall be recognized as restricted, according to the type of asset in question, at the same book value it had on the date of signing said contract, even if a selling price higher than the same has been agreed. Said asset shall follow the same valuation, presentation, and disclosure norms, in conformity with the applicable accounting criteria corresponding to it.

Payments received on account of the asset shall be recorded in liabilities as an advance payment.

On the date the asset promised for sale or subject to sale with retention of title is disposed of, the gain or loss generated shall be recognized in the results of the period as other income (expenses) of the operation.

In the event that the contract is rescinded, the asset shall cease to be recognized as restricted and those advance payments over which the entity may dispose or must settle in accordance with the conditions of the contract, shall be recognized in the results of the period as other income (expenses) of the operation, or as other accounts payable, as applicable.

Settlement accounts

With respect to active and passive operations carried out by entities, for example, in matters of investments in securities, repurchase agreements, and derivatives, once these reach maturity and while the corresponding settlement is not received or delivered, as agreed in the respective contract, the amount of the matured operations receivable or payable shall be recorded in settlement accounts (debtors or creditors for settlement of operations).

Likewise, for operations where immediate settlement or same-day value date is not agreed, including those involving the sale of foreign currency linked to its corporate purpose, on the transaction date, the amount receivable or payable shall be recorded in settlement accounts, until their settlement is effected. In cases where the amount receivable is not realized within 90 natural days following the date it was recorded in settlement accounts, it shall be reclassified as overdue debt and the estimate for uncollectibility or difficult collection shall be simultaneously established for the total amount thereof in accordance with what is established by criterion A-2 "Application of specific norms".

For the purposes of financial statement presentation, settlement accounts shall be presented under the item of other accounts receivable (net) or other accounts payable, as applicable. The balance of debtor and creditor settlement accounts may be offset in terms of what is established for the offsetting rules provided in this criterion.

With respect to the operations referred to in paragraph 10, the balance receivable or payable thereof shall be disclosed, for each type of operation from which they originate (foreign currency linked to its corporate purpose, investments in securities, repurchase agreements, etc.), specifying that these are operations agreed upon with settlement pending.

Various estimates and provisions

Estimates or provisions with indefinite and/or unquantifiable purposes, as well as those for which there is regulation regarding their valuation, shall not be created, increased, or decreased against the results of the period.

Trusts

When entities acquire documents issued by a trust, they shall evaluate whether such documents meet the definition of "investments in securities" in accordance with what is established in criterion B-2 "Investments in securities"; and in that case, follow the guidelines contained in such criterion. Otherwise, said documents shall be registered as a receivable right, applying the provisions indicated in criterion B-10 "Receivable rights".

With respect to contribution certificates or fiduciary right certificates, residual interests, or any other title, contract, or document that grant to their holder participation in the possible surplus or remainder that the trust or assignee may generate in its case, it shall be evaluated whether such participation grants control, joint control, or significant influence in accordance with what is established in the corresponding NIFs.

Accrued interest

Accrued interest for the different asset or liability items shall be presented in the balance sheet together with their corresponding principal.

Recognition or cancellation of assets and/or liabilities

The recognition or cancellation in the financial statements of assets and/or liabilities, including those resulting from operations involving the sale of foreign currency linked to its corporate purpose, investments in securities, repurchase agreements, derivatives, and issued securities, shall be carried out on the date the operation is concluded, regardless of the settlement or delivery date of the asset.

Offsetting rules

Financial assets and financial liabilities shall be subject to offsetting so that the balance sheet presents the debtor or creditor balance, as applicable, if and only if, the entity:

has the contractual right to offset the recognized amounts, and

the intention to settle the net amount, or to realize the asset and cancel the liability, simultaneously.

The foregoing, in addition to what is provided in the accounting criteria for credit unions corresponding to operations in which the method of offsetting them is established, such as the case of criteria B-3 "Repurchase agreements" and B-4 "Derivatives and hedging operations".

In the recognition of a transfer that does not meet the requirements to derecognize a financial asset from the balance sheet in terms of what is established by criterion C-1 "Recognition and derecognition of financial assets", the entity shall not offset the transferred asset with the associated liability.

This criterion establishes the presentation of the net balance on compensated financial assets and financial liabilities, when doing so reflects the expected future cash flows of the entity when settling two or more financial instruments separately. When the entity has the right to receive or pay a single amount on the net balance, and additionally has the intention to do so, it effectively possesses a single financial asset or financial liability, respectively. In other circumstances, financial assets and financial liabilities shall be presented separately, within the items resulting applicable according to the type of asset in question in accordance with what is established by the applicable accounting criteria.

The offsetting of recognized financial assets and financial liabilities, and the presentation in the balance sheet of the debtor or creditor balance, does not equate to the derecognition from the balance sheet of the financial asset or financial liability. Offsetting has no effect on the results of the period; in contrast, the derecognition from the balance sheet of a financial instrument not only implies the disappearance of the item recognized in the balance sheet, but may also give rise to the recognition of an effect on results.

Offsetting is a legal right of the debtor, acquired through a "master netting agreement" or other distinct means, to cancel or eliminate wholly or partially an account payable to a creditor. In exceptional circumstances, a debtor may have a legal right to offset an amount owed by a third party with the amount payable to a creditor; for example, an agreement between the three parties that clearly establishes the debtor's right to carry out such offsetting. In this sense, considering that the right to offset is of a legal nature, the legal conditions supporting this right may vary and therefore the laws applicable to the operations between the parties involved must be taken into account.

The existence of a right to offset a financial asset and a financial liability will affect the rights and obligations associated with the corresponding financial assets and financial liabilities, and may affect the entity's level of exposure to credit and liquidity risks. Nevertheless, the existence of the right, by itself, is not a sufficient reason for offsetting. If there is no intention to exercise the right to offset or to settle the two positions simultaneously, neither the amount nor the date of the entity's future cash flows derived from both instruments will be affected. When the entity intends to exercise the right to offset and settle the two positions simultaneously, the presentation of the asset and liability in net terms will adequately reflect the amount and date of the cash flows to which they are subject, as well as the risks to which these flows are exposed. The intention, of one or both parties, to settle in net terms, without the corresponding right to do so, is not sufficient to justify offsetting, since the rights and obligations associated with the financial asset or financial liability, considered individually, remain unaltered.

The entity's intention, regarding the settlement of specific financial assets and financial liabilities, may be influenced by its usual business practices, by the demands of financial markets, or by other circumstances, which may limit the possibility of settling in net or of settling the instruments simultaneously. When the entity has the right to offset, but not the intention to settle in net terms or to realize the financial asset and settle the financial liability simultaneously, the effect that the aforementioned right to offset has on the entity's exposure to credit risk shall be disclosed in notes to the financial statements.

The simultaneous settlement of two financial instruments may occur, for example, through the activity of a clearing house in an organized market, or through an exchange with the presence of both parties. In such circumstances, the cash flows will, effectively, be equivalent to a single net amount, and there will be no exposure to credit or liquidity risk. In other circumstances, the entity may settle two instruments through independent receipts and payments, thus resulting exposed to credit risk for the total amount of the asset or to liquidity risk for the total amount of the liability. Such risk exposures may be significant, although they have a relatively short duration in time. In accordance with the foregoing, the realization of a financial asset shall be considered simultaneous with the settlement of a financial liability only when the two transactions occur simultaneously.

Generally, it will be inappropriate to offset financial assets if the conditions established in paragraph 18 are not met, when:

several different financial instruments are used as if they all had the characteristics of a single financial instrument (giving rise to a "synthetic instrument");

financial assets and financial liabilities arise from financial instruments that have, basically, the same exposure to risk, but involve different counterparties (for example, financial assets and financial liabilities within the same portfolio of forward contracts or other derivatives);

assets, financial or non-financial, have been transferred to serve as collateral for financial liabilities that are non-recourse obligations, or

financial assets have been assigned by the debtor to a separate fund, under a trust regime, with the intention of releasing itself from an obligation, but that have not been accepted by the creditor as a form of payment for the same (for example, a fund constituted to reduce or amortize future obligations).

An entity that has entered into several financial instrument transactions with a single counterparty may carry out a "master netting agreement" with it. Such an agreement contemplates a single settlement, by offsetting, of all financial instruments covered by it, in the event of default or termination of any of the contracts. A "master netting agreement" generally creates a right to offset that becomes enforceable and, therefore, affects the realization or cancellation of individual financial assets and financial liabilities, only when certain insolvency situations or other abnormal circumstances within the normal course of the entity's activities occur. A "master netting agreement" does not meet the conditions to offset instruments unless the two conditions of paragraph 18 are satisfied. When the financial assets and financial liabilities subject to a "master netting agreement" have not been offset, the effect that the agreement has on the entity's exposure to credit risk shall be disclosed.

Disclosure of financial information

Regarding the disclosure of financial information, what is established in NIF A-7 "Presentation and disclosure" shall be taken into account, with respect to the fact that the responsibility for providing information on the economic entity rests with its administration, and such information must gather certain qualitative characteristics such as reliability, relevance, understandability, and comparability based on what is provided in NIF A-1 "Structure of financial reporting standards".

Entities, in compliance with the disclosure norms provided in these accounting criteria, shall consider materiality in terms of NIF A-4 "Qualitative characteristics of financial statements", that is, they shall show the most significant aspects of the entity recognized accountingly as indicated by that characteristic associated with relevance.

The foregoing implies, among other elements, that materiality requires the exercise of professional judgment regarding the circumstances that determine the facts reflected in the financial information. In the same sense, an appropriate balance must be obtained between the qualitative characteristics of financial information in order to fulfill the objective of the financial statements, for which an optimal point must be sought rather than the achievement of maximum levels of all qualitative characteristics.

Nevertheless, with respect to materiality, it shall not apply to information:

required by the CNBV through other general provisions issued specifically different from those contained in these criteria;

additional specific required by the CNBV, related to its supervisory activities, and

required through the issuance or authorization, if applicable, of special accounting criteria or records.

Valuation of the UDI

The value to be used shall be that made known by the Bank of Mexico in the DOF, applicable on the date of valuation.

A-4 SUPPLEMENTARY APPLICATION TO ACCOUNTING CRITERIA

Objective and scope

The present criterion aims to clarify the application of the norms contained in NIF A-8 "Supplementarity" issued by the CINIF, considering that, in applying it, financial information is being prepared and presented in accordance with accounting criteria for credit unions.

Definition

For the purposes of the accounting criteria for credit unions, the process of supplementarity

applies when in the absence of specific accounting standards issued by the CNBV in particular, and by the CINIF in general, these are covered by a formal and recognized set of standards.

Concept of Suppletoriness and Basic Standard

In the absence of a specific accounting criterion from the CNBV for entities and, secondarily, for credit institutions, or in a broader context, the NIFs, the bases for suppletoriness provided in the aforementioned NIF A-8 shall apply, together with what is provided in the provisions of this criterion.

Other Suppletory Normativity

Only in the event that the International Financial Reporting Standards (IFRS) referred to in NIF A-8 do not provide a solution for accounting recognition, one may opt for a suppletory standard belonging to any other normative scheme, provided it meets all the requirements indicated in the aforementioned NIF A-8 for a suppletory standard, as well as those provided in paragraph 6 of this criterion, and suppletoriness shall be applied in the following order:

the Generally Accepted Accounting Principles (GAAP) definitive, applicable in the United States of America, and

any accounting standard that is part of a formal and recognized set of standards.

For the purposes of the preceding paragraph, it is considered that both official (authoritative) and non-official (nonauthoritative) sources form part of the GAAP applicable in the United States of America, in accordance with what is established in Topic 105 of the Codification of the Financial Accounting Standards Board (FASB), in the following order:

Official sources: the Codification, rules or interpretations of the Securities and Exchange Commission (SEC), Staff Accounting Bulletins, and SEC positions regarding the Consensus of the FASB Emerging Issues Task Force (EITF), and

Non-official sources: widely recognized and preponderant practices, whether generalized or in a specific industry, FASB Concepts Statements, documents of the American Institute of Certified Public Accountants (AICPA, Issues Papers), pronouncements of professional associations or regulatory agencies, and questions and answers of the Technical Information Service included in AICPA Technical Practice Aids.

Requirements of a Suppletory Standard and Rules of Suppletoriness

In addition to what is established in the aforementioned NIF A-8, the standards that apply suppletorily must comply with the following:

they cannot be applied in advance;

they must not contravene the philosophy and general concepts established in the accounting criteria for credit unions;

the suppletory process, if any, provided within each of the standards used suppletorily shall not be applicable, except when such suppletoriness meets the preceding subsections and has the authorization of this CNBV, and

the standards that have been applied in the suppletory process shall be replaced, at the moment that a specific accounting criterion is issued by the CNBV or an NIF, on the subject on which said process was applied.

Disclosure Standards

Entities that follow the suppletory process recorded in this criterion must communicate in writing to the CNBV Vice Presidency responsible for their supervision within 10 natural days following its application, the accounting standard that has been adopted suppletorily, as well as its basis of application and the source used. Additionally, entities must disclose through notes to the financial statements, the information requested in the aforementioned NIF A-8 and the quantification of their impacts on the financial statements.

B-1 AVAILABILITIES

Objective and Scope

The present criterion aims to define the specific standards relative to the recognition, valuation, presentation, and disclosure in the financial statements of the items that make up the availability section in the balance sheet of entities.

For the purposes of the preceding paragraph, the availability section shall be composed of cash, banknotes and coins, deposits in financial institutions made in the country or abroad represented in cash. This section also includes the purchase of foreign currency linked to their social object, which are not considered derivatives as established by the Bank of Mexico in the applicable regulation, as well as other availabilities such as documents for immediate collection.

Deposits in financial institutions represented or invested in securities shall be subject to criterion B-2 "Investments in Securities".

Recognition and Valuation Standards

Availabilities must be recognized and maintained valued at their nominal value.

The yields generated by deposits shall be recognized in the results of the period as they accrue.

Documents for immediate collection shall be recognized as other availabilities according to the following:

In the case of operations with entities in the country, they must not contain uncollected items after 2 business days from the operation that gave rise to them, nor those that, having been deposited in banks, have been subject to return.

When they correspond to operations with entities abroad, they must be recorded in availabilities only if they are collectible within a maximum period of 5 business days.

When the documents indicated in the preceding paragraph have not been collected within the aforementioned periods (2 or 5 days, as applicable), the amount of these shall be transferred to the item that gave rise to them, that is, if they come from:

various debtors, the provisions of criterion A-2 "Application of specific standards" shall be attended to, or

credit portfolio, the provisions of criterion B-5 "Credit Portfolio" shall be attended to.

"Subject to good collection" documents for immediate collection, of operations carried out with entities in the country or abroad, shall be recorded in off-balance sheet accounts in the section of other registration accounts.

Foreign currencies acquired linked to their social object that are agreed to be settled on a date subsequent to the negotiation of the purchase-sale operation, shall be recognized on said negotiation date as a restricted availability (foreign currency to be received), while, the sold foreign currencies shall be recorded as an outflow of availabilities (foreign currency to be delivered). The counterparty must be a clearing, creditor, or debtor account, as applicable, in accordance with what is established in criterion A-3 "Application of general standards".

Presentation Standards

Balance Sheet

The availability section must be shown in the balance sheet of entities as the first item that integrates the asset.

In the event that there is an overdraft in checking accounts reported in the statement issued by the corresponding credit institution, the amount of the overdraft must be presented in the section of other accounts payable, even if other checking accounts with the same credit institution are maintained. Likewise, the compensated balance of foreign currency to be received with foreign currency to be delivered, or if any concept that makes up the availability section, were to show a negative balance, said concept must be presented in the section of other accounts payable.

Income Statement

The yields generated by deposits in financial institutions, as well as the valuation effects of those constituted in foreign currency, shall be presented in the income statement, as an interest income or expense, while the valuation and purchase-sale results of foreign currencies linked to their social object, shall be grouped in the section of intermediation result, referred to in criterion D-2 "Income Statement".

Disclosure Standards

The availability section shall be broken down through notes to the financial statements including, as applicable, cash, banknotes and coins, deposits in financial institutions made in the country and abroad, and finally, other availabilities. Likewise, the following rules must be observed where applicable:

When any item within the section has a restriction regarding availability or purpose to which it is destined, this fact must be disclosed.

In the event that the balance of availabilities is presented in the liability, in terms of what is stated in paragraph 11, this fact and the causes that gave rise to it must be disclosed.

The existence of availabilities denominated in foreign currency must be disclosed, indicating its amount, type of currency involved, settlement term, quotations used for its conversion, and its equivalent in national currency.

B-2 INVESTMENTS IN SECURITIES

Objective and Scope

The present criterion aims to define the specific standards relative to the recognition, valuation, presentation, and disclosure in the financial statements of operations with investments in securities carried out by entities.

The following aspects are subject to this criterion:

initial recognition and valuation of investments in securities;

subsequent recognition of gains or losses derived from investments in securities;

recognition of impairment of investments in securities, and

derecognition of investments in securities from the balance sheet of entities.

The following topics are not subject to this criterion:

repurchase agreements;

derivatives and hedging operations;

permanent investments contemplated by NIF B-8 "Consolidated or Combined Financial Statements", NIF C-7 "Investments in Associates, Joint Ventures and Other Permanent Investments" and NIF C-21 "Agreements with Joint Control";

investments derived from pension and retirement plans, and

adjudicated assets.

Definitions

Amortized Cost.- For the purposes of this criterion, it is the amount at which a financial asset is valued resulting from adjusting the value at which it is initially recognized by (i) payments of the principal, (ii) plus or minus the accumulated amortization, using the effective interest method, of any difference between the value at which it is initially recognized and the value at its maturity and (iii) less any reduction in value due to impairment.

Transaction Costs.- For the purposes of this criterion, these are those incremental costs directly attributable to the acquisition or disposal of a financial asset. A cost is incremental if it would not have been incurred had a financial instrument not been acquired or disposed of. For example, commissions paid to agents, consultants, brokers, as well as charges by stock exchanges, among others. Transaction costs do not include the discount or premium received or paid for debt securities, financing costs or internal administrative costs.

Impairment.- It is the condition existing when the book value of investments in securities exceeds the recoverable amount of said securities.

Equity Instruments.- Asset represented through a title, certificate or right derived from a contract, among others, that represents a residual participation in the assets of an entity, after deducting all its liabilities, such as shares, partnership interests, residual interests, among others.

Investments in Securities.- Those made in assets constituted by equity instruments, bonds, debentures, certificates and other credit titles and documents that are issued in series or in bulk and that the entity holds in its own position.

Effective Interest Method.- It is that by which the amortized cost of a financial asset or financial liability (or group thereof) is calculated and the recognition of income or financial expense over the relevant period. This, by applying the effective interest rate, that is, the discount rate that exactly equates the estimated future cash flows to be received or to be paid over the expected life of the financial asset or financial liability, or when appropriate, in a shorter period (for example, when there is the possibility of an early payment or redemption), with the net book value of said financial asset or financial liability.

Credit Risk.- It is the risk that one of the parties to a financial instrument causes a financial loss to the other party by failing to fulfill an obligation.

Market Risk.- It is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of variations in market prices. Market risk comprises three types of risks: exchange rate risk (originated by variations in the exchange rate), interest rate risk (coming from variations in market interest rates) and other price risks (caused by particular factors of the specific financial instrument or its issuer, or by factors that affect all similar financial instruments traded in the market).

Effective Interest Rate.- Rate obtained through the estimation of cash flows considering all contractual conditions of the financial instrument (for example, commissions and interest paid or received by the parties to the contract, transaction costs and any other premium or discount), without considering future credit losses. When extraordinarily the cash flows and the expected life of a group of substantially similar financial assets cannot be estimated reliably, the entity will use the contractual cash flows over the contractual period of each financial asset.

Securities Held to Maturity.- These are debt securities, whose payments are fixed or determinable and with a fixed maturity (which means that a contract defines the amounts and dates of payments to the holding entity), with respect to which the entity has both the intention and the capacity to hold until their maturity. A security cannot be classified as held to maturity if during the current fiscal year or during the two previous fiscal years, the entity sold securities classified in the category of held to maturity, or reclassified securities from the category of held to maturity to that of available for sale, in accordance with what is established in the Reclassifications section of this criterion, regardless of whether the securities to be classified, the previously sold or the reclassified have similar characteristics or not. In this regard, it will be considered that both the intention and the capacity to hold the securities until maturity have been maintained when previous sales or reclassifications have been made that are in the following circumstances:

they are carried out within the 28 natural days prior to their maturity or, as applicable, from the date of the issuer's call option on the security, or

occur after the entity has accrued or, as applicable, collected more than 85% of its original value in nominal terms.

Debt Securities.- These are instruments that, in addition to constituting a right for one party and an obligation for the other, have a known term and generate cash flows for the holder of the securities during or at the maturity of the term.

Securities Available for Sale.- These are debt securities and equity instruments, whose intention is not oriented to obtaining gains derived from price differences resulting from short-term purchase-sale operations and, in the case of debt securities, there is neither the intention nor the capacity to hold them until maturity, therefore it represents a residual category, that is, they are acquired with an intention different from that of securities for trading or held to maturity, respectively.

Securities for Trading.- These are securities that entities acquire with the intention of disposing of them, obtaining gains derived from price differences resulting from short-term purchase-sale operations, which they carry out as participants in the market.

Book Value.- It is the balance of an investment in a security, including adjustments by valuation result, interest, accrued but uncollected dividends, impairment loss or any other adjustment that corresponds to it, as applicable, as determined in accordance with this criterion.

Fair Value.- The amount by which an asset can be exchanged or a liability settled between informed, interested and equally willing parties in a free competition transaction.

Classification

At the time of their acquisition, investments in securities must be classified as securities for trading, securities available for sale, or securities held to maturity. Each of these categories has specific standards regarding recognition, valuation and presentation standards in the financial statements.

The classification between the categories of securities for trading and securities available for sale shall be made by the entity's management, taking as a basis the intention that at the time of acquiring a certain instrument it has regarding the same. To classify an instrument in the category of securities held to maturity, it must:

have the intention and capacity to hold them until maturity, and

ii.

not be unable to classify them as held to maturity in accordance with what is stated in paragraph 13.

Recognition Standards

At the time of their acquisition, investments in securities shall be initially recognized at their fair value (which includes, if applicable, the discount or premium), in accordance with what is established for such purposes in criterion C-1 "Recognition and Derecognition of Financial Assets".

Transaction costs for the acquisition of securities shall be recognized, depending on the category in which they are classified, as follows:

Securities for Trading.- In the results of the period on the date of acquisition.

Securities Available for Sale and Held to Maturity.- Initially as part of the investment.

For the derecognition from the balance sheet of investments in securities, the guidelines provided for such purposes in criterion C-1 shall be attended to, as well as what is stated in paragraph 30.

Valuation Standards

General Valuation Standards

Securities for trading and securities available for sale shall be valued at their fair value.

Securities held to maturity shall be valued at their amortized cost, which implies that the amortization of the premium or discount (included, if applicable, in the fair value at which they were initially recognized), as well as transaction costs, shall be part of accrued interest.

Accrued Interest

Accrued interest on debt securities shall be determined in accordance with the effective interest method and recognized in the corresponding category within the investments in securities section against the results of the period (including in the case of securities available for sale). At the moment when accrued interest is collected, the investments in securities section must be decreased against the availabilities section.

Dividends

Dividends from equity instruments shall be recognized in the corresponding category within the investments in securities section against the results of the period (including in the case of securities available for sale), at the moment when the right to receive payment thereof is generated. When dividends are collected, the investments in securities section must be decreased against the availabilities section.

Valuation Result of Securities for Trading and Available for Sale

The valuation result of securities for trading shall be recognized in the results of the period.

The valuation result of securities available for sale shall be recognized in other comprehensive income items within equity. In the event that a security classified as available for sale constitutes a hedged item in a fair value hedge, in terms of what is established in criterion B-4 "Derivatives and Hedging Operations", the valuation result of said security must be recognized in the results of the period. In the case of an inflationary environment, the valuation result corresponding to the monetary position of the valuation result of securities available for sale, must be recognized in other comprehensive income items within equity.

The valuation result of securities for trading that are disposed of, which has been previously recognized in the results of the period, must be reclassified as part of the purchase-sale result on the date of sale. Likewise, the accumulated valuation result of securities available for sale that are disposed of, which has been recognized in other comprehensive income items within equity, must be reclassified as part of the purchase-sale result on the date of sale.

Gain or Loss on Exchange

The gain or loss on exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the period.

Reclassifications

Reclassifications from the category of securities held to maturity to available for sale may be made, provided that there is no intention or capacity to hold them until maturity. Reclassifications to the category of securities held to maturity, or from securities for trading to available for sale, may be made in extraordinary circumstances (for example, lack of liquidity in the market, that there is no active market for it, among others), which will be evaluated and, if applicable, validated through express authorization of the CNBV.

The valuation result corresponding to the date of reclassification, in the event of carrying out the reclassification from the category of securities held to maturity to available for sale, must be recognized in other comprehensive income items within equity.

It will be understood as valuation result, the difference resulting from comparing the book value

books with fair value at the date the aforementioned reclassification takes place.

For those debt securities that had been authorized to be reclassified from the category of available-for-sale securities to the held-to-maturity category, the valuation result corresponding to the date of transfer shall continue to be reported in the entity's equity capital, and must be amortized based on the remaining life of said security.

Regarding reclassifications that may have been authorized from the trading securities category to any other, the valuation result at the date of reclassification must have been previously recognized in the income statement.

Clearing Accounts

Securities acquired that are agreed to be settled on a date subsequent to the agreement of the purchase-sale operation and that have been assigned, i.e., identified, shall be recognized as restricted securities (to receive) at the time of the agreement, while sold securities shall be recognized as an outflow of investment in securities (to deliver). The counterpart shall be a clearing account, either creditor or debtor, as appropriate, in accordance with what is established in criterion A-3 "Application of general norms".

Impairment in the value of a security

Entities must evaluate whether, at the balance sheet date, there is objective evidence that a security is impaired.

A security is considered impaired and, therefore, an impairment loss is incurred, if and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the security, which had an impact on its estimated future cash flows that can be determined reliably. It is unlikely to identify a single event that individually is the cause of the impairment; it is more likely that the combined effect of various events could have caused the impairment.

Objective evidence that a security is impaired includes observable information, among others, regarding the following events:

a) significant financial difficulties of the issuer of the security;

b) it is probable that the issuer of the security will be declared bankrupt or undergo another financial reorganization;

c)breach of contractual clauses, such as failure to pay interest or principal;

d)the disappearance of an active market for the security in question due to financial difficulties, or

e)that there is a measurable decrease in the estimated future cash flows of a group of securities since the initial recognition of said assets, although the decrease cannot be identified with the individual values of the group, including:

i. adverse changes in the payment status of issuers in the group, or

ii.local or national economic conditions that correlate with defaults in the securities of the group.

In addition to the events mentioned above, objective evidence of impairment for an equity instrument includes information about significant adverse changes that have taken place in the technological, market, economic, or legal environment in which the issuer operates, and indicates that it is probable that the cost of the investment in the equity instrument will not be recoverable.

The disappearance of an active market because a security is no longer publicly traded is not necessarily evidence of impairment. A decrease in the credit rating of an entity is not by itself evidence of impairment; however, it could be when considered in combination with additional information. A decrease in the fair value of a security below its amortized cost is not necessarily evidence of impairment (for example, a decrease in the fair value of a debt security resulting from an increase in the risk-free interest rate, such as the interest rate relative to treasury certificates issued by the Federal Government).

In some cases, the observable information required to estimate the amount of the impairment loss of a security may be limited or cease to be relevant in certain circumstances, so the entity will use its judgment based on its experience to determine said impairment loss.

Trading Securities

Because trading securities are valued at fair value, recognizing the valuation result immediately in the results of the period, the impairment loss that, if any, were generated with respect to said securities would already be implicit in the aforementioned valuation result, so it is not necessary to perform the impairment evaluation referred to in this section.

Available-for-Sale Securities

When a decrease in the fair value of an available-for-sale security has been recognized directly in other comprehensive income items within equity capital, and there is objective evidence that the security is impaired, the valuation result recognized therein shall be reclassified to the results of the period. The amount to be reclassified shall be determined as follows:

a) the difference between (i) the value at which the security was initially recognized, net of any principal payments and amortization, and (ii) the current fair value of the security, minus

b) any impairment loss of said security previously recognized in the results of the period.

The impairment loss recognized in the results of the period of an equity instrument classified as available-for-sale shall not be reversed.

If, in a subsequent period, the fair value of a debt security classified as available-for-sale increases and such effect of the reversal of impairment can be objectively related to an event that occurs after the impairment was recognized in the results of the period, the impairment loss shall be reversed in the results of the period.

Held-to-Maturity Securities

If there is objective evidence that an impairment loss has been incurred with respect to a held-to-maturity security, the amount of the loss shall be determined by the difference between the book value of the security and the present value of the estimated future cash flows, discounted at the original effective interest rate of the security (for example, the effective interest rate calculated at initial recognition). The book value of the security shall be reduced, recognizing the impairment loss in the results of the period.

If, in a subsequent period, the amount of the impairment loss decreases and such decrease can be objectively related to an event that occurs after the impairment was recognized, the previously recognized impairment loss shall be reversed. The effect of the reversal of impairment shall not exceed the amortized cost that the security would have had on that date, if impairment had not been recognized. Such effect shall be recognized in the results of the period.

Presentation Norms

Balance Sheet

Investments classified as trading securities, available-for-sale securities, and held-to-maturity securities shall be presented separately in the investment in securities item, maintaining that same order.

The valuation result of available-for-sale securities, as well as the monetary position result corresponding to said valuation, in case of an inflationary environment, shall be presented in the item of valuation result of available-for-sale securities as part of other comprehensive income items within equity capital.

Income Statement

Accrued interest and yields and gains or losses from changes in investment in securities, as well as dividends from equity instruments, shall be presented in the item of interest income or interest expense, as appropriate.

The fair value valuation result of trading securities, the buy-sell result of investment in securities, the amount of impairment loss of available-for-sale and held-to-maturity securities, or the effect of the reversal of impairment of debt securities classified as available-for-sale or held-to-maturity whose value was previously adjusted for impairment, as well as transaction costs of trading securities, shall be included within the item of intermediation result.

Disclosure Norms

Entities must disclose in notes to the financial statements the following information relating to investments in securities:

a) The book value of investments in securities for each category of securities.

b) If the entity has made sales of held-to-maturity securities, it must disclose in its financial statements and inform the CNBV, the amount and type of securities sold, the remaining time during which the held-to-maturity category cannot be used in the classification of securities, as well as an explanation of the reasons for said situation.

c) If the entity has reclassified a security from the held-to-maturity category to the available-for-sale category, it must disclose the amount and type of securities reclassified, the reason for said reclassification, the remaining time during which the held-to-maturity category of securities cannot be used in the classification of securities, as well as an explanation of the reasons for said situation.

d) If the entity, in accordance with what is established in the Reclassifications section of this criterion, has obtained authorization from the CNBV to reclassify securities, the disclosure of this fact is required, specifically indicating the category from and to which the reclassification was made, as well as the characteristics of the reclassified securities regarding: their number, weighted average rate, and type of issuer. Likewise, the book value and fair value of the securities at the date of the financial statements must be disclosed, when these have been transferred to the held-to-maturity securities category, or the effect of the fair value valuation on that date if the transfer has been from the trading securities category to the available-for-sale category.

e) The fair value of investments in securities that have been pledged as collateral, including those that had been reclassified as restricted in accordance with what is established in criterion C-1.

f) The terms and conditions related to the collateral.

g) If the entity receiving collateral (consisting of financial or non-financial assets) has the right to sell it or pledge it, without there being a breach by the entity granting the collateral, in terms of what is established in criterion C-1, it must disclose:

i. the fair value of the collateral received;

ii. the fair value of any collateral sold or pledged, and

iii. the terms and conditions associated with the use of the collateral.

h) Net gains or losses on:

i. trading securities;

ii. available-for-sale securities, showing separately the valuation result recognized in other comprehensive income items within equity capital during the period and the amount reclassified to the results of the period, and

iii. held-to-maturity securities.

i) The total interest income and total interest expense of securities.

j) Commission income and expenses generated by securities.

k) Interest income accrued on impaired securities.

l) The amount of impairment for each category of available-for-sale and held-to-maturity securities.

m) The amount and origin of the effect of the reversal of impairment of available-for-sale and held-to-maturity securities.

n) Accounting policies relating to the valuation bases used in investments in securities.

o) Any extraordinary event that affects the valuation of investments in securities.

p) Information that allows users of the entity's financial statements to evaluate the nature and degree of risks arising from investments in securities (for example, the type of risk and its characteristics, as well as to what extent they affect the entity), including but not limited to credit and market risk, to which said entity is exposed at the end of the period, as well as the way in which said risks are managed (for example, the establishment of a monitoring group whose function is supervision and determination of risks, as well as the degree of adherence to the policies established for such purposes).

q) Qualitative disclosure.

For each type of risk arising from investments in securities:

i. the risk exposures and how they arise;

ii. their objectives, policies, and processes for managing risk and the methods used to measure them, and

iii. any change in (i) or (ii), with respect to the previous period.

r) Quantitative disclosure.

For each type of risk arising from investments in securities:

i. a summary of quantitative information about its risk exposures at the end of the period, which shall be based on internally provided information to key management personnel of the entity;

ii. quantitative disclosure for each type of risk (credit and market) detailed in paragraphs t) and u), to the extent that it has not been provided according to paragraph (i) above, unless the risk is not material, and

iii. risk concentrations, if not evident according to paragraphs (i) and (ii) above.

s) If the quantitative information disclosed at the end of the period is not representative of the entity's exposure to risk during the period, additional information that is representative must be provided.

t) With respect to credit risk:

For each category of securities:

i. the amount that best represents the maximum exposure to credit risk at the end of the period, without taking into account any collateral received or other type of credit enhancement (e.g., guarantees);

ii. with respect to the amount disclosed in paragraph (i) above, a description of the collateral received or other type of credit enhancements;

iii. information on the credit quality of investments in securities that are not impaired;

iv. the book value of investments in securities whose terms have been renegotiated, and which otherwise would be impaired;

v. an analysis of investments in securities that have individually become impaired at the end of the period, including the factors the entity considered for such purposes, and

vi. with respect to the amounts disclosed in paragraph (v) above, a description of the collateral received by the entity and other credit enhancements and, unless impracticable, an estimate of their fair value.

If an entity obtains financial or non-financial assets during the period, exercising collateral or requesting other types of credit enhancements, and said assets meet the recognition standards contained in the accounting criteria for credit unions, the following shall be disclosed:

i. the nature and book value of the assets obtained, and

ii. when the assets are not immediately convertible into cash, the policies to sell said assets, or alternatively, use them in operations.

u) With regard to market risk, a sensitivity analysis for each type of market risk to which the entity is exposed at the end of the period, showing:

i. the methods, main parameters, and assumptions used for the preparation of the analysis;

ii. an explanation of the objective of the method used and limitations that might result in information not fully reflecting the fair value of investments in securities, and

iii. changes in the methods and assumptions used in the previous period, as well as the reasons for said changes.

v) Investments in securities other than government securities, that are integrated by debt securities from the same issuer and represent more than 5% of the entity's net capital, indicating the main characteristics of these (issuance, weighted average maturity term, and weighted average rate). Net capital shall be determined in accordance with the capital requirements established by the CNBV through general provisions.

w) If the entity acquires fiduciary rights issued by a trust and said issuance has been in series or mass, the underlying asset of said fiduciary rights, as well as the amount, term, and other characteristics thereof, must be disclosed.

Appendix A is an integral part of criterion B-2. Its content illustrates the application of this criterion, with the aim of clarifying its meaning.

APPENDIX A

APPLICATION GUIDE

Classification in the held-to-maturity securities category

Intent and capacity

For the purposes of the Reclassifications section, an entity does not have the intention to hold debt securities until maturity if at least one of the following assumptions is met:

a) the entity intends to hold the security for an indefinite period;

b) the entity is willing to sell the security (due to circumstances other than isolated events that are not subject to the control of the entity, are not recurrent, and could not have been reasonably anticipated by the entity) in response to changes in market interest rates or risks, liquidity needs, changes in the availability and profitability of alternative investments, changes in terms and sources of financing, or changes in foreign exchange risk, or

c) the issuer has the right to settle a security for an amount significantly lower than its amortized cost.

GA1

For the purposes of the Reclassifications section, an entity does not have demonstrated capacity to hold until maturity an investment in a security with a fixed maturity if:

a) it does not have available financial resources to continue financing its investment until maturity, or

b) it is subject to a legal or other type of restriction that may frustrate its intention to hold the investment until maturity.

Specific Cases

GA2

Variable interest rate debt securities may meet the conditions to be classified as held-to-maturity securities.

GA3

Credit risk does not prevent a security from being classified as held-to-maturity, provided that contractual payments are fixed and determinable, and that the other conditions for said classification are met.

GA4

The intention and capacity of an entity to hold debt securities until their maturity is not necessarily affected if said securities have been pledged as collateral in repo operations. Notwithstanding the foregoing, the entity does not have the intention or capacity to hold debt securities until maturity if it does not expect to be able to maintain or recover access to said securities.

GA5

If the issuer of a security has a repurchase option, it meets the conditions to be classified as held-to-maturity, if the entity has the intention and capacity to hold it until the date the issuer can repurchase it or until its maturity, and this recovers substantially its book value. The issuer's repurchase option simply accelerates the maturity of the security.

GA6

A security with a put option cannot be classified as held-to-maturity, because the fact of paying a premium for said option is inconsistent with the intention to hold it to maturity.

GA7

Equity instruments cannot be classified as held-to-maturity because they have an indefinite life period (such as shares), or because the amounts the entity might receive would vary in a non-predetermined manner. Likewise, if the terms of a perpetual debt security contemplate interest payments for an indefinite time, the security cannot be classified as held-to-maturity.

GA8

B-3 REPO OPERATIONS

Objective and Scope

This criterion aims to define the particular norms relating to the recognition, valuation, presentation, and disclosure in the financial statements of repo operations.

The treatment of operations that, in accordance with what is established in criterion C-1 "Recognition and derecognition of financial assets", meet the requirements to derecognize the financial assets subject thereto, in virtue of the transfer of risks, benefits, and control of said financial assets, is not the object of this criterion, so it must attend to what is established in criterion B-2 "Investments in Securities".

Definitions

Financial Assets.- All those assets in the form of cash, securities, equity instruments, loan portfolio, credit titles, the contractual right to receive cash or another asset from another entity, or to exchange assets under conditions that could be favorable to the entity, or a contract that is or can be settled using the entity's own equity instruments and is (i) a non-derivative financial instrument through which the entity is or may be obligated to receive a variable quantity of its own equity instruments, or (ii) a derivative financial instrument that is or can be settled through an exchange of a quantity of cash for a quantity of the entity's own equity instruments, in which at least one of the two quantities is variable. For the purposes of repo operations, financial assets shall at all times be those permitted in accordance with current regulation.

Substantially Similar Financial Assets.- Those financial assets that, among others, maintain the same primary obligor, identical form and type (which generates substantially the same risks and benefits), same maturity date, identical contractual interest rate, similar collateral, same outstanding balance.

Derecognition of Financial Assets.- Removal of previously recognized financial assets from the entity's balance sheet, in accordance with the guidelines established in criterion C-1.

Collateral.- Guarantee constituted to ensure payment of agreed counter-prestations. For the purposes of repo operations, collateral shall at all times be those permitted in accordance with current regulation.

Considerations.- Cash, benefits from interest referred to in criterion C-1,

equity instruments, financial derivative instruments, or any other type of asset

that is obtained in a transfer of financial assets, including any obligation

incurred. For the purposes of repo operations, the considerations shall at all times be those permitted in accordance with current regulation.

Amortized cost.- For the purposes of this criterion, it is the amount at which a financial

asset or financial liability is measured resulting from adjusting the value at which it is initially recognized by (i)

the principal payments, (ii) plus or minus the accumulated amortization, using the effective interest

method, of any difference between the value at which it is initially recognized and the value at its

maturity and (iii) less any impairment loss.

Equity instruments.- Asset represented through a title, certificate or right

derived from a contract, among others, that represents a residual participation in the assets of

an entity, after deducting all its liabilities, such as shares, partnership interests,

residual interests, among others.

Effective interest method.- It is that by which the amortized cost of a financial

asset or financial liability (or group thereof) is calculated and the recognition of income or expense

financial over the relevant period. This, through the application of the effective interest

rate, that is, the discount rate that exactly equates the estimated future cash flows to be

received or to be paid over the expected life of the financial asset or financial

liability, or when appropriate, in a shorter period (for example, when there is the

possibility of an early payment or redemption), with the net book value of said financial

asset or financial liability.

Cash-oriented repo operations.- Transaction motivated by the need of the

reported entity to obtain cash financing and the intention of the reporting entity to invest its

excess cash.

Securities-oriented repo operations.- Transaction motivated by the need of the

reporting entity to temporarily access certain specific securities and the intention of the

reported entity to increase the returns on its securities investments.

Fixed price at maturity.- It is that right or obligation, as the case may be, represented by the

agreed price plus the repo interest, agreed upon in the operation.

Agreed price.- Represents the right or obligation to receive or deliver resources, agreed at the

beginning of the operation.

Reported entity (Reportada).- That entity that receives cash, through a repo operation in which

it transfers financial assets as collateral, with the obligation to reintegrate to the reporting entity at

the end of the operation the cash and the agreed repo interest.

Reporting entity (Reportadora).- That entity that delivers cash, through a repo operation,

in which it receives financial assets as collateral, with the obligation to return them to the reported entity at

the end of the operation and receiving the cash plus the agreed repo interest.

Repo.- Operation by means of which the reporter acquires for a sum of money the

ownership of credit titles, and undertakes to transfer to the reportado the ownership of as many

titles of the same kind, within the agreed period and against reimbursement of the same price plus a

premium. The premium remains for the benefit of the reporter, unless otherwise agreed.

Effective interest rate.- For the purposes of this criterion, it is the rate obtained through the estimation

of cash flows considering all the contractual conditions of the repo operation

(for example the commissions and interest paid or received by the parties to the contract, the costs

of transaction and any other premium or discount), without considering future credit losses.

When exceptionally the cash flows and the expected life of a group of substantially similar financial

assets cannot be estimated reliably, the entity

will use the contractual cash flows over the contractual period of each financial

asset.

Repo rate.- It is the rate agreed upon which determines the payment of interest for the use of

cash in the repo operation.

Fair value.- Amount for which an asset can be exchanged or a liability settled between

informed, interested and equally willing parties in a free competition transaction.

Characteristics

Economic and legal substance of repo operations

For legal purposes, repo operations are considered as a sale where an

agreement to repurchase the transferred financial assets is established. However, the

economic substance of repo operations is that of a collateralized financing, in

which the reporting entity delivers cash as financing, in exchange for obtaining financial

assets that serve as protection in case of default.

In this regard, the financial assets granted as collateral by the reported entity, which do not meet

the requirements to be derecognized in terms of what is established by criterion C-1,

continue to be recognized in its balance sheet, since it retains the risks,

benefits and control thereof; that is, if there were any change in the value

fair value, accrual of interest or dividends were declared on the financial assets

granted as collateral, the reported entity is the one exposed, and therefore recognizes,

such effects in its financial statements.

In contrast, those operations where economically the reporting entity acquires the risks,

benefits and control of the transferred financial assets cannot be considered as

repo operations, being subject to criterion B-2.

Intent of repo operations

In repo operations there are generally two types of intentions, either of the

reported entity or of the reporting entity: the "cash-oriented" or the "securities-oriented".

In a "cash-oriented" repo, the intention of the reported entity is to obtain a

cash financing, using financial assets as collateral for this purpose; on the other hand, the

reporting entity obtains a return on its investment at a certain rate and not seeking any specific value

in particular, it receives financial assets as collateral to mitigate the credit risk exposure

it faces with respect to the reported entity.

In this sense, the reported entity pays the reporting entity interest on the cash received as

financing, calculated based on the agreed repo rate (which is usually lower than the

rate existing in the market for unsecured financing). On the other hand, the

reporting entity achieves returns on its investment whose payment is secured through the collateral.

In a "securities-oriented" repo, the intention of the reporting entity is to temporarily access certain

specific securities owned by the reported entity (for example, if the reporting entity through a previous

repo operation in which it acts as the reported entity, contracted a commitment on a security

similar to the object of the new operation), providing cash as collateral, which serves to

mitigate the exposure to risk faced by the reported entity with respect to the reporting entity.

In this regard, the reported entity pays the reporting entity the agreed interest at the repo rate for

the implicit financing obtained on the cash it received, where said repo rate is

generally lower than what would have been agreed in a "cash-oriented" repo.

In repo operations, an agreed price is usually agreed whose value is

above or below the cash exchanged, so the difference existing

between the cash exchanged and the agreed price is intended to protect the counterparty that is

exposed to the risks of the operation (for example, against market risk). If the

operation is "cash-oriented", the reported entity generally grants financial assets in

guarantee at an agreed price lower than the market value, so its fair value is superior

with respect to the cash received; in contrast, if it is "securities-oriented" the reporting entity

generally receives titles in guarantee at an agreed price higher than the market value, so

its fair value is below the cash granted.

The delivery of collateral can occur at the beginning of the operation or during the life of the repo

with respect to variations in the fair value of the granted collateral.

Considering all the above, regardless of the economic intention, the accounting treatment of the

repo operations "cash-oriented" or "securities-oriented" is the same.

Recognition and valuation rules

Reporting entity

On the date of contracting the repo operation, acting as the reporting entity,

it must recognize the outflow of cash or a creditor clearing account,

registering a receivable account measured initially at the agreed price, which represents the

right to recover the cash delivered.

During the life of the repo, the receivable account referred to in the previous paragraph, shall be measured at its

amortized cost, through the recognition of repo interest in the results of the period

as it accrues, in accordance with the effective interest method, affecting said receivable

account.

The financial assets that the reporting entity has received as collateral must be treated

in accordance with what is established in the section on Collateral granted and received other than cash

of this criterion.

Collateral granted and received other than cash

With regard to the collateral granted by the reported entity to the reporting entity (other than cash), it shall be

recognized as follows:

The reporting entity shall recognize the collateral received in off-balance sheet accounts, following for its

valuation the guidelines established in the accounting criterion for credit unions that applies.

The reporting entity, upon selling the collateral, must recognize the resources derived from the

transaction, as well as a payable account for the obligation to return the collateral to the

reported entity (measured initially at the agreed price) which shall be measured at its fair value

(any difference between the price received and the value of the payable account shall be recognized

in the results of the period).

In the event that the reported entity fails to comply with the conditions established in the contract, and

therefore cannot claim the collateral, the reporting entity must recognize in its balance

sheet the entry of the collateral, as established in the accounting criteria for

credit unions, according to the type of asset involved, against the receivable account

referred to in paragraph 32, or in its case, if the collateral had previously been sold, it must derecognize the payable account referred to in subsection b), relative to the

obligation to return the collateral to the reported entity.

The reporting entity shall not recognize the collateral in its financial statements but only in

off-balance sheet accounts, with the exception of what is established in subsection c) above, that is,

when the risks, benefits and control of the collateral have been transferred by the

default of the reported entity.

The off-balance sheet accounts recognized for collateral received by the reporting entity shall be

canceled when the repo operation reaches its maturity or there is default

by the reported entity.

In the case of operations where the reporting entity sells the received collateral, it must keep in

off-balance sheet accounts the control of said sold collateral, following for its valuation the

guidelines of the accounting criterion for credit unions that applies.

The off-balance sheet accounts recognized for received collateral that in turn have been sold by the

reporting entity shall be canceled when the entity acquires the sold collateral to return it to the

reported entity, or there is default by the counterparty.

Presentation rules

Balance sheet

The receivable account, which represents the right to receive the cash, as well as the accrued

interest shall be presented within the balance sheet, under the item of debtors for repo.

The collateral received from the reported entity shall be presented in off-balance sheet accounts under the item of

collateral received by the entity.

The payable account referred to in subsection b) of paragraph 35, which represents the obligation of the

reporting entity to return to the reported entity the collateral that it had sold, shall be presented within

the balance sheet, under the item of sold collateral.

The off-balance sheet accounts referred to in paragraph 36, with respect to those collateral

received by the reporting entity that in turn have been sold, shall be presented under the item of

collateral received and sold by the entity.

Income statement

The accrual of repo interest derived from the operation, shall be presented under the item of

interest income.

The difference referred to in subsection b) of paragraph 35 that, if any, was generated

by the sale of the collateral shall be presented under the item of intermediation result.

The fair value measurement of the payable account referred to in subsection b) of paragraph

35, which represents the obligation of the reporting entity to return to the reported entity the collateral that

it had sold, shall be presented under the item of intermediation result.

Offsetting of financial assets and liabilities

When the reporting entity sells the received collateral, the receivable account referred to in

paragraph 32 shall be offset with the payable account mentioned in subsection b) of paragraph 35,

presenting the debtor or creditor balance under the item of debtors for repo or sold collateral,

as applicable.

Disclosure rules

Entities must disclose through notes to the financial statements, the information

corresponding to repo operations in the following manner:

information relative to the total amount of operations carried out;

amount of repo interest recognized in the results of the period;

average terms in the contracting of outstanding repo operations;

type and total amount by type of asset of the collateral received; and

of the collateral received and in turn sold, the total amount by type of asset.

Appendix A is normative. Its content illustrates the application of criterion B-3, with the purpose of helping to

better understand its meaning.

Appendix A

Examples of application of the principles of non-derecognition from the balance sheet

If a contract establishes that the financial asset (collateral) will be reacquired at a fixed price or at the

sale price plus the normal profit that the entity delivering the collateral has obtained, the

above constitutes a repo operation, and therefore, said financial asset must not be derecognized from the balance sheet, since the entity delivering the collateral retains substantially all the risks and benefits inherent to the ownership of the financial asset.

If a contract establishes that the same financial asset (collateral) or another

substantially similar will be reacquired, at a fixed price or at a sale price plus the normal profit that

the entity delivering the collateral has obtained, which constitutes a repo operation, and by

therefore, said asset must not be derecognized from the balance sheet since the entity delivering the

collateral retains substantially all the risks and benefits inherent to the ownership of the

financial asset.

If a contract at a fixed repurchase price or equal to the sale price plus the normal profit that

the entity delivering the collateral has obtained, grants to the recipient of said collateral the right to

substitute the financial assets with other substantially similar and fair value

equivalent to that of the reported asset on the repurchase date, such operation constitutes a repo, and

therefore, the asset subject to repo, must not be derecognized from the balance sheet, since the

reported entity retains substantially all the risks and benefits inherent to the ownership of the

financial asset.

If an entity sells a financial asset and retains only the right of priority to reacquire the

asset transferred at its fair value in the event that the acquirer subsequently sells it, which

does not constitute a repo operation and the entity must derecognize the financial asset from the

balance sheet, by virtue of having transferred substantially all the risks and benefits

inherent to ownership.

B-4 DERIVATIVES AND HEDGING OPERATIONS

Objective

This criterion aims to define the particular rules relative to recognition,

valuation, presentation and disclosure in the financial statements, of financial instruments

known as derivatives and hedging operations.

Scope

This criterion shall be applicable to all derivatives and hedging operations carried out by

entities on their own account, with the exception of the following operations:

participations in subsidiaries, associates and joint control agreements that are

subject to the corresponding IFRS. However, entities must apply what is

established in this criterion to derivatives referred to participations in

subsidiaries, associates and joint control agreements, unless such financial

instruments meet the definition of equity instrument;

rights and obligations under lease contracts, which are subject to Bulletin

D-5 "Leases" of the IFRS. However, derivatives that are implicit in

said lease contracts are subject to the rules relative to implicit derivatives

of this criterion (paragraphs 23-28 and Appendix A GA17-GA23);

rights and obligations that represent employee benefit plans, to which

IFRS D-3 "Employee Benefits" shall apply;

financial instruments issued by the entity itself that meet the definition

of equity instrument and therefore must be considered within equity capital

(including options and options for the subscription of shares known as

warrants). However, holders of such instruments must apply what is

established in this criterion, unless they represent participations in

subsidiaries, associates and joint control agreements that are outside the scope of

this criterion, in accordance with subsection a);

rights and obligations arising from an insurance contract, defined as

contract under which one party (the insurer) accepts a significant insurance risk from

the counterparty (insured or policyholder), agreeing to compensate the holder if

an uncertain future event occurs (the insured event) that adversely affects said

insured. However, the provisions of this criterion shall be applicable to the

derivatives that are implicit in said insurance contracts if the derivative is not

itself an insurance contract;

any forward contract resulting from an agreement entered into before the date of

acquisition (for example before the date on which the acquirer obtains control over the

acquired entity) between an acquirer and a seller in a business acquisition to

buy or sell an entity at a future date and at a determined or

determinable price;

credit commitments, defined as legal commitments to extend credit to a

counterparty under predetermined terms and situations, unless such

commitments can be settled net in cash or through the delivery or issuance

of a financial instrument, in which case they are considered derivatives;

financial instruments, contracts and obligations under a scheme based on

shares;

those foreign exchange purchase and sale operations whose settlement is agreed in the terms and

terms established in the applicable legal provisions, since these operations are

considered as cash;

securities purchase and sale operations, that is, those carried out in the terms and

terms established in the applicable legal provisions, and

those common purchase and sale and supply contracts of assets that do not represent

underlyings permitted to entities to effect derivatives.

Definition of terms

Financial assets.- All those assets in the form of cash; securities; instruments of

equity; loan portfolio; credit titles; the contractual right to receive cash or

another asset from another entity, or to exchange assets under conditions that could be favorable

for the entity; or a contract that is or can be settled using the entity's own equity instruments and is (i) a non-derivative financial instrument through which the entity is or may be obligated to receive a variable amount of its own equity instruments, or (ii) a derivative financial instrument that is or can be

settled through an exchange of a quantity of cash for a quantity of

equity instruments of the entity, in which at least one of the two quantities is variable.

Collateral.- Guarantee constituted to secure the payment of the considerations agreed in

contracts with financial derivative instruments in operations not carried out in markets or

recognized exchanges. For the purposes of operations with derivatives and hedging, the

collaterals shall at all times be those permitted in accordance with current regulation.

Firm commitment.- It is a mandatory agreement for the exchange of a quantity

determined of resources, at a specific price and on a date or dates established.

Transaction costs.- For the purposes of this criterion, they are those incremental costs

directly attributable to the acquisition, issuance, sale or disposal of a financial asset or

of a financial liability. A cost is incremental if it would not have been incurred had the

financial instrument not been acquired, issued, sold or disposed of. For example, commissions

paid to agents, consultants, negotiators, as well as charges by stock exchanges,

among others. Transaction costs do not include the discount or premium received or paid

for debt securities, financing costs or internal administrative costs.

Margin accounts.- Individualized accounts where participants in markets or exchanges

recognized deposit financial assets (generally cash, securities and other assets

highly liquid) intended to seek compliance with the corresponding obligations for

derivatives entered into in these, in order to mitigate the risk of default. The amount of the

deposits corresponds to the initial margin and to subsequent contributions or withdrawals that are

effected during the term of the contract.

Derivative .- It is a financial instrument or another contract within the scope of this criterion

that meets all of the following characteristics:

its value changes in response to changes in a specific interest rate, the price

of a financial instrument, an exchange rate, a price or interest rate index, a

credit rating or credit index, or another variable permitted by the legislation and

applicable regulations, provided that, with respect to non-financial variables, these

are not specific or particular to one of the parties to the contract. The variables

previously described are commonly known as "underlying" ;

the contract requires no net initial investment, or in its case requires a net initial

investment lower than that which would be required for other types of contracts that could have

a similar response to changes in market conditions, and

it will be settled on a future date, taking into account the legislation and regulations

applicable.

Hedge effectiveness .- It is the degree to which changes in the fair value or in the

cash flows of the hedged item, which are directly attributable to the hedged risks,

cancel out with changes in the fair value or in the cash flows of the hedging instrument (Appendix A paragraphs GA44-GA55).

Financial instrument .- Any contract that gives rise to a financial asset in one entity and

to a financial liability or equity instrument in another entity.

Hedging instruments.- It is a derivative designated or (for the case of foreign currency risk hedges only) a non-derivative financial asset or financial liability designated whose fair value or generated cash flows, are expected to cancel out

changes in the fair value or in the cash flows of a hedged item (paragraphs 54-60 and

Appendix A paragraphs GA26-GA29).

Equity instruments .- Asset represented through a title, certificate or right derived from a contract, among others, that represents a residual participation in the assets of

an entity, after deducting all its liabilities, such as shares, partnership interests,

residual interests, among others.

Effective interest method .-

It is that by which the amortized cost of a

financial asset or financial liability (or group of them) is calculated and the recognition of income or

financial expense over the relevant period. The foregoing, through the application of the effective

interest rate, that is, the discount rate that exactly equates the future cash flows

receivable or payable estimated over the expected life of the financial asset or

financial liability, or when appropriate, in a shorter period (for example, when there is

the possibility of early payment or redemption), with the net book value of said financial

asset or financial liability.

Notional amount .- It is that amount resulting from applying the procedures established in the

contract, for example the number of units specified in it (number of titles or

currencies in foreign currency), a variable (interest rate, index) applicable to an amount

specified in the contract, among others. The interaction between the notional amount and the underlying

can determine the settlement of the derivative, which in some cases generates one or more

payment conditions in case the underlying goes out of certain previously

established limits.

Synthetic operations with derivatives .- Operations where one or more derivatives participate and

in some cases non-derivative assets or liabilities, forming together a specific position.

Hedged item .- It is an asset, liability, firm commitment, highly probable forecasted

transaction or net investment in a foreign operation that (i) exposes the entity to risks against

changes in fair value or in future cash flows and (ii) is designated to be

hedged (paragraphs 61-68 and Appendix A paragraphs GA30-GA40).

Financial liability .- It is any liability in the form of a contractual obligation to deliver cash

or another asset to another entity, or to exchange assets or liabilities with another entity, under conditions

that could be unfavorable to the entity, or a contract that will be settled or could

be settled using the entity's own equity instruments and is (i) a

non-derivative financial instrument through which the entity is or may be obligated to deliver a variable amount of its own equity instruments, or (ii) a

derivative financial instrument that is or may be settled through an exchange of an

amount of cash for an amount of the entity's own equity instruments,

in which at least some of the two quantities is variable.

Spot price .- Price or equivalent of the underlying, current in established terms

by regulations or conventions in the market from the date of operation. In the case of

currencies, the spot price will be the exchange rate for valuation purposes to which

refers criterion A-2 " Application of particular standards " .

Effective interest rate .- Rate obtained through the estimation of cash flows

considering all the contractual conditions of the financial instrument (for example the

commissions and interest paid or received by the parties to the contract, transaction costs

and any other premium or discount), without considering future credit losses. When

extraordinarily the cash flows and the expected life of a group of substantially similar financial assets cannot be estimated reliably, the entity will use the contractual cash flows over the contractual period of each financial asset.

Forecasted transaction .- It is an anticipated but not committed future transaction.

Examples of a forecasted transaction would be interest to accrue on a loan portfolio

referenced to a variable interest rate, or a bank bond that revises its interest rate

in previously determined periods.

Market value.- It is the amount that can be obtained from the sale or the amount that must be

paid for the acquisition of a financial instrument in a recognized market or stock exchange, or well, the value or price of a financial instrument indicated by the quotes of markets denominated " over the counter " where there are public quotes of the prices of

securities or derivatives.

Fair value .- Amount by which an asset can be exchanged or a liability settled between

informed, interested and equally willing parties in a free

competition transaction.

Embedded Derivatives

An embedded derivative is a component of a hybrid financial instrument (combined) that

includes a non-derivative contract (known as host contract), in which some of the

cash flows of said component vary in a manner similar to how a derivative would

vary independently. An embedded derivative causes some of the cash flows

required by the contract (or even all) to be modified according to changes in a specific interest rate, the price of a financial instrument, an exchange rate, a price or interest rate index, a credit rating or credit index, or another variable permitted by the

legislation and applicable regulations, provided that, with respect to non-financial variables,

these are not specific or particular to one of the parties to the contract. A derivative that is

attached to a financial instrument but that is contractually transferable independently from said instrument, or well, that has a different counterparty, is not an

embedded derivative but a separate financial instrument (for example in operations

structured as defined in this criterion).

An embedded derivative must be separated from the host contract for valuation purposes and receive

the accounting treatment of a derivative under the guidelines of this criterion, if and only if all of the following characteristics are met:

the economic characteristics and risks of the embedded derivative are not closely

related to the economic characteristics and risks of the host

contract (Appendix A paragraphs GA20 and GA23);

a separate financial instrument that has the same terms as the embedded derivative would meet the definition of a derivative, and

the hybrid (combined) financial instrument is not valued at fair value with the

changes recognized in profit or loss (for example a derivative that is embedded

in a financial asset or financial liability valued at fair value must not be separated) .

If the embedded derivative is separated from the host contract, the latter must be recognized in accordance with the guidelines established in the accounting criterion that corresponds

according to its nature.

Notwithstanding what is established in the two preceding paragraphs, if a financial instrument that is

within the scope of this criterion contains one or more embedded derivatives, the entity may designate the entire hybrid (combined) financial instrument as a

financial asset or a financial liability valued at fair value with changes recognized

in profit or loss, unless:

the embedded derivative(s) do not significantly modify the cash flows that

the hybrid (combined) financial instrument could generate, or

it is clear with little or no analysis when comparing said instrument with a similar

hybrid (combined) financial instrument, that the separation of the embedded derivative(s)

is not permitted, for example with respect to prepayment options embedded in a credit

that allows the borrower to prepay said credit for approximately its

book value.

In cases where this criterion establishes the separation of an embedded derivative for

valuation purposes of the host contract, but it is not possible to value said embedded derivative

separately, either at the time of acquisition or in subsequent periods, the entity

must designate the entire hybrid (combined) financial instrument as valued at fair

value with changes recognized in profit or loss.

If the entity is unable to reliably determine the fair value of an embedded derivative based on its terms and conditions (for example because the

embedded derivative is based on an equity instrument that does not have a market value), the fair value of said embedded derivative will correspond to the difference between the

fair value of the hybrid (combined) financial instrument and the fair value of the host

contract, if both values can be determined. If the entity is unable to

determine the fair value of an embedded derivative using the methodology described above,

the preceding paragraph will be applied and the entire hybrid (combined) instrument will be designated as valued at fair value with changes recognized in profit or loss.

Main characteristics of the most common derivatives

Futures contracts and forward contracts

Futures contracts, as well as forward contracts, are those by which

an obligation is established to buy or sell a financial asset or underlying on a

future date, in a quantity, quality and prices pre-established in the contract. In these

transactions it is understood that the party that is obligated to buy assumes a long position in the

contract and the party that is obligated to sell assumes a short position in the same contract.

There are basic differences between forward contracts and futures contracts. Forward contracts

are essentially negotiable with respect to price, term, quantity,

quality, collateral, place of delivery and method of settlement. This type of contract has no

secondary market and exposes the entity to credit risk. Futures contracts, on the other

hand, have standardized term, quantity, quality, place of delivery and method of settlement; their

price is negotiable; they have a secondary market; the establishment of margin accounts is

mandatory, and the counterparty is always a clearinghouse, so that

participants do not face significant credit risk.

Options contracts

Options are contracts by which the acquirer is granted the right, but

not the obligation, to buy or sell a financial asset or underlying at a determined price denominated exercise price, on a date or period established.

Two parties intervene in options contracts:

the party that buys the option is the one who pays a premium for the acquisition of this, and at the same

time obtains a right, but not an obligation, and

the party that issues or sells the option is the one who receives a premium for this fact, and at the same time

acquires an obligation but not a right.

For call and put options, the act of buying or selling the option will have the

following financial implications:

whoever assumes a long call position obtains the right to acquire the

financial asset or underlying, paying for this the exercise price;

whoever assumes a long put position, acquires the right to sell the financial asset

or underlying, receiving for this the exercise price;

whoever assumes a short call position, assumes the obligation to sell the

financial asset or underlying at the exercise price, in case the option holder decides to exercise it, and

whoever assumes a short put position, assumes the obligation to acquire the financial asset

or underlying at the exercise price, in case the option holder decides to exercise it.

Swaps

The swap is a contract between two parties, by which the bilateral obligation is

established to exchange a series of flows for a determined period of time and on dates

pre-established.

For the purposes of this criterion, it will be understood that the guidelines for recognition, valuation,

presentation and disclosure regarding swaps, will only apply to those denominated interest rate swaps, currency swaps and index swaps.

Interest rate swaps are contracts by which the bilateral obligation is

established to exchange during a determined period of time, a series of

calculated on a notional amount, denominated in the same currency, but referred to different interest rates.

Both at the beginning and at the end of the contract, there is no exchange of partial or total flows on

the notional amount and generally, in this type of contract one party receives a fixed interest rate

and the other receives a variable rate, although it can also be the case of exchanges

referred to two variable rates.

Currency swaps are contracts by which the bilateral obligation is

established to exchange during a determined period of time, a series of flows on a notional

amount denominated in different currencies for each of the parties, which in turn

can be referred to different interest rates.

Index swaps are contracts by which the bilateral obligation is

established to exchange during a determined period of time, a series of flows on a notional

amount referred to an index for each of the parties, or well to an index for one party and an

interest rate (fixed or variable) for the counterparty.

In some cases, in addition to exchanging flows referred to different interest rates or indices

in different currencies, the exchange of flows on the notional amount during the

term of the contract can be agreed. Regarding the different interest rates, the obligation established for the

parties does not necessarily imply the exchange of flows from a fixed rate to another variable,

can be fixed rate to fixed or variable to variable.

Credit derivatives

They are contracts that imply the celebration of one or more operations with derivatives

(mainly options and swaps), with the object of assuming or reducing the exposure to the risk of

credit (underlying) in financial assets such as loans or securities. The transfer of risk

in this type of operations can be in total or partial form. In said contracts, it can be agreed

the payment of initial premiums for the celebration of the same.

In this type of operations, one of the parties receives the right or assumes the obligation to receive

or deliver, as the case may be, the interest or any other type of returns inherent to the

financial assets, and even in some operations it can be agreed that one of the parties

obliges to pay the other the amounts that had not been covered by default of the issuer of the financial assets, even when the receiving party is not directly the

beneficiary of the cash flows on said financial assets. As consideration, the

right or obligation to receive or pay fixed or variable interest or returns is assumed,

previously determined.

Credit derivatives can be of two types:

Credit default derivatives: Credit default derivatives are

contracts in which only the default risk is transferred to the counterparty

in financial assets, such as in credit operations or in the amortization

early redemption of titles.

Total return derivatives: Total return derivatives are contracts in

which in addition to exchanging interest flows or returns inherent to financial

assets, such as a credit operation or issuance of securities, the

market and credit risk of these are transferred.

Structured operations and derivative packages

For the purposes of this criterion, structured operations and derivative packages

have the following characteristics:

Structured operations: In these operations there is a main contract referred to

non-derivative assets or liabilities (generally credit operations, bond issuances or other debt securities), and a derivative portion represented by one or more

derivatives (generally options or swaps). The derivative portions of structured

operations do not constitute embedded derivatives, but independent derivatives. Unlike synthetic operations with derivatives, structured operations

must necessarily be covered under a single contract. To carry out

hedging operations with structured instruments, entities will require

prior express authorization from the CNBV.

Derivative packages: Derivatives interact with each other in a single operation, without

any portion that does not meet all the characteristics of a derivative.

Derivatives whose underlying is a derivative

Derivatives whose underlying is another derivative will receive the treatment applicable to the primary derivative, so they will not be considered derivative packages. For example, in the case of

options on futures, the accounting guidelines established for the case of

options will apply, while for a forward contract on options, what is provided

for forward contracts will be followed.

Recognition and valuation standards for derivatives

The entity must recognize all derivatives it enters into (including those that are part of

a hedging relationship) as assets or liabilities (depending on the rights and/or

obligations they contain) in the balance sheet, initially at their fair value, which, presumably, will correspond to the price agreed in the operation. To this effect, the entity must

observe the recognition and valuation standards indicated in criterion C-1 " Recognition

and derecognition of financial assets " to account for derivatives. Transaction costs that are

directly attributable to the acquisition of the derivative will be recognized directly in

profit or loss.

Subsequently, all derivatives, other than those that are part of a hedging relationship, must be valued at fair value, without deducting transaction costs that might be incurred in the sale or other type of

disposition, recognizing said valuation effect in the results of the period.

Derivative packages that trade in any recognized market as a single instrument

will be recognized and valued jointly (that is without disaggregating each financial

asset derivative individually). Derivative packages not traded in any

recognized market will be recognized and valued disaggregated by each derivative that

makes up said packages.

Derivatives that are part of a hedging relationship must observe the provisions

relative to hedge accounting (for example, with respect to the specific valuation standards for derivatives that represent hedging instruments).

For the case of derivatives traded in recognized markets or stock exchanges, it will be considered that the rights and obligations related to them have expired when the risk position is closed, that is, when a derivative of a contrary nature is effected in said market or stock exchange of the same characteristics (for example, that a purchase future is contracted to cancel the effects of a sale future (issued) on the same underlying, with the same maturity date and in general under conditions that neutralize the gains or losses of one and the other).

With respect to derivatives not traded in recognized markets or stock exchanges, it will be considered that

the rights and obligations related to them have expired when they reach maturity; the rights are exercised by any of the parties, or well, said rights are exercised in an

anticipatory manner by the parties according to the conditions established in the same and the agreed consideration is settled.

Financial assets and financial liabilities that are designated as hedged items will be

recognized and valued according to their nature in accordance with the accounting criterion that corresponds to them, taking into account the guidelines of hedge accounting indicated in

paragraphs 69-89. In case a financial asset, coming from the rights

established in the derivatives, experiences a deterioration in credit risk (counterparty), the

book value must be reduced to the estimated recoverable amount and the loss amount is recognized in the results of the period. If the impairment situation subsequently disappears, it must be reversed up to the previously impaired amount, recognizing this effect in the results of the period in which this occurs.

Hedge Accounting

When a hedging relationship between a hedging instrument and a hedged item is designated as described in paragraphs 69-73 and Appendix A paragraphs GA41-GA43, entities shall apply hedge accounting for the recognition of the gain or loss in the hedging instrument and the hedged item described in paragraphs 74-89.

Hedging Instruments

Instruments that meet the requirements to be considered hedging instruments

This standard does not limit the circumstances in which a derivative may be designated as a hedging instrument, provided that such derivative meets the conditions established in paragraph 73, except in the case of some issued options (see Appendix A paragraph GA26). However, a non-derivative financial asset or a non-derivative financial liability may be designated as a hedging instrument only to hedge foreign currency risks.

For the purposes of hedge accounting, only those instruments that involve a counterparty external to the reporting entity (for example, external to the financial group, to a segment, or to an entity individually, on which information is being reported) may be designated as hedging instruments. Even though entities individually within a consolidated group or divisions within an entity may carry out hedging transactions with other entities of the group or other divisions of the same entity, any intercompany transaction must be eliminated in consolidation. Therefore, such intra-group or internal hedging transactions do not qualify to be accounted for as hedges under these standards in the consolidated financial statements. However, such transactions may qualify for hedge accounting individually, or, in the case of individual financial statements or segment information, provided that they are carried out with counterparties external to the individual entity or segment on which information is being reported.

Designation of a hedging instrument

Generally, there is only one fair value for a hedging instrument in its entirety, and the factors causing changes in said fair value are co-dependent. Therefore, an entity may designate a hedging relationship only for a hedging instrument in its entirety. The only exceptions to this rule are the following:

separating the intrinsic value and the time value of an option and designating as a hedging instrument only the change in the intrinsic value of said option, excluding the change due to the time value corresponding to it, and

separating the interest component and the spot price of a forward contract.

The above exceptions are permitted because the intrinsic value of an option and the premium value in a forward contract are generally measurable separately. A dynamic hedging strategy that evaluates both the intrinsic value and time value of an option may qualify for hedge accounting.

A portion of a hedging instrument in its entirety (for example, 50% of the notional amount) may be designated as a hedging instrument in a hedging relationship. However, a hedging relationship may not be designated only for a portion of the remaining term of the hedging instrument.

A hedging instrument may be designated to cover more than one type of risk, provided that (i) the risks covered can be clearly identified, (ii) the effectiveness of the hedge can be demonstrated, and (iii) it can be demonstrated that there is a specific designation of the hedging instrument and of the different risk positions covered.

Two or more derivatives, or portions of derivatives (or in the case of a foreign currency hedge (i) two or more non-derivative financial assets or non-derivative financial liabilities or portions of said non-derivatives, or (ii) a combination of derivatives and non-derivatives or portions of both), may be used in combination and designated jointly as hedging instruments, even in cases where the risk(s) from some derivatives cancel each other out. However, a derivative that insures a maximum or minimum interest rate or benefit, or another derivative that combines the sale (issuance) of an option and simultaneously the purchase of an option, do not qualify to be considered as a hedging instrument if it is a net sold (issued) option, for which a net premium is received. Similarly, two or more financial instruments (or portions thereof) may be designated as hedging instruments only if they are different from sold (issued) options or net sold (issued) options.

Hedged Items

Items that meet the requirements to be designated as hedged

A hedged item may be an asset or liability, an unrecognized firm commitment, a highly probable forecasted transaction, or a net investment in a foreign operation. The hedged item may be (i) a single asset, liability, firm commitment, highly probable forecasted transaction, or net investment in a foreign operation, (ii) a group of assets, liabilities, firm commitments, highly probable forecasted transactions, or net investments in foreign operations, or (iii), in the case of a portfolio hedged for interest rate risk, a portion of a portfolio of financial assets or financial liabilities that share the same risk to be covered.

Unlike the credit portfolio and accounts receivable, a held-to-maturity investment cannot be designated as a hedged item with respect to interest rate risk or prepayment risk because its designation as held-to-maturity represents the entity's intention to hold it until expiration or maturity, regardless of changes in the fair value or cash flows of said investment attributable to changes in the interest rate. Despite this, a held-to-maturity investment may be designated as a hedged item with respect to risks from changes in the exchange rate (foreign currency risk) and credit risk.

For the purposes of hedge accounting, only those assets, liabilities, firm commitments, or highly probable forecasted transactions that involve a counterparty external to the reporting entity may be designated as hedged items. Therefore, hedge accounting may be applied to transactions between entities or segments that are part of the same group only in the individual or separate financial statements of said entities or segments, and never in the consolidated financial statements. As an exception to the above rule, the foreign currency risk of an intra-group monetary item (for example, an account receivable/payable between two subsidiaries) may qualify to be considered as a hedged item in the consolidated financial statements if it generates a gain or loss from exposure to foreign currency risk that is not completely eliminated in consolidation in accordance with what is established in NIF B-15 "Foreign Currency Translation". According to said NIF, gains or losses from foreign currency on intra-group monetary items are not completely eliminated in consolidation when said items are made between two entities of the group that have different functional currencies. Additionally, the foreign currency risk of a highly probable intra-group forecasted transaction may qualify to be considered as a hedged item in the consolidated financial statements provided that said transaction is denominated in a currency different from the functional currency (defined as such in the corresponding NIF) of the entity carrying it out and the foreign currency risk affects consolidated results.

Designation of a financial instrument as a hedged item

If the item intended to be hedged is a financial asset or financial liability, it may be considered as a hedged item with respect to the risks associated with only a portion of its fair value or cash flows (for example, a percentage of the fair value, or one or more specific cash flows coming from the contract or portions of said cash flows), provided that the effectiveness of the hedge can be measured reliably. By way of example, a separately identifiable and measurable portion of the interest rate risk of a financial asset or financial liability may be designated as the risk covered (as would be the case of a risk-free rate or a reference rate representing a component of the total interest rate risk of a covered instrument).

In a fair value hedge for interest rate risk of a portfolio composed of financial assets or financial liabilities (and only in this specific type of hedge), the covered portion may be designated in terms of a currency amount (for example, an amount in dollars, euros, or pounds) instead of individual assets (or liabilities). Although the portfolio may, for risk management purposes, include both financial assets and financial liabilities, the designated amount must be an amount of financial assets or financial liabilities. The designation of a net amount including financial assets and financial liabilities is not permitted. The entity may cover a portion of the interest rate risk associated with said designated amount. For example, in the case of hedging a portfolio containing assets subject to prepayment, the entity may cover the change in fair value that is attributable to changes in the covered interest rate, considering the expected interest review dates and not the contractual dates. When the covered portion is based on the expected interest review dates, the effect that changes in the covered interest rate have on the expected review dates must be included in the determination of the change in the fair value of the hedged item. Consequently, if a portfolio containing instruments subject to prepayment is hedged with a derivative not subject to prepayment, the hedge may be ineffective if there is a change in the expected prepayment dates corresponding to the items making up the covered portfolio, or the observed payment dates differ from those anticipated.

Designation of a non-financial instrument as a hedged item

If an entity intends to hedge a non-financial asset or a non-financial liability, it may designate it as a hedged item (i) for foreign currency risks, or (ii) for all the risks to which said item is exposed in its entirety, due to the difficulty of isolating and reliably valuing the portion of changes in fair value or cash flows attributable to specific risks other than foreign currency risk.

Designation of a group of instruments as hedged items

Similar financial assets or financial liabilities may be aggregated and covered as a group only if each of the financial assets or financial liabilities that make up the group, individually, share the exposure to the risk intended to be covered. Additionally, the change in fair value attributable to the covered risk for each of the items making up the group, individually, must be approximately proportional to the total change in fair value attributable to the covered risk of the group of instruments.

Because an entity evaluates the effectiveness of the hedge by comparing the change in fair value or cash flows of the hedging instrument (or groups of similar hedging instruments) and the hedged item (or group of similar hedged items), the comparison of a hedging instrument with a global net position (for example, the net value of a portfolio composed of financial assets and financial liabilities all referred to a fixed interest rate with similar maturity dates), instead of a specific hedged item, does not qualify for hedge accounting.

Hedge Accounting

Hedge accounting recognizes the offsetting of effects in results from changes in the fair values of the hedging instrument and the hedged item.

There are three types of hedging relationships:

Fair value hedge: represents a hedge of exposure to changes in the fair value of recognized assets or liabilities or unrecognized firm commitments, or a identified portion of said assets, liabilities, or unrecognized firm commitments, which is attributable to a particular risk and that may affect the period's result.

Cash flow hedge: represents a hedge of exposure to the variation in cash flows of a forecasted transaction that (i) is attributable to a particular risk associated with a recognized asset or liability (such as the total or some of the future interest payments corresponding to a loan or variable interest rate debt instrument), or with a highly probable event, and that (ii) may affect the period's result.

Hedge of a net investment in a foreign operation, as defined in NIF B-15.

Taking the above into account, items that by valuation methodology established in the corresponding accounting standard must be valued at fair value, and such valuation may affect the period's result, will be subject to fair value hedges. Additionally, assets and liabilities referred to a fixed rate and not exposed to a fair value valuation that may affect the period's results (such as credit portfolio or stock exchange liabilities) may be subject to fair value hedge, only for interest rate and/or foreign currency risk, so it will be a partial hedge; the other risks to which said assets and liabilities are exposed will not be subject to hedging and must remain outside the determination of the fair value of these items.

A foreign currency risk hedge of a firm commitment may be accounted for as a fair value hedge only.

Conditions for the use of hedge accounting

A hedging relationship qualifies to use the hedge accounting of this standard referred to in paragraphs 74-89 provided that all and each of the following conditions are met:

At the beginning of the hedge, there must be a formal designation and sufficient documentation of the hedging relationship, as well as the entity's risk management objectives and strategy regarding the hedge. Such documentation must include the identification of the hedging instrument, the hedged item or transaction, the nature of the risk covered, and the manner in which the entity will evaluate the effectiveness of the hedging instrument to cancel the exposure to changes in the fair value or cash flows of the hedged item attributable to the covered risk.

The hedge must be highly effective (see Appendix A paragraphs GA44-GA55) in achieving the offsetting of changes in fair value or cash flows attributable to the covered risk, consistent with the originally documented risk management strategy for the specific hedging relationship.

For cash flow hedges, a forecasted transaction intended to be hedged must be highly probable to occur and present evident exposure to variations in cash flows that could affect the period's results.

The effectiveness of the hedge must be reliably measurable, that is, the fair value or cash flows of the hedged item attributable to the covered risk and the fair value of the hedging instrument can be reliably valued.

The hedge must be evaluated continuously (at least quarterly), maintaining high effectiveness throughout all periods in which the designation of the hedging relationship is shown in the entity's financial information.

Fair Value Hedge

If a fair value hedge meets all the conditions established in paragraph 73 above during the period, the accounting treatment will be as follows:

the result from the valuation of the hedging instrument at fair value (for a hedging derivative) or the foreign currency component valued in accordance with NIF B-15 (for a non-derivative hedging instrument) shall be recognized in the results of the period, and

the result from the valuation of the hedged item attributable to the covered risk shall adjust the book value of said item and be recognized in the results of the period. The above applies even if the hedged item is valued at cost (for example when hedging interest rate risk in a credit portfolio valued at amortized cost).

The recognition of the valuation result attributable to the covered risk in the results of the period applies even if the hedged item is an investment in securities classified as available for sale.

In a fair value hedge for interest rate risk of a portion of a portfolio composed of financial assets or financial liabilities (and only in this specific type of hedge), the requirement referred to in paragraph 74(b) may be met by presenting the adjustment to the book value of the hedged item by the gain or loss recognized in the results of the period, either:

in a separate line item within the asset of the balance sheet, during the periods of interest review of the portfolio in which the hedged item is an asset, or

in a separate line item within the liability of the balance sheet, during the periods of interest review of the portfolio in which the hedged item is a liability.

The asset or liability line items referred to in the previous paragraph shall be presented immediately after the corresponding financial assets or financial liabilities. The amounts included in said items shall be removed from the balance sheet at the moment when the financial assets or financial liabilities related to them are derecognized.

In the event that only specific risks attributable to a hedged item are covered, changes in the fair value of said item not related to the covered risks will be recognized in the results of the period or in other parts of comprehensive income, in accordance with the provisions of the accounting standards corresponding to the hedged item, according to its nature (for example, if it is a security available for sale, the valuation effects not covered will be recognized in equity).

An entity shall discontinue applying prospectively the fair value hedge accounting indicated in paragraph 74 if:

the hedging instrument expires or is sold, terminated, or exercised (for this purpose, the substitution or renewal of a hedging instrument by another is not considered equivalent to expiration or termination if such conditions were documented as part of the entity's hedge strategy);

the hedge does not meet the conditions established in this standard (paragraph 73) to apply hedge accounting, or

the entity revokes the hedge designation.

Any adjustment referred to in paragraph 74(b), relating to the adjustment to the book value by the valuation of the hedged item attributable to the covered risk through the effective interest method (or in the case of a fair value hedge for interest rate risk of a portfolio composed of financial assets or financial liabilities, the asset or liability line items reflected in the balance sheet described in paragraph 75), shall be amortized in the results of the period. Amortization shall begin as soon as the adjustment arises, and in no case after the hedged item ceases to be adjusted for changes in fair value attributable to the covered risk. The adjustment shall be based on the recalculated effective interest rate at the date amortization begins. However, in the case of a fair value hedge for interest rate risk of a portfolio composed of financial assets or financial liabilities (and only in this specific type of hedge), if it is not practical to perform amortization using the recalculated effective interest rate, the adjustment may be amortized using the straight-line method. The adjustment shall be fully amortized by the maturity date of the hedged item in question, or in the case of a fair value hedge for interest rate risk of a portfolio composed of financial assets or financial liabilities, at the time of termination of the interest review period.

When an unrecognized firm commitment is designated as a hedged item, the subsequent accumulated change in the fair value of said firm commitment attributable to the covered risk shall be recognized as an asset or liability with the corresponding recognition of the gain or loss in the results of the period (see paragraph 74(b)). The change in the fair value of the hedging instrument will also be recognized in the results of the period.

When an entity enters into a firm commitment to acquire an asset or assume a liability that constitutes a hedged item in a fair value hedge, the initial book value of the resulting asset or liability from the fulfillment of said firm commitment shall be adjusted to include the accumulated change in the fair value of the firm commitment

attributable to the covered risk that has been recognized in the balance sheet.

Cash Flow Hedges

If a cash flow hedge meets all the conditions established in paragraph 73 during the period, the accounting treatment shall be as follows:

a) the portion of the gain or loss of the hedging instrument that is effective in the hedge (see paragraph 73) shall be recognized in equity, as part of other comprehensive income items, and

b) the portion of the gain or loss of the hedging instrument that is ineffective in the hedge shall be recognized directly in the results of the period.

More specifically, a cash flow hedge shall be accounted for as follows:

a) the effective hedging component recognized in equity associated with the hedged item shall be adjusted to equal the lower amount (in absolute terms) of the following:

i. the cumulative gain or loss of the hedging instrument since its inception, and

ii. the cumulative change in the fair value (present value) of the expected future cash flows of the hedged item since the inception of the hedge;

b) any remaining gain or loss of the hedging instrument or the designated component thereof (which does not constitute an effective hedge) shall be recognized directly in the results of the period, and

c) if the risk management strategy, documented by the entity for a specific hedge relationship, excludes from the effectiveness evaluation of the hedge a specific component of the gain or loss or related cash flows of the hedging instrument (see paragraphs 56 to 58 and 73(a)), such excluded component shall be recognized in the results of the period.

If a hedge of a forecasted transaction subsequently results in the recognition of a financial asset or financial liability (for example, to the extent that a credit referred to a variable interest rate generates interest), the associated gain or loss that has been recognized in other comprehensive income items within equity in accordance with paragraph 82 shall be reclassified from equity to the income statement in the same period or periods during which the covered forecasted cash flows affect the results of the fiscal year (for example, in the periods in which interest income or interest expenses are recognized in the income statement). However, if an entity foresees that all or a portion of the loss recognized in other comprehensive income items within equity will not be recovered in one or more future periods, it shall reclassify such estimated unrecoverable amount to the results of the period.

If a hedge of a forecasted transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, or if the forecasted transaction relating to a non-financial asset or a non-financial liability becomes a firm commitment to which fair value hedge accounting applies, then the entity shall reclassify the associated gain or loss that has been recognized in other comprehensive income items within equity in accordance with paragraph 82, to the income statement in the same period or periods during which such acquired assets or assumed liabilities affect the results of the fiscal year (for example, in the periods in which depreciation or amortization expense is recognized in the income statement). Nevertheless, if the entity foresees that all or a portion of the loss recognized in other comprehensive income items within equity will not be recovered in one or more future periods, it shall reclassify such estimated unrecoverable amount to the results of the period.

For cash flow hedges other than those mentioned in paragraphs 84 and 85 above, the amounts that would have been recognized in other comprehensive income items shall be reclassified from equity to the income statement in the same period or periods during which the covered forecasted cash flows affect the results of the fiscal year (for example, when a forecasted sale occurs).

An entity shall discontinue applying prospectively the cash flow hedge accounting indicated in paragraphs 82 to 86 if:

a) the hedging instrument expires or is sold, terminated, or exercised (for this purpose, the replacement or renewal of a hedging instrument with another is not considered equivalent to expiration or termination if such conditions were documented as part of the entity's hedging strategy). In this case, the cumulative gain or loss of the hedging instrument that has been recognized in other comprehensive income items within equity in accordance with paragraph 82(a), during the period of time in which the hedge was effective, shall remain in equity until the forecasted transaction occurs. At the moment the forecasted transaction occurs, the guidelines indicated in paragraphs 84 to 86 shall apply;

b) the hedge does not meet the conditions established in this standard (paragraph 73) to apply hedge accounting. In this case, the cumulative gain or loss of the hedging instrument that has been recognized in other comprehensive income items within equity in accordance with paragraph 82(a), during the period of time in which the hedge was effective, shall remain in equity until the forecasted transaction occurs. At the moment the forecasted transaction occurs, the guidelines indicated in paragraphs 84 to 86 shall apply;

c) it is foreseen that the forecasted transaction will not occur, in which case any cumulative gain or loss of the hedging instrument that has been recognized in other comprehensive income items within equity in accordance with paragraph 82(a), during the period of time in which the hedge was effective, shall be reclassified from equity to the income statement immediately. A forecasted transaction that ceases to be highly probable (see paragraph 73(c)) may be considered feasible to occur, or

d) the entity revokes the hedge designation. For a forecasted transaction hedge, the cumulative gain or loss of the hedging instrument that has been recognized in other comprehensive income items within equity in accordance with paragraph 82(a), during the period of time in which the hedge was effective, shall remain in equity until the forecasted transaction occurs or there is clear evidence that it will not occur. At the moment the forecasted transaction occurs, the guidelines indicated in paragraphs 84 to 86 shall apply. In case it is foreseen that the forecasted transaction will not occur, the cumulative gain or loss of the hedging instrument that has been recognized in other comprehensive income items within equity in accordance with paragraph 82(a), during the period of time in which the hedge was effective, shall be reclassified from equity to the income statement immediately.

Hedge of a Net Investment in a Foreign Operation

A hedge of a net investment in a foreign operation, including the hedge of a monetary item that is recognized as part of the net investment (see NIF B-15, paragraphs 38 to 42), that meets all the conditions established in paragraph 73 during the period, shall be accounted for similarly to a cash flow hedge:

a) the portion of the gain or loss of the hedging instrument that is effective in the hedge (see paragraph 73) shall be recognized in equity, as part of other comprehensive income items, and

b) the portion of the gain or loss of the hedging instrument that is ineffective in the hedge shall be recognized directly in the results of the period.

The gain or loss of the hedging instrument associated with the effective portion of the hedge that has been recognized in other comprehensive income items within equity in accordance with paragraph 88(a) above, during the period of time in which the hedge was effective, shall be reclassified from equity to the income statement in accordance with paragraph 43 of NIF B-15 at the time of the partial or total disposal of a foreign operation.

Subsequent Measurement for Derivatives upon Suspension of Hedge Accounting

At the moment a hedging derivative ceases to meet the conditions established for hedge accounting, in addition to what is stated above, the derivative in question shall receive the corresponding treatment for derivatives established in paragraphs 46-52.

Cash Margins Granted in Derivative Transactions Carried Out in Recognized Markets or Exchanges

The cash margin (and other cash-equivalent assets) required from entities in connection with the execution of derivative transactions carried out in recognized markets or exchanges, does not form part of the initial net investment of said derivative, and therefore shall be accounted for separately from its recognition, as follows:

a) The grantor shall recognize the outflow of contributed resources, affecting the cash and cash equivalents item, against a cash margin account.

b) The value of the cash margin granted (and other cash-equivalent assets) shall be modified by partial or total settlements deposited or withdrawn by the clearing house; by additional contributions or withdrawals made by the entity itself; by the returns generated by the margin account itself, as well as by the agreed commissions charged to the entity.

c) Partial or total settlements deposited or withdrawn by the clearing house due to fluctuations in derivative prices shall be recognized within the margin account itself, affecting as a counterparty a specific account that may be of a debtor or creditor nature, as appropriate, and which will reflect the valuation effects of the derivative prior to its settlement. In accordance with the foregoing, modifications to the margin account shall not affect the results of the period.

The debtor or creditor counterparty will represent an advance received, or a financing granted by the clearing house prior to the settlement of the derivative.

d) Returns and commissions affecting the cash margin account, other than fluctuations in derivative prices, shall be recognized in the results of the period.

e) Additional contributions or withdrawals made by the entity itself to the cash margin account shall be recognized against the cash and cash equivalents item, so the results of the period shall not be affected.

Non-Cash Margins Granted in Derivative Transactions Carried Out in Recognized Markets or Exchanges

Regarding the margin granted by the grantor to the clearing house other than cash, such as debt or equity securities, the recognition standards will depend on the right that the clearing house has to sell or pledge said margin, as well as on the default, if any, of the grantor entity. The grantor shall recognize the margin as follows:

a) If the clearing house has the right to sell or pledge the financial assets comprising the margin, the grantor shall reclassify the financial asset in its balance sheet, presenting it as restricted, which will follow the valuation and disclosure standards in accordance with the accounting standard applicable according to its nature, observing the presentation standards contained in this standard.

b) In case the grantor entity fails to meet the conditions established in the contract, and therefore cannot claim the margin, it shall derecognize it from its balance sheet.

c) With the exception of what is established in subsection b) above, the grantor entity shall maintain the margin in its balance sheet.

Cash Collateral Granted and Received in Derivative Transactions Not Carried Out in Recognized Markets or Exchanges

The collateral granted and received in cash (and other cash-equivalent assets) required from entities in connection with the execution of derivative transactions not carried out in recognized markets or exchanges, does not form part of the initial net investment of said derivative, and therefore shall be accounted for separately from its recognition, as follows in accordance with criterion C-1:

a) The grantor shall recognize the outflow of resources granted, affecting the cash and cash equivalents item, against an account receivable.

b) The grantee shall recognize the inflow of resources received, affecting the cash and cash equivalents item, against an account payable.

Non-Cash Collateral Granted and Received in Derivative Transactions Not Carried Out in Recognized Markets or Exchanges

Regarding the collateral granted by the grantor to the grantee other than cash in derivative transactions not carried out in recognized markets or exchanges, such as debt or equity securities, the recognition standards for both will depend on the right that the grantee has to sell or pledge said collateral, as well as on the default, if any, of the grantor entity. Both the grantor and the grantee shall recognize the collateral as follows:

a) The grantee shall recognize the received collateral in off-balance sheet accounts, following for its valuation the guidelines established in the accounting standards for credit unions that correspond. If the grantee has the right to sell or pledge the collateral, the grantor shall reclassify the financial asset in its balance sheet, presenting it as restricted, in accordance with criterion A-3, which will follow the valuation, presentation, and disclosure standards in accordance with the accounting standard applicable according to its nature.

b) If the grantee sells the collateral, it shall recognize the resources derived from the sale, as well as a liability (initially measured at the agreed price of the collateral) that will be valued at fair value for the obligation to return the collateral (any difference between the price received and the fair value of the liability shall be recognized in the results of the fiscal year).

c) In case the grantor entity fails to meet the conditions established in the contract, and therefore cannot claim the collateral, it shall derecognize it from its balance sheet; on its part, the grantee shall recognize the collateral at its fair value, or if it had previously sold the collateral, it shall derecognize the obligation to return it to the grantor.

d) With the exception of what is established in subsection c) above, the grantor entity shall maintain the collateral in its balance sheet, and the grantee shall not recognize it in its financial statements (but only in off-balance sheet accounts).

Presentation Standards

Balance Sheet

Derivatives shall be presented in a specific item of the asset or liability, depending on whether their fair value (as a consequence of the rights and/or obligations they establish) corresponds to a debtor balance (positive) or a creditor balance (negative), respectively.

Such debtor or creditor balances may be offset provided they meet the offsetting rules contained in criterion A-3.

The derivatives item (debtor balance), or derivatives (creditor balance) in the balance sheet shall be segregated into derivatives for trading purposes (i.e., derivatives that do not constitute hedging instruments) and for hedging purposes (those that follow hedge accounting).

For hybrid financial instruments (combined), the host contract and the embedded derivative shall be presented in the item corresponding in accordance with the accounting standard applicable according to their nature, including what is established in this standard.

In the case of structured transactions, the presentation of the derivative portion or portions shall be separate from that corresponding to the main contract, so the presentation guidelines mentioned above shall be followed according to the type or types of non-derivative financial assets (or financial liabilities), as well as derivatives incorporated in the structured transaction.

For packages of derivatives that trade in a recognized market as a single instrument, such package shall be presented jointly (i.e., without disaggregating each financial derivative instrument individually), in the derivatives item (debtor balance), or derivatives (creditor balance) in the balance sheet.

In the case of packages of derivatives not trading in a recognized market, their presentation in the balance sheet of entities shall follow the guidelines established for each derivative individually, in the derivatives item (debtor balance), or derivatives (creditor balance), as appropriate.

Fair Value Hedge

100

In a fair value hedge for interest rate risk of a portion of a portfolio composed of financial assets or financial liabilities (and only in this specific type of hedge), the adjustment to the book value of the hedged item by the gain or loss recognized in the results of the period, shall be presented in the item of valuation adjustments for fair value hedge of financial assets, or valuation adjustments for fair value hedge of financial liabilities, as appropriate, immediately after the corresponding financial assets or financial liabilities.

101

When an unrecognized firm commitment is designated as the hedged item, the initial book value of the asset or liability resulting from the fulfillment of said firm commitment, added to the subsequent accumulated change after the designation of the hedge in the fair value of said firm commitment attributable to the covered risk, shall be recognized as an asset or liability, in the item corresponding according to the nature of the firm commitment (for example, if the firm commitment refers to the acquisition of securities, the changes in the fair value of the securities will be presented in the securities investments item).

Cash Flow Hedge

102

The portion of the gain or loss of the hedging instrument that is effective in the cash flow hedge shall be recognized in equity, as part of other comprehensive income items, in the item of valuation result for cash flow hedging instruments.

Hedge of a Net Investment in a Foreign Operation

103

The portion of the gain or loss of the hedging instrument that is effective in the hedge of a net investment in a foreign operation shall be recognized in equity, as part of other comprehensive income items, in the item of accumulated effect by conversion.

Uncovered Specific Risks

104

For hedges of specific risks in which the entity excludes from the effectiveness evaluation of the hedge a determined component of the gain or loss or related cash flows of the hedging instrument, the excluded component of the gain or loss recognized in other comprehensive income items shall be presented in equity in the item corresponding in accordance with the provisions of the applicable accounting standards.

Margins Granted in Derivative Transactions Carried Out in Recognized Markets or Exchanges

105

The amount of cash margins granted, as well as non-cash financial assets (such as debt or equity securities) that are restricted, in derivative transactions in recognized markets or exchanges shall be presented in a specific item in the balance sheet. The debtor or creditor counterparty for margins represents a financing granted by the clearing house, or an advance received from the clearing house prior to the settlement of the derivative, which shall be presented netted with the margin granted.

Collateral Granted and Received in Derivative Transactions Not Carried Out in Recognized Markets or Exchanges

106

The account receivable generated by the granting of cash collateral in derivative transactions not carried out in recognized markets or exchanges shall be presented in the other accounts receivable item, while the account payable generated by the receipt of cash collateral shall be presented in the other accounts payable item.

107

Collateral granted in such transactions, other than restricted cash, shall remain in the same item from which they originated. The account payable, which represents the obligation of the grantee to return to the grantor the non-cash collateral that has been sold, shall be presented within the balance sheet, in the sold collateral item.

108

The amount of non-cash collateral over which the right to sell or pledge has been granted shall be presented in off-balance sheet accounts in a specific item.

Income Statement

Derivatives

109

Entities shall present in the intermediation result item the following:

a) the fair value valuation result of derivatives whose purpose is trading;

b) the result from the sale and purchase of derivatives. The fair value valuation result of derivatives that are sold, which has been previously recognized in the results of the period, shall be reclassified as part of the sale and purchase result on the date of sale;

the impairment loss on financial assets arising from rights

established in derivatives, as well as the effect of reversal, both effects

mentioned in paragraph 52 of this standard, and

the transaction costs incurred in the purchase or sale of derivatives.

Fair Value Hedges

110

The result from the fair value measurement of the hedging instrument (for a derivative

hedging instrument) or the foreign currency component measured in accordance with NIF B-15 (for a

non-derivative hedging instrument) shall be presented in the same line item of the

statement of income where the result from the measurement of the hedged item attributable to the

hedged risk is presented.

111

The result from the measurement of the hedged item attributable to the hedged risk (including

firm commitments not recognized) that adjusts the carrying amount of such item shall be

presented in the period's income in the line item corresponding to it in accordance with the

dispositions of the applicable accounting standards.

112

The recognition of the measurement result attributable to the hedged risk in the period's income

in an investment in securities classified as available for sale shall be presented in

intermediation income.

113

In a fair value hedge for interest rate risk of a portion of a portfolio

composed of financial assets or financial liabilities (and only in this specific type

of hedge), the result from the measurement of the hedged item attributable to the hedged

risk shall be presented, if identifiable, where the result

from the measurement of each of the hedged items is presented. If it cannot be identified, such

measurement effect shall be presented in the line item where the result from

measurement of the most relevant hedged item is presented in accordance with the dispositions of the

applicable accounting standards (for example, if the portfolio of financial assets

corresponds mostly to investments in securities, the measurement effect shall be presented in

intermediation income).

114

In the event that only specific risks attributable to a hedged item are hedged, the

changes in the fair value of such item not related to the hedged risks that have been recognized in

the period's income shall be presented in the line item corresponding to it in accordance with the

dispositions of the applicable accounting standards.

115

The amortization of any adjustment referred to in paragraph 74(b), relating to the carrying amount of

a hedged item valued through the effective interest method (or in the case of a

fair value hedge for interest rate risk of a portfolio composed of financial assets

or financial liabilities, the asset or liability line items reflected in the balance

sheet described in paragraph 75), in accordance with what is established in paragraph 79, shall be

presented in the same line item of the statement of income where the result from the

measurement of the hedged item attributable to the hedged risk is presented.

Cash Flow Hedges

116

The portion of the gain or loss of the hedging instrument that is ineffective in the

hedge (and therefore recognized directly in the period's income) shall be

presented in intermediation income.

117

In a hedge of a forecasted transaction in which the recognition of a

financial asset or financial liability (or of a non-financial asset or a non-financial liability) occurs,

the associated gain or loss that has been recognized in other comprehensive income

within shareholders' equity in accordance with what is established in paragraph 82, and that has been

reclassified from shareholders' equity to the statement of income shall be presented in the same line item

of the statement of income where the result from the measurement of the hedged item

attributable to the hedged risk is presented.

118

The entire or a portion of the loss associated with the hedge of a forecasted transaction

(previously recognized in other comprehensive income within shareholders' equity) that

is expected to be unrecoverable in one or more future periods, and therefore has been

recognized in the period's income, shall be presented in intermediation income if it is a derivative, or else,

in the same line item of the statement of income where the result from the

measurement of the non-derivative financial instrument in question is presented in accordance

with the dispositions of the applicable accounting standards.

119

The accumulated gain or loss of a hedging instrument over a forecasted transaction

that has expired, has been sold, or has ceased to be effective in the

hedge, recognized in other comprehensive income within shareholders' equity in accordance with what is established in paragraph 82(a), during the period of time in which the

hedge was effective, and that has been recognized in the period's income at the moment

when the forecasted transaction occurs, shall be presented in the same line item of the statement of

income where the result from the measurement of the hedged item attributable to the

hedged risk is presented.

120

The accumulated gain or loss of a hedging instrument over a forecasted transaction,

recognized in other comprehensive income within shareholders' equity in accordance with what is established in paragraph 82(a), during the period of time in which the

hedge was effective, and that has been recognized in the period's income at the moment

when it is expected that the forecasted transaction will not occur, shall be presented in intermediation income if it is a derivative, or else, in the same line item of the statement of income in

which the result from the measurement of the non-derivative financial instrument in question is presented in accordance

with the dispositions of the applicable accounting standards.

121

The accumulated gain or loss of an instrument for which the entity revokes its designation

as a hedging instrument over a forecasted transaction, recognized in other comprehensive

income within shareholders' equity in accordance with what is established in paragraph

82(a), during the period of time in which the hedge was effective, and that has been

recognized in the period's income at the moment when the forecasted transaction

occurs or there is clear evidence that it will not occur, shall be presented as follows:

in the same line item of the statement of income where the result from the

measurement of the hedged item attributable to the hedged risk is presented in the event that the forecasted transaction

occurs, or

in intermediation income if it is a derivative, or else, in the same line item of the

statement of income where the result from the measurement of the non-derivative

financial instrument in question is presented in accordance with the dispositions of the

applicable accounting standards, in the event that it is expected that such forecasted transaction

will not occur.

Hedge of a Net Investment in a Foreign Operation

122

The portion of the gain or loss of the hedging instrument that is ineffective in the

hedge recognized directly in the period's income shall be presented in intermediation

income.

123

The gain or loss of the hedging instrument associated with the effective portion of the

hedge that has been recognized in other comprehensive income within shareholders'

equity in accordance with what is established in paragraph 88(a) above, during the period of

time in which the hedge was effective, and that has been reclassified from shareholders' equity to

the statement of income in accordance with what is established in NIF B-15 at the moment of

the partial or total disposal of a foreign operation shall be presented in the line item

of discontinued operations within the statement of income, as part of the gain or

loss derived from the partial or total disposal of such foreign operation.

Cash Margin Accounts

124

The returns affecting the cash margin account, other than the

fluctuations in the prices of derivatives, shall be recognized in the period's income

as interest income, while commissions paid shall be presented in the

line item of commissions and fees paid.

Disclosure Standards

125

Entities shall disclose in the notes to the financial statements the following information related

to derivatives and hedging activities:

The carrying amount of financial assets and financial liabilities related to

derivatives held for trading.

The fair value of financial assets (other than cash) that have been

granted in margin accounts or as collateral for liabilities resulting from derivatives,

including those financial assets that had been reclassified as restricted in accordance with what is established in

standard C-1.

The terms and conditions related to margin accounts and collateral.

If the entity receiving collateral (consisting of financial or non-financial assets)

has the right to sell it or pledge it, without there being a default

by the

entity granting the collateral, in terms of what is established in standard C-1, it shall be

disclosed:

the fair value of collateral received;

ii.

the fair value of any collateral sold or pledged, and

iii.

the terms and conditions associated with the use of the collateral.

The characteristics of a financial instrument containing a component both of

liability and equity, as well as multiple embedded derivatives whose values are

interdependent (for example, a convertible debt instrument with a call option).

126

The net gains or losses on financial assets and liabilities related to

derivatives held for trading.

Interest income accrued on impaired financial assets related to derivatives.

The amount of impairment of financial assets related to derivatives.

The accounting policies regarding the valuation bases used in derivatives.

For each type of hedge (fair value hedge, cash flow hedge, and hedge of a

net investment in a foreign operation), separately:

a description of each type of hedge;

ii.

a description of the financial instruments designated as hedging instruments

and their fair values at the end of the period, and

iii.

the nature of the risks hedged.

For fair value hedges, the gains or losses of the hedging instrument, as well as of the hedged item attributable to the hedged risk.

For cash flow hedges:

the periods in which the cash flows are expected to occur and affect income;

ii.

description of any forecasted transaction for which a cash flow hedge has been previously used, but that is expected to not occur;

iii.

the amount that was recognized in other comprehensive income within shareholders' equity during the period;

iv.

the amount that was reclassified from shareholders' equity to income in the period,

showing the amount included in each line item of the statement of income, and

the ineffectiveness recognized in income.

For hedges of a net investment in a foreign operation, the ineffectiveness

recognized in income.

Information that allows users of the entity's financial statements to evaluate the

nature and degree of the risks to which such entity is exposed at the end of the period,

arising from derivatives.

The manner in which the risks arising from derivatives have been managed,

including, but not limited to, credit risk, liquidity risk, and market risk.

Qualitative disclosure.

For each type of risk arising from derivatives:

the risk exposures and how they arise;

ii.

their objectives, policies, and processes for managing risk and the methods used

to measure it, and

iii.

any change in (i) or (ii), compared to the previous period.

Quantitative disclosure.

For each type of risk arising from derivatives:

a summary of the quantitative information about its risk exposures at the end of the

period, which shall be based on information internally provided to key management personnel of the entity;

ii.

the quantitative disclosure for each type of risk (credit, liquidity, and market)

that is detailed in items s) to u), to the extent that it has not been provided

in accordance with item i above, unless the risk is not material, and

iii.

risk concentrations, if not evident in accordance with items (i) and (ii)

above.

If the quantitative information disclosed at the end of the period is not representative of the

entity's exposure to risk during the period, additional information that is representative shall be provided.

With respect to credit risk:

For each type of derivative:

the amount that best represents the maximum exposure to credit risk at the end of

the period, without taking into account any collateral received or other type of credit enhancement

(for example, guarantees);

ii.

with respect to the amount disclosed in item (i) above, a description of the collateral

received or of other type of credit enhancements;

iii.

information on the credit quality of financial assets related to

derivatives, that are not past due or impaired, and

iv.

the carrying amount of financial assets related to derivatives, whose

terms have been renegotiated, and that would otherwise be past due or

impaired.

For each type of financial assets related to derivatives:

an analysis of the maturity periods of financial assets that are

past due but not impaired at the end of the period;

ii.

an analysis of financial assets that have been individually impaired at

the end of the period, including the factors that the entity considered for such purposes,

and

iii.

with respect to the amounts disclosed in items (i) and (ii) above, a

description of the collateral received by the entity, including any type of credit enhancements and, unless it is impracticable, an estimate of its fair value.

If an entity obtains financial assets or non-financial assets during the period,

taking possession of the collateral or requesting other type of credit enhancements, and the aforementioned

assets meet the recognition standards contained in the accounting standards, the following shall be disclosed:

the nature and carrying amount of the assets obtained, and

ii.

when the assets are not immediately convertible into cash, the policies

for selling such assets, or else, using them in operations.

With respect to liquidity risk:

a maturity analysis for financial liabilities related to derivatives, that

shows the remaining contractual maturities, and

ii.

a description of how the liquidity risk inherent in item (i) above is managed.

With respect to market risk, a sensitivity analysis for each type of market risk to which the entity is exposed at the end of the period, showing:

the manner in which income and shareholders' equity would have been affected by the

changes in the relevant risk variable, which were reasonably possible at

that date;

ii.

the methods, main parameters, and assumptions used for the preparation of the

analysis;

iii.

an explanation of the objective of the method used and of the limitations that might

result in the information not fully reflecting the fair value of the

financial assets and financial liabilities related to derivatives;

iv.

changes in the methods and assumptions used in the previous period, as well as the

reasons for such changes, and

when the sensitivity analysis is not representative of an inherent risk in the

financial statements (for example, because the exposure at the end of the period does not

reflect the exposure during the period), that fact shall be disclosed, as well as the

reason why such analysis is not representative.

Appendix A is an integral part of standard B-4. Its content illustrates the application of this standard, with

the purpose of clarifying its meaning.

APPENDIX A

APPLICATION GUIDE

Derivatives

A derivative commonly has a notional amount, which represents an amount of currency,

a number of shares, a number of units of financial assets, or other units

specified in the contract. However, a derivative does not require that the buyer or seller (issuer) invest or receive the notional amount at the beginning of the transaction. Alternatively, a derivative may require a fixed payment or the payment of an amount that may vary (but not proportionally with respect to the change in the value of an underlying) as a result of a future event that is not related to the notional amount. For example, a contract may require a fixed payment of 1,000 monetary units if a reference rate increases by 100 basis points. Such a contract is a derivative even if the notional amount is not specified.

GA1

The definition of derivative in this standard includes contracts that are settled in gross terms through the delivery of the underlying element (for example, a futures contract to buy a fixed-rate debt instrument). An entity may acquire a contract to buy or sell a non-financial asset that can be settled net in cash or in another financial asset or through the exchange of financial instruments. Such contracts are within the scope of this standard unless the derivative has been acquired for the purpose of delivering a non-financial asset.

GA2

One of the most important characteristics of a derivative is that it has an initial net investment lower than what would be required to enter into other types of contracts that are expected to have a similar response to changes in market conditions. An option contract meets the definition of a derivative because the corresponding premium represents an amount smaller than the investment that would be required to obtain the underlying financial instrument to which such option is linked. A currency swap, which requires an initial exchange of different currencies with equal fair values, also meets the definition because it has an initial net investment equal to zero.

GA3

The definition of derivative refers to non-financial variables that are not specific to either party to the contract. Among them are an earthquake loss index in a particular region or a temperature index in a city. Among the non-financial variables specific to one of the parties to the contract is included, for example, the occurrence or not of a fire that damages or destroys an asset of one of the counterparties to the contract. A change in the fair value of a non-financial asset will be specific to the owner if such fair value reflects not only changes in the market prices of such assets (a financial variable), but also the condition of the non-financial asset in question (a non-financial variable). For example, if the residual value guarantee of a specific automobile exposes the guarantor to the risk of changes in its physical condition, the change in that residual value is specific to the owner of the automobile.

GA4

For the purposes of paragraphs 46 to 52 of this standard, regarding the recognition and valuation of rights and obligations arising from derivatives, the following is exemplified:

Forward Contracts

Buyer

GA5

The fair value of the contract corresponds to the fair value of the rights

of the same.

Seller

GA6

The fair value of the contract corresponds to the fair value of the obligations

of the same.

Futures Contracts

GA7

Both for the buyer and for the seller of the contract, the fair value of the future

corresponds to that determined based on recognized market or exchange quotes, which are initially recorded at their notional amount.

Options Contracts

Buyer

GA8

The fair value of an option generally corresponds to the premium paid in the transaction.

This will be subsequently valued according to the fair value of such contract.

Seller (Issuer)

GA9

The fair value of an option generally corresponds to the premium charged in the transaction.

This will be subsequently valued according to the fair value of such contract.

Swaps

GA10

The fair value of a swap corresponds to the net amount between the rights and obligations of the

contract (present value of flows to receive minus present value of flows to deliver), which

shall be initially recorded at their fair value. Subsequently, the fair value measurement of the

contract shall be carried out in accordance with the conditions established in the same.

GA11

In the event that the contract establishes the exchange of notional amounts, the fair values

referred to in the previous paragraph must incorporate the amount of the amounts

to be exchanged for valuation purposes.

Credit Derivatives

GA12

Credit derivatives in which the exchange of flows is agreed, are valued according to the

fair value of the rights to receive and the flows to deliver incorporated in each instrument.

GA13

Credit derivatives whose primary contract takes the form of an option, are valued in accordance with the

fair value of the premiums embedded in the contract.

Structured Operations

GA14

The embedded derivative portion or portions in structured operations are valued each

one independently from the main contract, observing for such purposes, the dispositions

of valuation applicable to the derivative to which they resemble (futures contracts, forward

contracts, options, swaps, and credit derivatives).

GA15

Once the derivative portions have been determined, identifying whether they are options,

forward contracts, or any other, these shall be valued one by one in accordance with the

guidelines established above.

Embedded Derivatives (paragraphs 23 - 28)

GA16

If a host contract has no established or predetermined maturity, and represents a

residual participation in the entity's equity, then its economic characteristics and risks are those of an equity instrument, so that an embedded derivative on it

would need to possess the equity instrument characteristics of the same entity

to be considered as closely related. If the host contract is not an equity instrument and meets the definition of a financial instrument, then its economic and risk characteristics are those of a debt instrument.

GA17

An embedded derivative that is not an option (such as an implicit forward or swap contract) is separated from the host contract by considering its substantive conditions, whether explicit or implicit, so that it has a fair value equal to zero upon initial recognition. An embedded derivative based on options (such as an implicit put, call, cap, floor, or interest rate swap option) is separated from the host contract based on the conditions established for the option component it possesses. The initial book value of the host contract is the residual amount remaining after separating the embedded derivative.

GA18

Generally, multiple embedded derivatives in an individual instrument are treated as a single composite embedded derivative. However, embedded derivatives classified eas equity are accounted for separately from those classified as assets or liabilities. Additionally, if an instrument has more than one embedded derivative, and those derivatives relate to different risk exposures and are easily separable and independent of each other, each will be recognized separately.

GA19

In the following examples, the economic characteristics and risks of an embedded derivative are not closely related to the host contract (see paragraph 24(a)). In them, under the assumption that the conditions established in paragraphs (b) and (c) of paragraph 24 are met, the entity will recognize the embedded derivative separately from the host contract: a)

An implicit put option in an instrument, which enables the holder to require the issuer to repurchase the instrument for a cash amount or other assets, which varies in function of changes in a price or an index, corresponding to instruments of equity, which are not closely related to the host debt instrument. b)

An implicit call option in an equity instrument, which enables the issuer to repurchase it at a specified price, is not closely related to the host equity instrument from the holder's perspective (from the perspective of the issuer, the call option is an equity instrument provided it meets the conditions to be classified as such according to NIF C-12 "Financial Instruments with Liability and Capital Characteristics" of the NIFs, in which case it is excluded from the scope of this criterion). c)

An option to extend or an automatic extension clause for the maturity term of a debt financial instrument, are not closely related to the debt host instrument, unless at the same time as the extension there exists a simultaneous adjustment to the market interest rate. If an entity issues an instrument of debt and the holder of this sells (issues) a call option on the instrument of debt in favor of a third party, the issuer will consider the call option as the extension of the maturity term of the debt instrument, provided that said issuer can be required to participate or facilitate the new marketing of the debt instrument as a result of the exercise of the call option. d)

Principal or interest payments indexed to an equity instrument, which are implicit in a debt host instrument or in a host insurance contract are not closely related to the host contract, because the risks inherent to said host contract and to the embedded derivative are different. e)

A conversion component in equity instruments, implicit in a convertible debt instrument, is not closely related to the instrument of debt host from the perspective of the holder of the instrument (from the perspective of the issuer, the conversion option in equity instruments is an instrument of equity and is outside the scope of this criterion, provided it meets the conditions for such classification according to NIF C-12). f)

A call, put, redemption or prepayment option implicit in a debt host instrument, is not closely related to said host contract unless the exercise price of the option is, at each exercise date, approximately equal to the amortized cost of the debt host instrument or of the host insurance contract. From the perspective of the issuer of a convertible debt instrument with an implicit call or put option component, the evaluation of whether the call or put option is closely related to the debt host instrument, is performed before the separation of the equity instrument according to NIF C-12. g)

Credit derivatives that are implicit in a debt host instrument and allow a party (the "beneficiary") to transfer the credit risk of a particular reference asset (which may or may not belong to it), to another party (the "guarantor"), are not closely related to the debt host instrument. Such credit derivatives allow the guarantor to assume the credit risk associated with the reference asset without owning it directly.

GA20

An example of a hybrid financial instrument is a financial instrument that gives the holder the right to resell it to the issuer in exchange for a cash amount or in other financial instruments, which varies according to changes in an index of equity instruments that can increase or decrease (which can be called "instrument with put option"). In this case, separation of the embedded derivative is required (i.e., the indexed principal payment) in accordance with paragraph 24, because the host contract is a debt instrument according to paragraph GA17, and the indexed principal payment is not closely related to a debt host instrument according to paragraph GA20(a). As the principal payment can increase or decrease, the embedded derivative is a derivative other than an option whose value is indexed to an underlying variable.

GA21

In the case of an instrument with put option that can be resold at any time, for a cash amount equal to a proportional share of the equity value of an entity (such as shares in an investment fund or some investment products linked to investments), the effect of separating an embedded derivative and recognizing each component is to measure the hybrid financial instrument (combined) at the residual value payable at the balance sheet date if the holder exercised its right to resell the instrument to the issuer.

GA22

In the examples that follow, the economic characteristics and risks of an embedded derivative are closely related to those of a host contract. In these examples, the entity does recognize the embedded derivative separately from the host contract. a)

An embedded derivative where the underlying is an interest rate or an index of interest rates, whose effect is that it can change the amount of interest that would otherwise be paid or received in a debt host instrument that accrues (accrues) interest or in an insurance contract, is closely related to the host instrument, unless the hybrid financial instrument (combined) can be settled in such a way that the holder does not recover substantially the investment it has recognized, or that the embedded derivative can, at least, double the initial yield of the holder on the host contract, resulting in a yield that is, at least, double the market yield for a contract with the same conditions as the host contract. b)

An implicit option that sets maximum or minimum limits on the interest rate of a debt contract or an insurance contract, will be closely related to the host contract, provided that, at the time of issuance of the instrument, the maximum limit is not below the market interest rate and the minimum limit is not above it and that neither of the two limits is leveraged relative to the host contract. Similarly, clauses included in the purchase or sale contract of an asset, that establish a maximum or minimum limit to the price to be paid or received for the asset, will be closely related to the host contract if both the maximum and minimum limits are out of the money at inception, and are not leveraged. c)

An embedded foreign currency derivative that provides for a flow of principal and interest payments, denominated in a foreign currency, and is implicit in a debt host instrument (for example, a bond in two currencies: one for interest and another for principal amortizations), is closely related to the debt host instrument. Such a derivative is not separated from the host contract because NIF B-15 requires that gains or losses on changes in monetary items be recognized in the statement of comprehensive income.

GA23 d)

A foreign currency derivative implicit in a host contract, which is an insurance contract or is not a financial instrument, is part of the agreement and therefore closely related to the host contract provided it is not leveraged, does not contain an option component and requires payments denominated in: i. the functional currency of any substantial party to the contract; ii. the currency in which the price of the good or service related to which is acquired or delivered is usually denominated for commercial transactions around the world, or iii. a currency that is commonly used in contracts to buy or sell non-financial items in the economic environment in which the transaction takes place (for example, a stable and liquid currency that is commonly used in local transactions, or in foreign trade). e)

An implicit prepayment option in a segregated instrument representing principal or interest, will be closely related to the host contract provided that it: (i) initially is the result of separating the right to receive contractual cash flows from a financial instrument that, by itself, does not contain an embedded derivative; and (ii) does not incorporate additional conditions to the original debt host contract. f)

An embedded derivative in a host lease contract will be closely related to it if it is (i) an inflation-related index, such as a lease payment index that is included in the consumer price index (provided the lease is not leveraged and the index refers to the inflation of the economic environment of the entity), (ii) a set of contingent fees based on sales made, and (iii) a set of contingent fees based on variable interest rates. g)

An implicit component, within a host financial instrument or a host insurance contract, that is linked to participation units in an investment fund, will be closely related to the host contract if the payments, denominated in participation units in the cited fund, are measured in terms of monetary values of those units, which reflect the fair values of the fund's assets. A component linked to participation units in an investment fund is a contractual condition that requires payments to be denominated in participation units of an internal or external investment fund. h)

An embedded derivative in an insurance contract will be closely related to the main insurance contract if both have such a degree of interdependence that the entity cannot measure the embedded derivative separately (that is, without considering the host contract).

Instruments containing embedded derivatives

When an entity becomes a counterparty to a hybrid financial instrument (combined) that contains one or more embedded derivatives, paragraph 24 requires that the entity identify these embedded derivatives, evaluate whether it is mandatory to separate them from the host contract and in those cases where this is so, value said derivatives at their fair value, both at the moment of initial recognition and subsequently. These requirements may become more complex, or result in less reliable measurements than measuring the entire instrument at fair value with changes in profit or loss. Therefore, this criterion allows that the entire instrument be designated as measured at fair value with changes in profit or loss for the period.

GA24

This designation could be used when paragraph 24 requires the separation of embedded derivatives from the host contract, as well as when it prohibits it. However, paragraph 26 does justify the designation of the hybrid financial instrument (combined) as measured at fair value with changes in profit or loss for the period in the cases established in paragraph 26(a) and 26(b), because doing so would not reduce complexity nor increase reliability.

Hedging operations (paragraphs 53 - 89)

Hedging instruments (paragraphs 54-60)

Instruments that meet the requirements to be considered hedging instruments (paragraphs 54 and 55)

GA25

The potential loss in an option issued by the entity could be significantly higher than the potential gain in value of the associated hedged item. In other words, an issued option is not effective in reducing exposure to gain or loss of a hedged item. Consequently, an issued option does not meet the requirements for a hedging instrument unless it is designated to cancel a purchased option, including an option that is implicit in another financial instrument (for example, a call option issued used to cover a liability that can be recovered). In contrast, a purchased option has potential gains equal to or greater than losses and, therefore, has the possibility of reducing exposure to gains or losses arising from changes in fair value or in cash flows. Consequently, it may meet the requirements to be a hedging instrument.

GA26

An investment held to maturity, and valued at amortized cost, can be designated as a hedging instrument within a foreign currency risk hedge.

GA27

The investment in a non-traded equity instrument, which is not valued at fair value because this cannot be measured reliably, or the investment in a derivative that is linked to that non-traded instrument and must be settled by delivery of the same, cannot be designated as hedging instruments.

GA28

The entity's own equity instruments are not the entity's financial assets or liabilities, and consequently cannot be designated as hedging instruments.

Covered items (paragraphs 61 - 68)

Items that meet the requirements to be designated as hedged (paragraphs 61- 63)

GA29

A firm commitment to acquire a business in a business combination, cannot be a hedged item, with the exception of the foreign currency risk component, because the other risks to be covered cannot be identified and evaluated specifically. These other risks are general business risks.

GA30

An investment valued by the equity method cannot be a hedged item in a fair value hedge, because the equity method recognizes in the statement of comprehensive income the investor's proportion of the results of the associate or joint venture, not the changes in the fair value of the investment. Similarly, an investment in a consolidated subsidiary cannot be a hedged item in a fair value hedge, because consolidation recognizes in the results the portion of the gain or loss of the subsidiary, not the changes in the fair value of the investment. The hedge of a net investment in a foreign operation is different, because it is a hedge of exposure to the foreign currency exchange rate, not a fair value hedge of the change in the value of the investment.

GA31

Paragraph 63 establishes that in consolidated financial statements, the foreign currency risk of intra-group transactions forecast as highly probable, could meet the requirements to be a hedged item in a cash flow hedge, provided that the transaction is denominated in a currency different from the functional currency of the entity that carried it out and that the foreign currency risk affects the consolidated result. For this purpose, the entity could be a parent, subsidiary, associate, joint arrangement or branch. If the foreign currency risk of a forecast intra-group transaction does not affect the consolidated result, the intra-group transaction would not qualify as a hedged item. Generally, this is the case for royalty payments, interest payments or management service charges between entities of the same group, unless there is an external transaction linked to them. However, when the foreign currency risk of a forecast intra-group transaction affects the consolidated result, the intra-group transaction could qualify as a hedged item. An example would be the forecast purchases or sales of securities between entities of the same group, if they are subsequently sold to a third party outside the group.

GA32

If the hedge of a forecast intra-group transaction meets the requirements of hedge accounting, any gain or loss recognized directly in equity, in accordance with paragraph 82(a), will be reclassified to profit or loss for the period or periods during which the foreign currency risk of the covered forecast transaction affects the consolidated result.

GA33

An entity may designate all changes in fair value or in cash flows of a hedged item in a hedge relationship. An entity may also designate only the changes in fair value or in cash flows of a hedged item above or below a certain price or other variable, for example an interest rate (known as one-sided risk ). The intrinsic value of a purchased option designated as a hedging instrument (assuming it has the same terms as the risk covered), but not the time value reflects a one-sided risk in a hedged item. For example, an entity may cover the variability in cash flows that result from the increase in the price of a forecast purchase of an asset. In such a situation, only the losses in cash flows that result from the increase in the price of the good will be designated as hedged items. The covered risk does not include the time value of the option because said time value does not represent a component of the forecast purchase that affects the results of the period (paragraph 70(b)).

Designation of a financial instrument as a hedged item (paragraphs 64 and 65)

GA34

If a portion of the cash flows of a financial asset or financial liability is designated as a hedged item, the designated portion must be less than the total cash flows of the corresponding asset or liability. For example, in the case of a liability whose effective interest rate is below a reference rate, the entity cannot designate as a hedged item a portion of the liability equal to the principal plus an interest corresponding to the reference rate. However, the entity may designate all cash flows of the financial asset or the complete financial liability as a hedged item and cover them only for a specific risk (for example, against changes attributable to variations in a risk-free rate). For example, in the case of a financial liability whose effective interest rate is 100 basis points below the risk-free rate, the entity may designate as a hedged item the complete liability (that is, the principal plus interest calculated according to the risk-free rate minus 100 basis points), and cover it from the change in fair value or in cash flows of the total liability that are attributable to variations in the risk-free rate. The entity could also choose a hedge ratio different from one-to-one, to improve the effectiveness of the hedge described in paragraph GA39.

GA35

Furthermore, if a fixed-interest financial instrument is hedged subsequently to the moment it originated, and interest rates have changed since then, the entity may designate a portion equal to a reference rate that is higher than the contractual rate paid by the item. The entity could do this assuming that the reference rate is lower than the effective interest rate calculated under the assumption that it had purchased the instrument on the day it designates it as a hedged item. For example, it is assumed that an entity originates a fixed-interest financial asset for 100 monetary units, which has an effective interest rate of 6 percent, at a time when the reference rate is at 4 percent. It begins to hedge that asset subsequently, when the reference rate has risen to 8 percent and the fair value of the instrument has decreased to 90 monetary units. The entity calculates that if it had purchased the asset on the date it first designated it as a hedged item for 90 monetary units, the effective yield would have been 9.5 percent. Since the reference rate is lower than this effective yield, the entity may designate a portion of the reference rate at 8 percent, comprising in part the contractual interest cash flows, and in part the difference between the current fair value (that is, 90 monetary units) and the amount repayable at maturity (that is, 100 monetary units).

GA36

Paragraph 64 allows an entity to designate as a hedged item not only the total change in the fair value or in the variability of the cash flows of a financial instrument.

For example:

a) All cash flows of a financial instrument may be designated as hedged items against changes in fair value or in cash flows attributable to some (but not all) associated risks, or

b) Some (but not all) cash flows from a financial instrument may be designated as hedged items against changes in fair value or in cash flows attributable to all or only some associated risks (for example, a portion of the cash flows of a financial instrument may be designated as hedged items against changes attributable to all or some associated risks).

GA37

To be eligible to use hedge accounting, the risks designated as hedged or the portions of the hedged items must be separate and identifiable components of the financial instrument, and the changes in the fair value or in the cash flows of the financial instrument (in its entirety or portions thereof) attributable to changes in the hedged risks must be reliably measurable. For example:

a) In the case of hedging a fixed-rate financial instrument against changes in fair value attributable to fluctuations in a risk-free rate or reference interest rate, the risk-free rate or reference interest rate is usually a separate and identifiable component of the financial instrument, and it is reliably measurable.

b) Inflation is not a separate and identifiable component, nor reliably measurable, and therefore cannot be designated as a risk to hedge or a portion of a hedged financial instrument, unless the provisions of the following subsection c) are met.

c) A portion of inflation (established in a contract) of the cash flows of an inflation-indexed bond (assuming that the separation accounting of an embedded derivative does not apply) is a separable, identifiable and reasonably measurable element provided that other cash flows of the instrument are not affected by said portion of inflation.

Designation of a non-financial instrument as a hedged item (paragraph 66)

GA38

Changes in the price of a component of a non-financial asset or non-financial liability generally do not have a predictable and measurable effect separately on the price of such item, as could be the case (for example) of a change in market interest rates on the price of a bond. For this reason, a non-financial asset or non-financial liability may be a hedged item only in its entirety, or to hedge foreign currency risk. If there is a difference between the terms of the hedged item and the hedging instrument, the hedge relationship may meet the requirements of a hedge relationship provided that all conditions of paragraph 73 are met, including that the hedge is highly effective. To this end, the amount of the hedging instrument may be higher than that of the hedged item, if this improves the effectiveness of the hedge relationship. For example, a regression analysis may have been developed to establish the statistical relationship between the hedged item and the hedging instrument. If there is a significant statistical relationship between the two variables, the slope of the regression curve may be used to establish the hedge ratio that maximizes expected effectiveness. For example, if the slope of the regression curve is 1.02, a hedge ratio based on 0.98 parts of hedged item for each 1 part of the hedging instrument will maximize expected effectiveness. Nevertheless, the hedge ratio may result in ineffectiveness, which shall be recognized in the period's income while the hedge relationship lasts.

Designation of a group of instruments as hedged items (paragraphs 67 and 68)

GA39

Hedging a net global position (for example, the net amount of all fixed-rate assets and liabilities with similar maturities), instead of a specific hedged item, does not meet the requirements for hedge accounting. Nevertheless, in hedge accounting of this type of hedge relationship, almost the same effect in period income can be achieved by designating a portion of the underlying variables as a hedged item. For example, if a bank has 100 monetary units of assets and 90 monetary units of liabilities with risks and terms of a similar nature, and covers the net exposure of 10 monetary units, it may designate as a hedged item 10 monetary units of said assets. This designation may even be used if the assets or liabilities are referenced to a fixed interest rate (in which case it would correspond to a fair value hedge), or to a variable interest rate (in which case a cash flow hedge would apply). Similarly, if an entity has a firm commitment to purchase foreign exchange for 100 monetary units and a firm commitment to sell 90 monetary units, it may cover the net amount of 10 monetary units by acquiring a derivative and designating it as the hedging instrument associated with 10 monetary units of the firm commitment to purchase 100 monetary units.

Hedge Accounting (paragraphs 69-89)

GA40

As an example of a fair value hedge, one may mention a hedge of the exposure to changes in the fair value of a fixed-rate debt instrument, as a consequence of changes in interest rates, provided that such exposure to changes in fair value affects period income (for example, because it is a security classified as held for trading). Such a hedge may be entered into by both the issuer and the buyer.

GA41

An example of a cash flow hedge is the use of a swap to convert variable-rate debt into fixed-rate debt (that is, the hedge of a forecasted transaction where the future cash flows to be hedged are future interest payments).

GA42

Hedging a firm commitment (for example, a hedge of the change in the price of an asset relative to an unrecorded contractual commitment by an entity to purchase said asset at a fixed price) is a hedge of an exposure to changes in fair value. As a consequence, such a hedge is a fair value hedge. Also, according to paragraph 72, the hedge of foreign currency risk of a firm commitment can only be accounted for as a fair value hedge.

Assessment of Hedge Effectiveness

GA43

A hedge will be considered highly effective if the following two conditions are met:

a) At the inception of the hedge and in subsequent periods, it is expected that it will be highly effective in offsetting changes in fair value or in cash flows attributable to the hedged risk, during the period for which the hedge has been designated. Such expectation may be demonstrated in various ways, including by performing a comparison of past changes in the fair value or in the cash flows of the hedging instrument, attributable to the hedged risk, with the changes that this fair value or cash flows have experienced in the past, respectively; as well as by demonstrating a high statistical correlation between the fair value or cash flows of the hedged item and those corresponding to the hedging instrument. The entity may choose a hedge ratio other than one-to-one, in order to improve the effectiveness of the hedge, as described in paragraph GA39.

b) The actual effectiveness of the hedge is within a range of 80-125 percent. For example, if the results achieved are such that the loss in the hedging instrument is 120 monetary units, while the gain in the cash instruments is 100 monetary units, the degree of offset may be measured as 120/100, which yields 120 percent, or as 100/120, which yields 83 percent. In this example, assuming that the hedge meets the condition established in subsection (a) above, the entity could conclude that the hedge has been highly effective.

GA44

Effectiveness is evaluated, at a minimum, at each point in time when an entity prepares its annual financial statements or at interim dates.

GA45

This standard does not specify a single method for evaluating the effectiveness of hedges. The method that the entity adopts to evaluate the effectiveness of hedges depends on its risk management strategy. For example, if the entity's risk management strategy consists of periodically adjusting the amount of the hedging instrument so as to reflect changes in the hedged item, the entity will need to demonstrate why it expects the hedge to be highly effective, but only for the remaining period until the amount of the hedging instrument is adjusted again. In some cases, the entity may adopt different methods for different classes of hedges. The documentation on the hedge strategy followed by the entity will include the procedures for evaluating effectiveness. These procedures will establish whether the evaluation comprises the entire gain or loss of the hedging instrument, or if the time value of the instrument is excluded.

GA46

If the entity hedges less than 100 percent of the exposure of an item, for example 85 percent, it will designate that the hedged item is 85 percent of the exposure, and it will base the measurement of ineffectiveness on the change in this designated 85 percent exposure. Nevertheless, when proceeding to hedge this designated 85 percent, the entity may use a hedge ratio other than one-to-one, if this improves the expected effectiveness of the hedge, as described in paragraph GA39.

GA47

If the main conditions of a hedging instrument and of the asset, liability, firm commitment or highly probable forecasted transaction being hedged are the same, it is likely that changes in fair value or in cash flows attributable to the hedged risk will be completely offset, both at the time of entering into the hedge and subsequently. For example, an interest rate swap is very likely to be an effective hedge if the notional and principal amounts, the total term, the interest review dates, the principal and interest payment and receipt dates, and the bases for measuring interest rates are the same for both the hedging instrument and the hedged item. On the other hand, the hedge of a highly probable forecasted purchase of a financial asset, through a forward contract, is likely to be highly effective if:

a) the forward contract is acquired for the purchase of the same amount of the same financial asset, at the same time and under the same conditions as the covered forecasted purchase;

b) the fair value of the forward contract at inception is equal to zero, and

c) the effectiveness assessment excludes the change in the premium (discount) of the forward contract (which is recognized in period income), or, the change in the expected cash flows of the highly probable forecasted transaction is based on the forward price of the financial asset.

GA48

Sometimes the hedging instrument only offsets part of the hedged risk. For example, a hedge would not be completely effective if the hedging instrument and the hedged item are denominated in different currencies that do not vary in a similar manner. Likewise, a hedge of interest rate risk using a derivative would not be completely effective if part of the change in the fair value of the derivative is attributable to the counterparty credit risk.

GA49

To meet the conditions for the use of hedge accounting, the hedge must refer to a specifically designated and identified risk, and not simply to the general risks of the entity's business, and it must ultimately affect its income. For hedge accounting, the hedge of obsolescence risk of a physical asset or of the risk of expropriation of properties by the government cannot be chosen, as effectiveness cannot be measured because those risks cannot be reliably measured.

GA50

Paragraph 56(a) allows an entity to separate the intrinsic value and the time value of an option and designate as the hedging instrument only the change in the intrinsic value of said option. Such designation may result in a perfectly effective hedge relationship in terms of offsetting changes in cash flows attributable to a one-sided risk in a forecasted transaction, if the main terms between said forecasted transaction and the hedging instrument are the same.

GA51

If an entity designates an option in its entirety as a hedging instrument of a forecasted transaction with respect to a one-sided risk, the hedge relationship will not be perfectly effective. This is because the premium paid for the option includes the time value, and as established in paragraph GA34, the hedge of a one-sided risk does not include the time value of an option. Therefore, in this situation, there will be no offset between the cash flows related to the premium paid corresponding to the time value of the option, and those related to the hedged risk.

GA52

In the case of interest rate risk, the effectiveness of the hedge may be evaluated by preparing a maturity schedule for financial assets and financial liabilities, showing the net exposure to interest rate for each period, provided that the net exposure is associated with a specific asset or liability (or with a specific group of assets or liabilities, or with a specific portion thereof) giving rise to the net exposure, and the effectiveness of the hedge is evaluated with reference to that asset or liability.

GA53

When evaluating the effectiveness of a hedge, the entity will generally consider the time value of money. It is not necessary that the fixed interest rate of a hedged item exactly matches the fixed interest rate of a swap designated for a fair value hedge. Nor is it necessary that the variable interest rate in an interest-bearing asset or liability be equal to the interest rate corresponding to the swap designated for a cash flow hedge. The fair value of a swap is derived from its net settlements (net position of flows to be delivered and received). The fixed and variable interest rates of a swap may be changed without affecting the net settlement, provided that both are exchanged for the same amount.

GA54

When an entity fails to meet the hedge effectiveness requirements, it will suspend the application of hedge accounting from the last date on which it demonstrated compliance with the hedge effectiveness requirements. Nevertheless, if the entity identifies the event or change in circumstances that caused the hedge relationship to cease to meet the effectiveness criteria, and demonstrates that the hedge was effective before the event or change in circumstances occurred, it will suspend the application of hedge accounting from the same date of the event or change in circumstances.

Fair Value Hedge of Interest Rate Risk for a Portion of a Portfolio Composed of Financial Assets or Financial Liabilities

GA55

In the case of fair value hedging of interest rate risk associated with a portfolio of financial assets or financial liabilities, the entity will comply with the requirements of this standard if it observes the procedures established in the following subsections (a) through (i):

a) The entity will identify the portfolio of items, the interest rate risk of which it wishes to hedge, as part of the usual processes it follows for risk management. The portfolio may contain only assets, only liabilities, or a combination of assets and liabilities. The entity may identify two or more portfolios (for example, the entity could group its available-for-sale financial assets into a separate portfolio), in which case it will apply the following guidelines to each of the portfolios separately.

b) The entity will disaggregate the portfolio into interest review periods, based on the expected dates for such reviews, disregarding contractual dates. Such disaggregation may be done in various ways, including by distributing cash flows among the periods in which they are expected to occur, or by distributing the notional principal amounts across all periods until the time when the review is expected to occur.

c) From this stratification, the entity will decide on the amount it wishes to hedge. To this effect, it will designate as a hedged item an amount of assets or liabilities (but not a net amount) of the identified portfolio, which is equal to the amount it wishes to designate as hedged. This amount also determines the percentage measure that will be used to prove effectiveness.

d) The entity will designate the interest rate risk that it is hedging. This risk could consist of a portion of the interest rate risk of each of the items in the covered portfolio, such as, for example, a reference interest rate (for example, LIBOR).

e) The entity will designate one or more hedging instruments for each interest review period.

f) Using the designations made in the preceding subsections (c) to (e), the entity will evaluate, both at the beginning and in subsequent periods, whether the hedge can be expected to be highly effective throughout the interval for which it has been designated.

g) Periodically, the entity will measure the change in the fair value of the hedged item (as per the designation made in subsection (c)) that is attributable to the hedged risk (as per the designation made in subsection (d)) based on the expected interest review dates determined in subsection (b). Assuming that, using the effectiveness valuation method documented by the entity, it has been determined that the hedge was actually highly effective, the entity will recognize the change in the fair value of the hedged item as a gain or loss in period income, as well as in one of the two lines corresponding to the balance sheet items described in paragraph 75. It is not necessary that the change in fair value be distributed among individual assets or liabilities.

h) The entity will measure the change in the fair value of the hedging instrument or instruments (as per the designation made in subsection (e)), and recognize it as a gain or loss in period income. The fair value of the hedging instrument or instruments will be recognized as an asset or a liability in the balance sheet.

i) Any ineffectiveness will be recognized in income as the difference between the changes in fair values mentioned in subsections (g) and (h).

GA56

B-5 CREDIT PORTFOLIO

Objective and Scope

This standard aims to define the particular rules regarding the recognition, valuation, presentation, and disclosure in the financial statements of the credit portfolio of entities.

1 This standard also includes accounting guidelines regarding the allowance for credit risk.

2 The following are not subject to this standard:

a) The establishment of the methodology for the rating and provision of the allowance for credit risk.

b) The accounting rules regarding securities issued in series or in bulk, which are quoted on recognized markets and which the entity holds in its own position, even if they are linked to credit operations, being subject to standard B-2 "Investments in Securities".

c) The receivables rights that the entity acquires that fall under the circumstances foreseen in standard B-10 "Receivables Rights".

Definitions

3 Borrower.- The natural or legal person, or trust to whom a credit is granted.

4 Aforo.- The amount of the nominal value of the credit rights transferred in a factoring, discount, or assignment of credit rights operation, which the assignee does not finance to the factor or assignor and which is obligated to deliver to the latter, once the collection of the portfolio subject to factoring, discount, or assignment of credit rights is carried out.

5 Capitalizable Lease.- A lease that transfers substantially all the risks and benefits inherent in the ownership of an asset.

6 Portfolio Rating.- Methodology used by entities to recognize the credit risk associated with the credits granted by them.

7 Payment Capacity.- For the purposes of this standard, payment capacity will be understood to exist when the conditions established for credit unions, to that effect, in the General Provisions applicable to general warehouse deposits, exchange houses, credit unions, and multiple-object financial companies regulated are met.

8 Troubled Portfolio.- Those commercial credits for which it is determined that, based on current information and facts as well as on the credit review process, there is a considerable probability that they will not be fully recovered, both their principal and interest components, according to the terms and conditions originally agreed. Both the performing and non-performing portfolios are susceptible to being identified as troubled portfolio.

9 Past Due Portfolio.- Composed of credits:

a) Whose borrowers are declared in commercial bankruptcy, with the exception of those credits that:

i. Continue to receive payment in terms of what is provided in subsection VIII of article 43 of the Commercial Bankruptcy Law, or

ii. Are granted under the protection of article 75 in relation to subsections II and III of article 224 of said Law; or

Principal, interest, or both, have not been settled in the terms originally agreed, considering the provisions established in paragraphs 65 to 79 of this criterion.

Performing Portfolio.- The portfolio integrated by credits that are current in their payments of both principal and interest, as well as by those credits with principal or interest payments that are past due but have not been placed in the situations provided for in this criterion to be considered as past due, and those that having been classified as non-performing portfolio are restructured or renewed and have evidence of sustained payment in accordance with what is established in this criterion.

Write-off.- It is the cancellation of the credit when there is evidence that formal collection efforts have been exhausted or the practical impossibility of recovering the credit has been determined.

Assignment of Credit Rights.- Those financing operations by virtue of which the ownership of credit rights is transferred to any entity. Credit Portfolio Acquisition operations shall not be considered Assignment of Credit Rights operations.

Commission for the granting of credit.- Exists when the entity and the borrower have agreed from the date the credit was arranged, the collection of a monetary fee for recovery of the costs or expenses incurred to grant the credit regardless of the moment in which the disbursements thereof are made. Likewise, commissions charged for restructuring or renewal of credits are considered part of these commissions.

Consolidation of credits.- It is the integration into a single credit, of two or more credits granted by the same entity to the same borrower.

Amortized Cost.- For the purposes of this criterion, it is the valuation method that integrates the amount effectively granted to the borrower, adjusted by the accrued interest that has been recognized in accordance with what is established in this criterion, the insurance that, if applicable, had been financed, the collections of principal and interest, as well as by the haircuts, forgiveness, bonuses, and discounts that have been granted.

Credit.- Asset resulting from the financing that entities grant to their members based on what is established in the applicable legal provisions.

Commercial Credits.- Direct or contingent credits, including bridge credits denominated in national currency, foreign currency, or investment units (UDIs), as well as the interest they generate, granted to their members, whether legal entities or natural persons with business activity and destined for their commercial or financial business; including credits for financial factoring, discounting, and assignment of credit rights operations and credits for capitalizable leasing operations that are entered into with such legal entities or individuals; credits granted to trustees acting under trusts and credit schemes commonly known as "structured" in which there is an asset encumbrance that allows the risk associated with the scheme to be evaluated individually.

Restricted Credits.- Those credits are considered as such with respect to which there are circumstances under which they cannot be disposed of or used, and must be presented as restricted; for example, the credit portfolio that the assigning entity grants as guarantee or collateral.

Debtor of the credit rights.- The natural or legal person to whom the credit rights transferred from the factor (assignor) to the factor buyer (assignee) in a financial factoring, discounting, or assignment of credit rights operation are originally enforceable.

Preventive Estimation for Credit Risks.- An adjustment made against the results of the fiscal year that measures that portion of the credit that is estimated will not have collectability viability.

Factor (Assignor).- The natural or legal person who transfers the credit rights held in its favor, whose payment obligation is borne by the debtor of the credit rights subject to financial factoring.

Financial Factoring.- Operation by virtue of which the factor buyer agrees with the factor, who may be a natural or legal person, to acquire credit rights that the latter holds in its favor for a determined or determinable price, in national currency, foreign currency, or UDIs, regardless of the date and manner of payment, it being possible to agree that the factor remains obligated to respond for the punctual and timely payment of the credit rights transferred to the factor buyer.

Factor Buyer (Assignee).- The entity that acquires the credit rights in favor of the factor (Assignor).

Credit Line.- Amount of money made available to the customer by the entity, for a determined period of time.

Reduced Price Purchase Option.- Agreement that allows the lessee, at its option, to buy the rented property at a significantly low price in relation to the market value at the moment the option can be exercised. This situation allows supposing that such option will be exercised.

Discounting Operation.- Operation by virtue of which the discounting entity obligates itself to anticipate to the discounted party the amount of a monetary credit, against a third party and with future maturity, in exchange for the alienation in favor of the discounting Institution of said credit and the deduction of an interest.

Payment.- Real delivery of the thing or amount due or the provision of the service that has been agreed. Financial income from accrual arising from capitalizable leasing, financial factoring, discounting, or assignment of credit rights operations shall not be considered as payment, nor shall capitalized interests.

Write-offs, haircuts, forgiveness, bonuses, and discounts that are effected on a credit or group of credits are not considered payments.

Sustained Credit Payment.- Borrower's payment compliance without delay, for the total required amount of principal and interest, for a minimum of three consecutive amortizations of the credit's payment scheme, or in the case of credits with amortizations that cover periods greater than 60 natural days, the payment of one installment.

For credit restructurings with periodic payments of principal and interest whose amortizations are less than or equal to 60 days, in which the payment periodicity is modified to shorter periods, the number of amortizations equivalent to three consecutive amortizations of the original payment scheme of the credit shall be considered. Regarding credits that remain with a single payment scheme of principal at maturity, the provisions of the following paragraph 34 shall apply.

In the case of consolidated credits, if in accordance with paragraph 79, two or more credits had resulted in the transfer to non-performing portfolio, to determine the required amortizations, the original payment scheme of the credit whose amortizations equate to the longest term shall be attended to.

In all cases, in demonstrating that there is sustained payment, the entity must have available to the CNBV evidence justifying that the borrower has payment capacity at the moment the restructuring or renewal is carried out to meet the new conditions of the credit. The elements that must be taken into account for such purposes are at least the following: the intrinsic probability of default of the borrower, the guarantees granted for the restructured or renewed credit, the payment priority vis-à-vis other creditors, and the liquidity of the borrower in the new financial structure of the financing.

Regarding credits with single payment of principal at maturity, regardless of whether interest payment is periodic or at maturity, it is considered that there is sustained payment of the credit when any of the following situations occur:

the borrower has covered at least 20% of the original amount of the credit at the time of restructuring or renewal, or

the amount of accrued interest corresponding to the payment scheme for restructuring or renewal for a term of 90 days has been covered.

The early payment of amortizations of restructured or renewed credits, other than those with single payment of principal at maturity, regardless of whether interests are paid periodically or at maturity, is not considered sustained payment. This is the case of amortizations of restructured or renewed credits that are paid without having elapsed the natural days equivalent to the periods required in accordance with the previous paragraph 30.

Restructuring.- It is that operation that derives from any of the following situations:

expansion of guarantees covering the credit in question, or

modifications to the original conditions of the credit or the payment scheme, among which are:

change of the interest rate established for the remaining term of the credit;
change of currency or unit of account (for example UDI);
granting of a grace period regarding the fulfillment of payment obligations according to the original terms of the credit, or
extension of the credit term.

Renewal.- It is that operation in which the balance of a credit is settled partially or totally, through the increase in the original amount of the credit, or with the proceeds from another credit contracted with the same entity, in which the same member is a party, a joint obligor of said member, or another person who by their asset links constitutes common risks.

Notwithstanding the foregoing, a credit shall not be considered renewed for the disbursements made during the validity of a pre-established credit line, provided that the borrower has settled the entirety of the payments due to them in accordance with the original conditions of the credit.

Credit Risk.- For the purposes of this criterion, it is defined as the potential loss due to the non-payment by a borrower or counterparty in the operations carried out by entities, including the real or personal guarantees granted to them, as well as any other mitigation mechanism used by entities.

Outstanding Balance.- It is the result obtained by the application of the amortized cost.

Recognition and Valuation Standards

The balance to be registered in the credit portfolio shall be the amount effectively granted to the borrower and, if applicable, the insurance that had been financed. To this amount, any type of interest that accrues in accordance with the credit's payment scheme shall be added.

In cases where the collection of interest is made in advance, these shall be recognized as an advance collection in the item of deferred credits and advance collections. Such collection shall be amortized during the life of the credit under the straight-line method against the results of the fiscal year, in the item of interest income.

Credit Lines

In the case of credit lines that the entity has granted, in which not all the authorized amount is utilized, the unused portion thereof shall be maintained in off-balance sheet accounts.

Letters of credit that have been issued based on the granting of credits are included within this category.

Partial Payments in Kind

Partial payments received in kind to cover the amortizations (principal and/or interest) accrued or, if applicable, past due, shall be registered in accordance with what is established in criterion B-6 "Assets Adjudicated".

Capitalizable Leasing Operations

In capitalizable leasing operations, that is, those that meet the requirements established in criterion A-2 "Application of Particular Standards", in which the entity acts as lessor, it shall recognize at the beginning of the contract, within its credit portfolio, the contractual value of the leasing operation, against the cash outflow and the corresponding financial income to accrue. Such financial income to accrue shall be registered as a deferred credit, which shall be recognized based on the outstanding balance of the credit against the results of the fiscal year, in the item of interest income.

For the guarantee deposits received by the lessor, it must register the cash inflow against the corresponding liability.

At the moment the lessee obligates itself to adopt the reduced price purchase option, the entity must recognize its amount as part of the credits for capitalizable leasing operations, against a deferred credit which shall be amortized on a straight-line basis during the remaining term of the contract. In case the purchase option is adopted at maturity, on that date the income shall be recognized directly in the results.

When the lessee opts to participate in the sale price of the goods to a third party, the entity shall recognize the income corresponding to it at the time of the sale against the results of the fiscal year as other income (expenses) of the operation.

Financial Factoring, Discounting, and Assignment of Credit Rights Operations

At the beginning of the operation, the value of the portfolio received shall be recognized in the asset against the cash outflow, the agreed fee recognized as other accounts payable, and, if applicable, the financial income to accrue derived from financial factoring, discounting, or assignment of credit rights operations.

The financial income to accrue referred to in the previous paragraph shall be determined, if applicable, by the difference between the value of the portfolio received minus the fee and the cash outflow. Such financial income to accrue shall be recognized within the item of deferred credits and advance collections and amortized under the straight-line method during the life of the credit, in the item of interest income.

In the event that the operation generates interest, these shall be recognized as they accrue.

The amount of advances that, if applicable, are granted shall be recognized as part of financial factoring, discounting, or assignment of credit rights operations, within the concept of commercial credits.

Commissions Charged for the Granting of Credit

Commissions charged for the granting of credit shall be registered as a deferred credit, which shall be amortized against the results of the fiscal year as interest income, under the straight-line method during the life of the credit, except those originating from revolving credits which shall be amortized for a period of 12 months.

Regarding commissions charged for restructuring or renewal of credits, these shall be added to the commissions that had originated in accordance with the previous paragraph, recognized as a deferred credit, which shall be amortized against the results of the fiscal year as interest income, under the straight-line method during the new term of the credit.

Commissions that are recognized subsequent to the granting of the credit, those that are generated as part of the maintenance of said credits, nor those that are charged with respect to credits that have not been placed, shall not enter this category.

Likewise, in the case of commissions charged that originate from the granting of a credit line that has not been disbursed, at that moment they shall be recognized as a deferred credit, which shall be amortized against the results of the fiscal year as interest income under the straight-line method for a period of 12 months. In case the credit line is canceled before the aforementioned 12-month period concludes, the outstanding balance to be amortized shall be recognized directly in the results of the fiscal year in the item of commissions and fees charged, on the date the line cancellation occurs.

Associated Costs and Expenses

Costs and expenses associated with the granting of credit shall be recognized as a deferred charge, which shall be amortized against the results of the fiscal year as an interest expense, during the same accounting period in which income from commissions charged for the granting of credit referred to in this section is recognized.

For the purposes of the previous paragraph, costs or expenses associated with the granting of credit shall be understood to be only those that are incremental and directly related to activities carried out by entities to grant the credit, for example, the credit evaluation of the debtor, evaluation and recognition of guarantees, negotiations for the terms of the credit, preparation and processing of credit documentation and closing or cancellation of the transaction, including the proportion of compensation to employees directly related to the time invested in the development of those activities.

Any other cost or expense not included in the previous paragraph, among them those related to promotion, advertising, potential customers, administration of existing credits (follow-up, control, recoveries, etc.) and other auxiliary activities related to the establishment and monitoring of credit policies shall be recognized directly in the results of the fiscal year as they accrue in the item corresponding according to the nature of the cost or expense.

Commissions charged or pending collection, as well as associated costs and expenses relative to the granting of credit, shall not form part of the credit portfolio.

Commissions and Fees Charged

Commissions and fees other than those charged for the granting of credit shall be recognized against the results of the fiscal year in the item of commissions and fees charged, on the date they accrue. In the case that part or all of the consideration received for the collection of the corresponding commission or fee is received in advance of the accrual of the related income, such advance shall be recognized as a liability.

Acquisitions of Credit Portfolio

On the date of acquisition of the portfolio, the contractual value of the acquired portfolio shall be recognized in the item of credit portfolio, according to the type of portfolio that the originator had classified; the difference that arises with respect to the acquisition price shall be registered as follows:

when the acquisition price is less than the contractual value thereof, in the results of the fiscal year within the item of other income (expenses) of the operation, up to the amount of the preventive estimation for credit risks that, if applicable, is constituted in accordance with what is indicated in the following paragraph and the excess as a deferred credit, which shall be amortized as respective collections are made, in accordance with the proportion that these represent of the contractual value of the credit;

when the acquisition price of the portfolio is greater than its contractual value, as a deferred charge which shall be amortized as respective collections are made, in accordance with the proportion that these represent of the contractual value of the credit;

when it comes from the acquisition of revolving credits, such difference shall be carried directly to the results of the fiscal year on the date of acquisition.

Preventive Estimation for Credit Risks of Portfolio Acquisitions

The entity shall constitute for any type of acquired credit against the results of the fiscal year the preventive estimation for credit risks corresponding, in accordance with what is stated in paragraphs 86 to 88, taking into account the defaults that the credit may have presented since its origin.

Transfer to Non-Performing Portfolio

The outstanding balance in accordance with the payment conditions established in the credit contract shall be registered as non-performing portfolio when:

It is known that the borrower is declared in commercial insolvency proceedings, in accordance with the Commercial Insolvency Law.

Without prejudice to what is provided in this section, credits that continue to receive payment in terms of what is provided for in fraction VIII of article 43 of the Commercial Insolvency Law, as well as credits granted under article 75 in relation to fractions II and III of article 224 of said Law, shall be transferred to non-performing portfolio when they incur in the situations provided for in numeral 2 below, or

their amortizations have not been settled in their entirety in the terms originally agreed, considering the following for this purpose:

if the debts consist of credits with single payment of principal and interest at maturity and present 30 or more natural days past due;

if the debts refer to credits with single payment of principal at maturity and with periodic interest payments and present 90 or more natural days past due for the respective interest payment, or 30 or more natural days past due for the principal;

if the debts consist of credits with periodic partial payments of principal and interest and present 90 or more natural days past due;

if the debts consist of revolving credits and present two monthly billing periods past due or, in case the billing period is different from monthly, the corresponding to 60 or more natural days past due, and

the immediate collection documents referred to in criterion B-1 "Cash and Cash Equivalents" shall be reported as non-performing portfolio at the moment such event occurs.

With respect to the maturity periods referred to in numeral 2 of the previous paragraph, monthly periods may be used, regardless of the number of days each calendar month has, in accordance with the following equivalences:

30 days

one month

60 days

two months

90 days

three months

Likewise, in case the fixed term expires on a non-working day, said term shall be understood to be concluded on the first following working day.

In the case of acquisitions of credit portfolio, for the determination of the days past due and its corresponding transfer to non-performing portfolio as indicated in the 3 previous paragraphs, the defaults that the borrower may have presented since its origin shall be taken into account.

Restructurings and Renewals

Past due credits that are restructured or renewed shall remain within the non-performing portfolio, until there is evidence of sustained payment.

Credits with single payment of principal at maturity, regardless of whether interests are paid periodically or at maturity, that are restructured during their term or renewed at any time, shall be considered as non-performing portfolio until there is evidence of sustained payment, in accordance with what is established in paragraph 34 of this criterion.

Credits granted under a credit line, revolving or not, that are restructured or renewed at any time, may remain in the performing portfolio provided there are elements justifying the debtor's payment capacity. Additionally, the borrower must have:

a) liquidated all accrued interest, and

b) covered all payments to which they are obligated under the contract as of the date of restructuring or renewal.

Regarding credit facilities granted under a line of credit, when they are restructured or renewed independently of the credit line supporting them, they must be evaluated in accordance with this section taking into account the characteristics and conditions applicable to the restructured or renewed facility or facilities. If such analysis concludes that one or more facilities granted under a credit line must be transferred to the non-performing portfolio as a result of their restructuring or renewal, and such facilities, individually or collectively, represent at least 25% of the total disbursed balance of the credit line as of the date of restructuring or renewal, such balance, as well as subsequent disbursements, must be transferred to the non-performing portfolio until there is evidence of sustained payment of the facilities that caused the transfer to the non-performing portfolio, and all facilities granted under the credit line have met the obligations due as of the date of transfer to the performing portfolio.

Performing credits with characteristics different from those indicated in paragraphs 70 to 71 above that are restructured or renewed, without at least 80% of the original credit term having elapsed, will be considered to continue being performing only when:

a) the borrower has covered all accrued interest as of the date of renewal or restructuring, and

b) the borrower has covered the principal of the original credit amount that should have been covered as of the date of renewal or restructuring.

If all the conditions described in the previous paragraph are not met, they will be considered as non-performing from the moment they are restructured or renewed and until there is evidence of sustained payment.

When it concerns performing credits with characteristics different from those indicated in paragraphs 70 to 71 above that are restructured or renewed during the final 20% of the original credit term, these will be considered performing only when the borrower has:

a) liquidated all accrued interest as of the date of renewal or restructuring;

b) covered the principal of the original credit amount that should have been covered as of the date of renewal or restructuring, and

c) covered at least 60% of the original credit amount.

The requirement referred to in paragraphs 73 and 75 above in their respective subsections a) will be considered met when, having covered the accrued interest as of the last cutoff date, the time elapsed between said date and the restructuring or renewal does not exceed the lesser of half the current payment period and 90 days.

Performing credits with periodic partial payments of principal and interest that are restructured or renewed on more than one occasion, may remain in the performing portfolio if, in addition to the conditions established in paragraphs 73 or 75 above, as applicable, the entity has elements justifying the debtor's payment capacity. Such elements must be duly documented and integrated into the credit file.

In the case where a restructuring or renewal consolidates various credits granted by the same entity to the same borrower, each of the consolidated credits must be analyzed as if they were restructured or renewed separately, and if such analysis concludes that one or more of said credits would have been transferred to the non-performing portfolio as a result of such restructuring or renewal, then the total balance of the consolidated credit must be transferred to the non-performing portfolio.

The provisions in paragraphs 69 to 78 above shall not apply to those restructurings that on the date of the operation present payment compliance for the total amount due of principal and interest and only modify one or more of the following original credit conditions:

· Guarantees: only when they imply the expansion or substitution of guarantees with others of better quality.

· Interest rate: when the agreed interest rate is improved for the borrower.

· Currency or unit of account: provided that the rate corresponding to the new currency or unit of account is applied.

· Payment date: only in the case that the change does not imply exceeding or modifying the payment periodicity. In no case shall the change in the payment date allow for the omission of payment in any period.

Suspension of interest accrual

The accrual of accrued interest on credit operations must be suspended at the moment the outstanding balance of the credit is considered non-performing. Likewise, the amortization in the results of the period of financial income to accrue, as well as the amount corresponding to the purchase option of credits by capitalizable leasing operations, must be suspended at the moment the outstanding balance of the credit is considered non-performing.

The suspension of interest accrual established in the previous paragraph shall apply to credits that contractually capitalize interest to the debt amount.

While the credit remains in the non-performing portfolio, the control of accrued interest or financial income shall be kept in off-balance sheet accounts. In the event that such accrued interest or financial income is collected, it shall be recognized directly in the results of the period under the item of interest income, canceling in the case of capitalizable leasing, financial factoring, discounting, or assignment of credit rights, the corresponding deferred credit.

Unpaid accrued interest

With respect to unpaid accrued interest or financial income corresponding to credits considered as non-performing portfolio, an estimate shall be created for an amount equivalent to the total of these, at the time of transferring the credit as non-performing portfolio.

Regarding non-performing credits where in their restructuring the capitalization of previously recorded unpaid accrued interest in off-balance sheet accounts is agreed, the entity must create an estimate for 100% of said interest. The estimate may be canceled when there is evidence of sustained payment.

Preventive estimate for credit risks

In accordance with the relevant provisions, the preventive estimate for credit risks shall be determined based on the rules for the classification of the credit portfolio issued by the CNBV or those that replace them.

The amount of the preventive estimate for credit risks must be determined based on the different methodologies established or authorized by the CNBV for each type of credit through general provisions, as well as by additional estimates required in various regulations and those ordered and recognized by the CNBV, and must be recognized in the results of the period corresponding.

The additional estimates recognized by the CNBV referred to in the previous paragraph are those constituted to cover risks not foreseen in the different credit portfolio classification methodologies, and prior to their constitution, entities must inform the CNBV of the following:

a) origin of the estimates;

b) methodology for their determination;

c) amount of estimates to be constituted, and

d) time estimated to be necessary.

Write-offs, eliminations, and recoveries of credit portfolio

The entity must periodically evaluate whether a non-performing credit should remain in the balance sheet, or be written off. Such write-off will be carried out by canceling the outstanding balance of the credit against the preventive estimate for credit risks. When the credit to be written off exceeds the balance of its associated estimate, before carrying out the write-off, such estimate must be increased up to the amount of the difference.

In addition to what is established in the previous paragraph, the entity may opt to eliminate from its assets those non-performing credits that are provisioned at 100% according to what is indicated in paragraphs 86 to 88, even if they do not meet the conditions to be written off. For such purposes, the entity must cancel the outstanding balance of the credit against the preventive estimate for credit risks.

Any recovery resulting from previously written-off or eliminated credits in accordance with paragraphs 89 and 90 above, must be recognized in the results of the period.

Discounts, forgiveness, bonuses, and discounts on the portfolio

Discounts, forgiveness, bonuses, and discounts, that is, the amount forgiven of the payment of the credit in part or total, shall be recorded charged to the preventive estimate for credit risks. In the event that the amount of these exceeds the balance of the estimate associated with the credit, estimates must previously be constituted up to the amount of the difference.

Credits denominated in foreign currency and UDIS

For the case of credits denominated in foreign currency and UDIS, the estimate corresponding to said credits shall be denominated in the currency or unit of account of origin that corresponds.

Cancellation of excesses in the preventive estimate for credit risks

When the balance of the preventive estimate for credit risks has exceeded the amount required in accordance with paragraphs 86 to 88, the differential must be canceled on the date of the next classification against the results of the period, affecting the same concept or item that originated it, that is, the preventive estimate for credit risks. In cases where the amount to be canceled is greater than the registered balance of said estimate in the results of the period, the excess shall be recognized as other income (expenses) of the operation.

Assignment of credit portfolio

For credit portfolio assignment operations that do not meet the conditions established to derecognize a financial asset in accordance with criterion C-1 "Recognition and derecognition of financial assets", the entity must retain in the asset the amount of the assigned credit and recognize in the liability the amount of resources coming from the assignee.

In cases where the assignment of credit portfolio is carried out, in which the conditions to derecognize a financial asset established in criterion C-1 are met, the estimate associated with it must be canceled.

Transfer to performing portfolio

Non-performing credits will be returned to the performing portfolio in which the pending payment balances (principal and interest, among others) are fully liquidated, or, which being restructured or renewed credits, comply with the sustained payment of the credit.

Presentation standards

Balance sheet

a) the portfolio will be grouped into performing and non-performing, according to the type of credit, that is, unrestricted credits and restricted credits, and in turn classified according to the nature of the operation (documented with real estate guarantee, with other guarantees, without guarantee, financial factoring operations, discounting and assignment of credit rights, and capitalizable leasing operations);

b) the preventive estimate for credit risks must be presented in a separate item, subtracting it from the credit portfolio;

c) the amount of credits from capitalizable leasing, financial factoring, discounting, and assignment of credit rights operations, both performing and non-performing, must be presented net of the deferred credits referred to in paragraphs 46 and 51 respectively, in the case of financial factoring, discounting, and assignment of credit rights operations, it will be presented net of the corresponding exposure;

d) interests collected in advance must be presented together with the portfolio that gave rise to them;

e) it must be presented in the item of other assets, the deferred charge that may have been generated by the acquisition of portfolio;

f) it will be presented in the item of deferred credits and advance collections, the purchase option at reduced price, the excess that may have originated from the acquisition of portfolio referred to in subsection a) of paragraph 63, as well as commissions received in advance to the accrual of income related;

g) commissions collected for the granting of credit must be presented net of associated costs and expenses, presented in the item of other assets, or of deferred credits and advance collections, according to their debtor or creditor nature;

h) it will be presented in the item of other accounts payable, the liability for deposit guarantees;

i) it will be presented within the item of other accounts payable, if its relative importance warrants it, the creditor balances of credits, for example when there is a balance in favor coming from revolving credits because the borrower made a payment greater than due;

j) it will be presented in the item of bank loans, partners' loans, and loans from other organisms, the liability derived from credit portfolio assignment operations;

k) it will be presented in off-balance sheet accounts in the item called credit commitments, the unused amount of the credit lines that the entity has granted, and

l) it will be presented in off-balance sheet accounts, in the item of accrued interest not collected derived from non-performing credit portfolio, the amount of accrued interest not collected derived from credits that remain in the non-performing portfolio, as well as accrued financial income not collected.

Income statement

Interest income will be grouped as accrued interest, the amortization of interest collected in advance, the financial income accrued in capitalizable leasing, financial factoring, discounting, and assignment of credit rights operations, the amortization of commissions collected for the granting of credit, foreign exchange gain, and the result from UDIS revaluation (creditor balance). Likewise, interest expenses will be grouped as the amortization of costs and expenses associated with the granting of credit, as well as foreign exchange loss and the result from UDIS revaluation (debtor balance).

It will be presented as a specific item, immediately after the financial margin, the preventive estimate for credit risks and foreign exchange gain or loss, as well as the result from UDIS revaluation, which originate from the estimate denominated in foreign currency or in UDIS, respectively.

100

Commissions other than those related to the granting of credit will be presented in the item of commissions and fees collected.

101

Recoveries of previously written-off or eliminated operations, and the cancellation of the excess referred to in paragraph 94, will be presented in the item of other income (expenses) of the operation.

102

The amortization of the deferred credit or deferred charge, or in its case, the application referred to in subsection c) of paragraph 63, derived from the acquisitions of credit portfolio, the difference between the contractual value and the acquisition price up to the amount of the estimate for credit risks referred to in subsection a) of paragraph 63, as well as the gain or loss derived from the assignment of credit portfolio, will be presented in the item of other income (expenses) of the operation, as applicable.

103

The amortization of the deferred credit generated by the purchase option at a reduced price, the purchase option when adopted at maturity, as well as the income from participation in the sale of goods in capitalizable leasing to a third party, will be presented in the item of other income (expenses) of the operation.

Disclosure standards

104

Through notes to the financial statements, the following must be disclosed:

a) main policies and procedures established for the granting, acquisition, assignment, control, and recovery of credits, as well as those related to the evaluation and monitoring of credit risk;

b) accounting policies and methods used to identify troubled credits, whether performing or non-performing;

c) main policies for classifying the portfolio as restricted, as well as a brief description of the reasons for it;

d) policies and procedures established to determine concentrations of credit risk;

e) breakdown of the total balance of commercial credits, identifying them as troubled and non-troubled, both performing and non-performing;

f) breakdown of the restricted and unrestricted performing portfolio and non-performing by type of credit (documented with real estate guarantee, with other guarantees, without guarantee, financial factoring operations, discounting and assignment of credit rights, and capitalizable leasing operations), distinguishing those denominated in national currency, foreign currency, and UDIS;

g) identification by type of credit (documented with real estate guarantee, with other guarantees, without guarantee, financial factoring operations, discounting and assignment of credit rights, and capitalizable leasing operations), of the balance of the non-performing portfolio from the date it was classified as such, in the following terms: 1 to 180 natural days, 181 to 365 natural days, 366 natural days to 2 years, and more than 2 years non-performing;

h) in aggregate form, the percentage of concentration and main characteristics of the portfolio by sector, region, or economic group, understanding by the latter the groups of individuals and legal entities that by their property or liability links constitute common risks;

i) cumulative cost borne by the entity, as well as the balance of the portfolio subject to support programs, identifying it by type of program;

105

j) the amounts of commissions and costs and expenses recognized for the granting of credit; weighted average term for their amortization; description of the concepts that integrate the commissions for the origination of such credits and the costs and expenses associated with such commissions, as well as elements that justify their direct relationship with the granting of credit;

k) explanation of the main variations in the non-performing portfolio identifying, among others: restructurings, renewals, adjudications, discounts, write-offs, transfers to the performing portfolio, and from the performing portfolio;

l) amount of those credits that, in terms of numeral 1 of paragraph 65 above, have remained in the performing portfolio for continuing to receive payment in terms of what is provided by fraction VIII of article 43 of the Mercantile Bankruptcy Law, or by having been granted under article 75 in relation to fractions II and III of article 224 of said Law. Said amount must be disclosed stratified, if applicable, by each article and, if applicable, fraction;

m) brief description of the methodology to determine preventive estimates for credit risks;

n) qualification by risk degree, amount of the portfolio, as well as of the preventive estimate for credit risks, disaggregated according to the stratification contained in the methodologies for the classification of the credit portfolio and by type of credit (documented with real estate guarantee, with other guarantees, without guarantee, financial factoring operations, discounting and assignment of credit rights, and capitalizable leasing operations);

o) balance of the preventive estimate for credit risks, disaggregated according to the methodologies for the classification of the credit portfolio, as well as by type of credit (documented with real estate guarantee, with other guarantees, without guarantee, financial factoring operations, discounting and assignment of credit rights, and capitalizable leasing operations);

p) movements that have been made to the preventive estimate for credit risks during the period by its creation, write-offs, cancellations, discounts, forgiveness, bonuses, discounts, and adjudications, among others;

q) amount derived from the cancellation of the preventive estimate for credit risks recognized as other income (expenses) of the operation, and the reasons that motivated said cancellation;

r) amount and origin of estimates recognized by the CNBV, as well as the methodology used for their determination;

s) amount of non-performing credits that in accordance with paragraph 90 were eliminated from assets, disaggregating those granted to related parties;

t) main policies and procedures related to the granting of restructurings and renewals, including restructurings or renewals that consolidate various credits granted by the same entity to the same borrower, as well as the elements taken into account to evidence sustained payment;

u) total accumulated amount of restructured or renewed by type of credit (documented with real estate guarantee, with other guarantees, without guarantee, financial factoring operations, discounting and assignment of credit rights, and capitalizable leasing operations) distinguishing those originated in the period. Each of these amounts must be disaggregated in:

i. non-performing credits that were restructured or renewed;

ii. restructurings or renewals that were transferred to non-performing portfolio for having been restructured or renewed, in accordance with paragraph 70;

iii. restructured or renewed credits that remained in the performing portfolio in accordance with paragraphs 71 to 78;

iv. consolidated credits that as a product of a restructuring or renewal were transferred to non-performing portfolio, in accordance with paragraph 79, and

v. restructured credits to which the criteria relative to transfer to non-performing portfolio were not applied based on paragraph 80.

v) amount and nature of additional guarantees and concessions granted in restructured credits;

total amount of the acquired credit portfolio, as well as related estimates regarding

said portfolio;

total amount of credit portfolio assignments made by the entity;

amount of recoveries from previously written-off or eliminated credit portfolios;

breakdown of interest and commissions by type of credit (documented with real estate collateral, with other collateral, without collateral, factoring operations, discount or assignment of credit rights, and capitalizable leasing operations);

aa)

amount of interest income recognized on the credit in question, at the time of the capitalization referred to in paragraph 85;

bb)

amount of credit lines registered in off-balance sheet accounts, and

cc)

brief description of the effects on the credit portfolio derived from the application of prudential rules issued by the CNBV, as well as additional estimates required in various regulations and those ordered and recognized by the CNBV.

B-6 ADJUDICATED ASSETS

Objective and scope

This criterion aims to define the specific rules regarding the recognition, valuation, presentation, and disclosure in financial statements of assets adjudicated to entities.

This criterion does not cover the treatment of assets adjudicated to entities that are destined for their own use, as guidelines provided in accounting criteria applicable to the type of asset in question will apply to this type of asset.

Definitions

Adjudicated assets.- Movable assets (equipment, securities, rights, credit portfolios, among others) and immovable assets that, as a consequence of accrued or due amortizations, or due to an uncollectible account, right, or item, the entity:

a) acquires through judicial adjudication, or

b) receives through payment in kind (dación en pago).

Cost.- That which is set for the purposes of adjudicating assets as a result of lawsuits related to claims of rights in favor of entities. In the case of payments in kind, it shall be the price agreed upon by the parties.

Adjudication value.- This value shall be understood as the book value of the asset. In the case of assets promised for sale or with reservation of ownership, it shall be the book value reduced by payments received on account of the asset, as referred to in criterion A-3 "Application of general norms".

Fair value.- For the purposes of this criterion, it corresponds to that determined on the date of adjudication:

a) in the case of assets whose valuation can be done through an appraisal, this must comply with the requirements established by the CNBV applicable to providers of banking appraisal services, or

b) for assets not subject to appraisal, the amount for which an asset could be exchanged or a liability settled between informed, interested, and equally willing parties in a free competition transaction.

Recognition rules

Assets acquired through judicial adjudication must be registered on the date the approving order of the auction becomes final, through which the adjudication was decreed.

Assets received through payment in kind shall be registered, on their part, on the date the deed of payment in kind is signed, or on the date formal transmission of the property of the asset was given.

The recognition value of adjudicated assets shall be equal to their cost or fair value minus the costs and expenses strictly indispensable incurred in their adjudication, whichever is lower.

On the date an adjudicated asset is registered in accounting, the value of the asset that gave rise to the adjudication, as well as any estimate constituted for it, must be removed from the balance sheet of the entities for the total of the asset and the aforementioned estimate, or for the portion corresponding to accrued or due amortizations that have been covered by partial payments in kind referred to in criterion B-5 "Credit Portfolio" or by collections or recoveries referred to in criterion B-10 "Rights to Collect".

When the value of the asset or of the accrued or due amortizations that gave rise to the adjudication, net of estimates, is higher than the value of the adjudicated asset, the difference shall be recognized in the results of the period as other operating income (expenses).

When the value of the asset or of the accrued or due amortizations that gave rise to the adjudication, net of estimates, is lower than the value of the adjudicated asset, the value of the latter must be adjusted to the net value of the asset, instead of attending to the provisions contemplated in paragraph 9.

Valuation rules

Adjudicated assets must be valued as established in the accounting criteria for credit unions, according to the type of asset in question, registering such valuation against the results of the period as other operating income (expenses), as appropriate.

The amount of the estimate recognizing signs of impairment due to potential loss of value over time of adjudicated assets shall be determined in accordance with procedures established in the general provisions applicable to the methodology for the classification of the credit portfolio of credit unions, and must be recognized in the results of the period as other operating income (expenses).

In the event that, in accordance with said impairment tests, it is necessary to modify the estimate referred to in the previous paragraph, such adjustment must be registered against the amount of the estimate previously recognized as other operating income (expenses).

At the time of the sale of adjudicated assets, the difference between the selling price and the book value of the adjudicated asset, net of estimates, must be recognized in the results of the period as other operating income (expenses).

Transfer of adjudicated asset for use

When opting to transfer adjudicated assets for the entity's use, such transfer may be made to the balance sheet item corresponding to the asset in question, provided that the assets are used for the achievement of its purpose and carried out in accordance with the investment strategies and objectives of the entity that are previously established in its manuals, with no possibility that these assets return to be considered as adjudicated.

Presentation rules

Balance Sheet

Adjudicated assets must be presented in a separate item within the balance sheet, net of estimates, immediately after merchandise inventory.

Income Statement

The result from the sale of adjudicated assets, adjustments to their value, as well as the establishment and adjustment of the respective estimate, shall be presented in the item of other operating income (expenses), as appropriate.

The difference referred to in paragraph 11 corresponding to the loss from adjudication of assets shall be presented in the item of other operating income (expenses).

Disclosure rules

It must be disclosed through notes to the financial statements the type of adjudicated asset in question (real estate, equipment, securities, rights, credit portfolios, among others), the procedure used for the valuation of said asset, as well as the amount of its respective estimate and a brief description of the procedure carried out for its determination.

When the value of the asset that gave rise to the adjudication is equal to the corresponding estimates, the adjudication value of the asset must be disclosed.

B-7 GUARANTEES

Objective and scope

This criterion aims to establish the accounting treatment to be given to commitments acquired by entities in granting guarantees in favor of their members.

Definition

Through the granting of a guarantee, the entity supports the creditworthiness of the member who is guaranteed by promising payment of the obligation in case of default.

In the contract giving rise to the guarantee, the contingency that will generate the possible payment commitment is defined, so until such contingency materializes, guarantees represent only commitments acquired, in accordance with what is provided in Bulletin C-9 "Liability, provisions, contingent assets and liabilities, and commitments" of the NIFs.

Recognition and valuation rules

Since a guarantee represents a commitment, it will not form part of the balance sheet of entities until the contingency materializes. Therefore, the recognition of guarantees must be carried out in off-balance sheet accounts.

The total amount for the concept of guarantees must include the total commitments the entity has on a specific date. As the member with whom the commitment exists liquidates the obligations that have been guaranteed, the entity must cancel these amounts from its records.

The entity must determine an estimate of the guarantees granted based on the different methodologies established or authorized by the CNBV for credit and recognize it in the results of the period, with the periodicity established in the aforementioned methodologies.

In case of default by the member whom the entity is guaranteeing, the total amount for which the guarantee was granted will be registered in the entity's balance sheet as a credit portfolio, recognizing the corresponding liability. Once the portfolio is affected, the provisions contained in criterion B-5 "Credit Portfolio" will apply to it.

Income from commissions arising from the granting of guarantees will be recognized in the results of the period as they are earned.

Presentation rules

Balance Sheet

The amount corresponding to guarantees granted will be presented in off-balance sheet accounts, balancing the balance sheet.

The balance of the liability for the default of the member whom the entity is guaranteeing will be included as a diverse creditor in the item of other accounts payable.

Income Statement

Commissions charged for the granting of guarantees will be presented in the item of commissions and fees charged.

Disclosure rules

Through notes to the financial statements, the types of operations that gave rise to the guarantees must be disclosed, including generic terms on which this type of operation was carried out.

Losses caused to the entity due to default by those guaranteed, the amount of the estimate established, as well as recoveries, must also be disclosed.

B-8 ASSET ADMINISTRATION

Objective and scope

This criterion aims to define the specific rules regarding the recognition, valuation, presentation, and disclosure in financial statements of asset administration operations performed by entities.

Trust operations are not included within this criterion.

Definitions

Assets in administration.- These are movable assets (securities, rights, among others) and immovable assets owned by third parties, delivered to the entity for their administration.

Administration operations.- Those performed by the entity, in which it provides administrative services on certain assets, receiving, if applicable, a commission as consideration.

Fair value.- Amount for which an asset could be exchanged or a liability settled between informed, interested, and equally willing parties in a free competition transaction.

Characteristics

Third-party-owned assets may be alienated, administered, or transferred in accordance with conditions agreed upon in the contract.

By the essence of this type of operation, assets in administration are not subject to recognition by entities in accordance with:

a) criterion C-1 "Recognition and derecognition of financial assets", since entities do not acquire the rights and contractual obligations related to financial assets in administration, and

b) in the case of non-financial assets, NIF A-5 "Basic elements of financial statements", since the definition of "asset" contained in said standard is not met.

Notwithstanding the above, the entity is responsible for assets in administration, assuming a risk in case of loss or damage.

Recognition and valuation rules

Since the assets subject to this criterion do not represent assets of the entities, they should not form part of their balance sheet. However, an estimated amount for which the entity would be obligated to respond to its clients for any future contingency must be recognized in off-balance sheet accounts, except for cash received for payment of services on behalf of third parties, because in that particular case, the conditions for its recognition contemplated in Criterion C-1 are met.

Income derived from administration services will be recognized in the results of the period as they are earned.

In the event that the entity has an obligation with the depositor for the loss or damage of the asset in administration, the liability will be recognized in the entity's balance sheet against the results of the period. The accounting recognition referred to in this paragraph will be carried out at the moment the entity becomes aware of such situation, regardless of any legal action by the depositor aimed at repairing the loss or damage.

The determination of the valuation of the estimated amount for assets in administration (including receipt of service payments) will be carried out based on the operation performed in accordance with the accounting criteria for credit unions.

Receipt of service payments on behalf of third parties.

Entities must recognize the entry of cash for payment of services in their restricted liquidity against the corresponding liability. At the moment the respective service payment is made on behalf of third parties, entities must cancel the cited liability against their restricted liquidity.

In the event that service payment is made on behalf of a member of the entity itself and the service provider has an account open with the entity to receive such payments, at the moment the account holder makes a payment, the corresponding amount must be reclassified within the traditional collection item.

Presentation and disclosure rules

The liability arising from the obligation with the depositor for the loss or damage of the asset in administration will be presented in the balance sheet in the item of other accounts payable, while in the results of the period it will be presented in the item of other operating income (expenses).

The amount of assets in administration will be presented in off-balance sheet accounts under the same item, except for cash received for payment of services.

Income derived from administration services recognized in the results of the period will be presented in the item of commissions and fees charged.

The following must be disclosed through notes to the financial statements:

a) amounts recognized for each type of asset in administration;

b) information regarding the type of assets;

c) information regarding the nature of administration operations, specifying conditions and terms that could affect them, and

d) amount of income from the activity.

Additionally, the amount that is restricted within the entity's liquidity with respect to the receipt of service payments on behalf of third parties must be disclosed.

B-9 TRUSTS

Objective and scope

This criterion aims to define the specific rules regarding the recognition, valuation, presentation, and disclosure in financial statements for private trust activities performed by entities in their capacity as trustees, as well as for mandate operations. Regarding this, it should be mentioned that entities may only act as trustees in guarantee trusts.

Definitions

Trust.- The General Law of Credit Instruments and Credit Operations establishes that "By virtue of the trust, the settlor transmits to a fiduciary institution the ownership or title of one or more assets or rights, as the case may be, to be destined to lawful and determined ends, entrusting the realization of said ends to the fiduciary institution itself".

For the purposes of these accounting criteria for credit unions, it will be understood that, where applicable, this term also refers to mandate operations carried out by credit unions in their capacity as mandataries.

Beneficiary.- Person with the necessary capacity to receive the benefit implied by the trust.

Settlor.- Person with capacity to transmit the ownership or title of the assets or rights object of the trust, as the case may be, and who destines or affects them to a lawful and determined end.

Trustee.- That entity authorized to carry out trust operations and to whom their realization is entrusted.

Mandate.- The Federal Civil Code establishes that "The mandate is a contract by which the mandatary obliges himself to execute on behalf of the principal the legal acts that he entrusts to him".

Trusted Estate.- With respect to each trust contract, the money, and other assets, securities, or rights entrusted to the trustee, as well as increases or decreases, due to respective products or expenses.

Recognition and valuation rules

Trusts

Entities must recognize the trusted estate in off-balance sheet accounts, attending to the responsibility that carrying out or fulfilling the object of such trusts implies for the fiduciary entity, whose entrustment is accepted.

In some cases, the responsibility referred to in the previous paragraph is limited to the accounting of the trust's assets, while in other cases, it includes the recognition of assets and liabilities generated during its operation.

The valuation of the trusted estate recognized in off-balance sheet accounts will be carried out in accordance with what is provided in the accounting criteria for credit unions.

Losses borne by the entity due to responsibilities incurred as trustee will be recognized in results in the period in which they are known, regardless of the moment when any legal promotion for this effect is carried out.

In addition to the recognition referred to in the previous paragraphs, entities must keep special accounting for each trust contract, registering all operations performed therein. The balances of the special accountings of each trust contract must invariably coincide with the balances of the off-balance sheet accounts in which the entity recognizes the trusted estate.

When, due to the nature of the trusts established in the entity, there are assets or liabilities owed to or in favor of the entity itself, these must be recognized in the balance sheet of said entity, as appropriate.

The recognition of income from the management of trusts must be made based on accrual. The accumulation of such accrued income must be suspended at the moment the debt for these presents 90 or more calendar days of non-payment, being able to resume accumulation when the pending debt is fully liquidated.

While accrued income from trust management is suspended from accumulation and not collected, control thereof will be kept in off-balance sheet accounts. In the event that such accrued income is collected, it will be recognized directly in the results of the period.

Presentation rules

Balance Sheet

Off-balance sheet accounts will present the total amount of the trusted estate in the item of assets in trust or mandate, in accordance with the recognition and valuation rules provided in this criterion. Likewise, off-balance sheet accounts in the item of other registration accounts will present accrued but uncollected income from trust management.

Income Statement

Losses borne by the entity due to incurred responsibilities will be presented in the item of other operating income (expenses), while income from trust management will be included in the item of commissions and fees charged.

Disclosure rule

Through notes to the financial statements, the amount of income received by the entity in trust operations must be disclosed.

B-10 RIGHTS TO COLLECT

Objective and scope

This criterion aims to define the specific rules regarding the recognition, valuation, presentation, and disclosure in financial statements of assets representing rights to collect for entities.

The following are not objects of this criterion:

a) permanent investments contemplated by NIF B-8 "Consolidated or combined financial statements", NIF C-7 "Investments in associates, joint ventures, and other permanent investments", and NIF C-21 "Agreements with joint control";

b) financial instruments issued in series or mass by a trust, entity, or other legal figure, to which the provisions of criterion B-2 "Investments in securities" will apply, and

c) acquired credits that do not meet the definition of impaired credits referred to in paragraph 3, in which case they must adhere to what is established in criterion B-5 "Credit Portfolio".

Definitions

Impaired credits.- Those acquired credits by entities on which it is determined, based on current information and facts as well as the credit review process, that there is a considerable probability that the contractually exigible amounts, both their principal component and interest, cannot be recovered in full, in accordance with the originally agreed terms and conditions, and that at the time of their acquisition and during their life, they fail to meet any of the following conditions:

a) they are considered active portfolio according to the assumptions provided in the aforementioned criterion B-5;

b) the price paid for each document that may compose the portfolio can be identified, and

if the entity has the elements and information necessary to apply the regulation issued by the CNBV in credit matters.

As examples of situations where there is a considerable probability that the amounts contractually due on acquired credits cannot be recovered in full, and therefore evidence their impairment, are decreases in the value of the collateral associated with said credits, as applicable, the fulfillment of some of the conditions provided in criterion B-5 to consider a credit as overdue, among others.

Receivables Rights.- These are those impaired credits in accordance with what is established in this criterion, as well as financial instruments that have not been issued in series or mass by a trust, entity, or other legal figure to which the provisions of criterion B-2 are not applicable.

Expected Cash Flows.- These are those determined by entities based on information, tests, evidence, or data available that are supported by statistically significant methodologies.

Financial Instrument.- Any contract that gives rise to a financial asset in one entity and to a financial liability or equity instrument in another entity.

Cash-Based Method.- A valuation method for receivables rights, through which the initial investment is systematically amortized and the associated return is recognized in earnings, using an estimated yield rate based on recoveries in cash and other assets derived from said receivables rights.

Interest Method.- A valuation method for receivables rights, through which the initial investment is systematically amortized and the associated return is recognized in earnings, using an estimated yield rate based on the outstanding balance of said receivables rights.

Cost Recovery Method.- A valuation method for receivables rights, through which the associated return is recognized in earnings based on recoveries in cash and other assets, once the initial investment of said receivables rights has been fully amortized.

Estimated Yield Rate.- The interest rate that represents the return from receivables rights that will be recognized in earnings, and which is equivalent to the discount rate that equates the present value of the flows the acquirer expects to obtain from the receivables rights and the acquisition price, calculated based on the expected recovery time.

Recognition and Valuation Standards

The receivables rights acquired by entities shall be recognized as other accounts receivable.

The amount to be recognized for receivables rights shall be the price paid at the time of their acquisition, and no estimation shall be created on that date. This is because the estimations made by the acquiring entities of the receivables rights will correspond to expected losses or actually incurred losses determined after the acquisition.

The valuation of receivables rights, that is, the amortization of the initial investment and the determination of the return to be recognized in earnings, shall be carried out using one of the methods established in paragraphs 7 to 9 above. In the event of opting for the interest method, or the cash-based method, entities must reasonably estimate the recovery time and the amount of expected cash flows, and if such conditions are not met, they must apply the cost recovery method.

For impaired credits acquired primarily with the intention of obtaining benefits derived from the utilization or exploitation of the collateral associated with them, the cost recovery method must be used.

Entities may segment the acquisitions of receivables rights, provided that the integrity and consistency of each segment is maintained, even in cases of alienation or liquidation of the assets that compose it. To each of the segments thus determined, a portion of the paid acquisition price shall be assigned and one of the methods indicated in paragraphs 7 to 9 above shall apply. Once the method for recognizing the return and amortization of each of said segments is chosen, it cannot be changed during their life, except in the case described in paragraph 18.

The segmentation referred to in the previous paragraph must be carried out taking into account the common characteristics of the assets that make up each segment, so that entities are able to apply the valuation method that best reflects the economic value of said assets.

It is considered that entities can reasonably estimate the amount of expected cash flows if, at the time of recognizing the receivables right and during its life, the entities:

a) demonstrate that the generation of expected cash flows, over the estimated term, is probable, understood as such, when there is high certainty that the future event will occur; this based on available information, tests, evidence, or data, in the terms established by NIF A-1 "Structure of Financial Reporting Standards", and

b) evaluate and determine that the estimation is highly effective for the case of the interest method.

Determination of Effectiveness for the Interest Method

In cases where entities opt to use the interest method, they must evaluate semi-annually whether the estimation of expected cash flows for the receivables rights, and in their case, for each of the segments that constitute them, is highly effective. For those receivables rights, and in their case, for each of the segments that constitute them, in which such estimation of expected cash flows is not highly effective according to what is established in the following paragraph, entities must use the cost recovery method, without the possibility of subsequently valuing them under the interest method or the cash-based method.

The estimation of expected cash flows is considered highly effective if the quotient resulting from dividing the sum of actually collected flows by the sum of expected cash flows, remains in a range between 0.8 and 1.25 at the time of evaluating said effectiveness.

Interest Method

Under the interest method, the amount resulting from multiplying the estimated yield rate by the outstanding balance of the receivables rights shall be recognized in the earnings of the period, and the difference with respect to collections or recoveries made, shall be applied to reduce the balance of the account receivable.

Collections or recoveries represented by assets other than cash shall be applied to reduce the balance of the account receivable, so no income shall be recognized in the earnings of the period until the moment of their alienation. Such assets shall follow the recognition, valuation, presentation, and disclosure standards established in criterion B-6 "Adjudicated Assets".

In the event that the quotient representing collections or recoveries relative to the amount of expected cash flows is less than 0.8 during any of the periods prior to the effectiveness evaluation, no income shall be recognized and the total shall be applied against the account receivable for said period.

Entities will carry out an evaluation of their expected cash flows periodically during the validity of the receivables rights, and in the event that, based on current events and information, they determine that said expected cash flows will decrease, they will constitute an estimation for uncollectibility or difficult collection against the earnings of the period, for the amount by which said expected cash flows are less than the book value that the account receivable maintains at the date.

When it is determined, based on current events and information, that the value of expected cash flows will increase above the book value of the account receivable, any estimation that may have been constituted must be reduced until exhausting the amount thereof, without exceeding the book value originally recognized as the price paid at the time of acquisition of the receivables rights.

Cash-Based Method

With this method, the amount resulting from multiplying the estimated yield rate by the amount of cash collected or recovered shall be recognized in the earnings of the period, provided that this cannot be greater than what would be recognized under the interest method. The difference between what is recognized in the earnings of the period and the collection or recovery made shall be applied to reduce the balance of the account receivable.

Once entities have recovered the total price paid for the receivables right, any subsequent recovery shall be recognized directly in the earnings of the period.

Entities will carry out an evaluation of their expected cash flows periodically during the validity of the receivables rights, and in the event that, based on current events and information, they determine that said expected cash flows will decrease, they will constitute an estimation for uncollectibility or difficult collection against the earnings of the period for the amount by which said expected cash flows are less than the book value that the account receivable maintains at the date.

Cost Recovery Method

Collections or recoveries made shall be applied against the account receivable until exhausting its balance. Subsequent recoveries shall be recognized directly in the earnings of the period.

In the event that entities determine, based on current events and information, that the entire book value that the account receivable maintains at the date cannot be recovered, an estimation for uncollectibility or difficult collection must be created against the earnings of the period, for the amount estimated to be unrecoverable.

When it is determined, based on current events and information, that the expected recovery of the account receivable will increase above the book value that the account maintains at the date, any estimation that may have been constituted must be reduced until exhausting the amount thereof, without exceeding the book value originally recognized as the price paid at the time of acquisition of the receivables rights.

Presentation Standards

Balance Sheet

For presentation purposes, receivables rights will be grouped in the balance sheet net of their estimation, within the item of other accounts receivable, except when it concerns impaired credits, in which case they will be presented net of their estimation within the total credit portfolio (net), identified in a separate line item.

Income Statement

The amount resulting from multiplying the estimated yield rate by the outstanding balance of the receivables rights, or by the amount of cash collected or recovered referred to in paragraphs 20 and 25, respectively, as well as the subsequent recoveries referred to in paragraphs 27 and 30, shall be presented in the item of other income (expenses) from operations.

Likewise, the estimation for uncollectibility or difficult collection referred to in paragraphs 23, 28, and 31 shall be presented in the item of other income (expenses) from operations.

Disclosure Standards

Through notes to the financial statements, the following must be disclosed:

a) description of the valuation method used to determine the value of expected cash flows and the corresponding estimation for uncollectibility or difficult collection;

b) description of the method used for recognizing collections or recoveries, and in their case, change to the cost recovery method and reasons for making said change;

c) main characteristics of non-cash assets that have been obtained as part of collections or recoveries;

d) description of the effectiveness evaluation to estimate expected cash flows;

e) main characteristics that may have been considered for the segmentation of receivables rights;

f) amount and explanation of any increases or decreases that the estimation for uncollectibility or difficult collection corresponding to receivables rights may have had during the period, and

g) main characteristics of financial instruments that have not been issued in series or mass by trusts, entities, or other legal figures that constitute receivables rights (date of issuance, weighted average term to maturity, yield, among others).

C-1 RECOGNITION AND DERECOGNITION OF FINANCIAL ASSETS

Objective

This criterion aims to define the particular standards relative to the recognition and derecognition of financial assets.

Definitions

Financial Assets.- All those assets in the form of cash; securities; equity instruments; credit portfolio; negotiable instruments; the contractual right to receive cash or another asset from another entity, or to exchange assets under conditions that could be favorable to the entity; or a contract that is or can be settled using the entity's own equity instruments and is (i) a non-derivative financial instrument through which the entity is or may be obligated to receive a variable amount of its own equity instruments, or (ii) a derivative financial instrument that is or can be settled through an exchange of a quantity of cash for a quantity of the entity's own equity instruments, in which at least one of the two quantities is variable.

Derecognition of Financial Assets.- Removal of financial assets previously recognized in the entity's balance sheet.

Interest Benefits.- Rights to receive all or specific portions of cash flows from a trust, entity, or other figure, including participations in the principal and/or interest of principal and/or subordinated debt securities, other cash flows from underlying assets, premiums, obligations, residual interest (whether in the form of debt or capital), among others.

Transferor.- Entity that transfers financial assets.

Transferee.- Entity that receives financial assets.

Collateral.- Guarantee constituted for the payment of agreed counterconsiderations.

Counterconsiderations.- Cash, interest benefits, equity instruments, derivative financial instruments, or any other type of asset obtained in a transfer of financial assets, including any obligation incurred.

Equity Instruments.- Asset represented through a title, certificate, or right derived from a contract, among others, that represents a residual participation in the assets of an entity, after deducting all its liabilities, such as shares, partnership interests, residual interests, among others.

Financial Liability.- Any liability in the form of a contractual obligation to deliver cash or another asset to another entity, or to exchange assets or liabilities with another entity, under conditions that could be unfavorable to the entity, or a contract that will be settled or could be settled using the entity's own equity instruments and is (i) a non-derivative financial instrument through which the entity is or may be obligated to deliver a variable amount of its own equity instruments, or (ii) a derivative financial instrument that is or can be settled through an exchange of a quantity of cash for a quantity of the entity's own equity instruments, in which at least one of the two quantities is variable.

Transfer.- Act by which the transferor grants to another entity, called the transferee, possession of certain financial assets, which meets the requirements established in this criterion.

Fair Value.- The amount by which an asset can be exchanged or a liability settled between informed, interested, and equally willing parties in a free competition transaction.

Characteristics

Entities must analyze the concepts established in this criterion to determine the cases in which the recognition or derecognition of financial assets is appropriate. These concepts refer mainly to the retention (or not) of the risks and benefits of the financial assets, as well as to the control that said entity maintains over them. In this context, it must be analyzed whether the operations meet the definitions, concepts, and assumptions established in this criterion for the derecognition of financial assets, that is, if the risks and benefits of the transferred financial assets are substantially transmitted, or in their case, control is not maintained over them, in which case the transferring entity (transferor) must remove the corresponding financial assets from its financial statements and recognize the counterconsiderations received in the operation. On the other hand, the receiving entity (transferee) will recognize said financial assets in its accounting, as well as the outflow of the counterconsiderations granted by the transfer.

If the definitions, concepts, and assumptions established in this criterion for derecognizing financial assets are not met, the transferor must maintain the financial assets in its balance sheet and record a liability for the counterconsiderations received in the operation.

Recognition and Valuation Standards

Recognition of Financial Assets

A transferee entity must recognize a financial asset (or portion thereof) or a group of financial assets (or portion of said group) in its balance sheet if and only if it acquires the rights and contractual obligations related to said financial asset (or portion thereof). For this, the entity must:

a) Recognize the financial assets received at their fair value, which presumably corresponds to the price agreed in the transfer operation. Subsequently, said assets must be valued according to the corresponding criterion in accordance with their nature.

b) Recognize the new rights obtained or new obligations incurred as a result of the transfer, valued at their fair value.

c) Derecognize the counterconsiderations granted in the operation at their net book value (for example considering any associated estimation) and recognizing in the earnings of the period any item pending amortization related to said counterconsiderations.

d) Recognize in the earnings of the period any differential, if any, arising from the transfer operation.

Regarding credit portfolio transfers, the provisions of criterion B-5 "Credit Portfolio" (for example regarding portfolio acquisitions) must be observed.

Derecognition of Financial Assets

Consolidated Financial Statements

Regarding consolidated financial statements, entities must first observe the guidelines contained in NIF B-8 "Consolidated or Combined Financial Statements", and then apply the guidelines contained in this criterion.

Evaluation of the Transfer

Entities must determine, before applying the guidelines relative to the derecognition of financial assets, whether the transfer is made for a portion of a financial asset (or portion of a group of substantially similar financial assets), or for the entirety of a financial asset (or group of substantially similar financial assets), as follows:

a) The standards relative to the derecognition of financial assets will be applicable to the portion of a financial asset (or portion of a group of financial assets), only if the portion subject to evaluation for derecognition meets any of the following conditions:

The portion comprises only specifically identified cash flows from a financial asset (or from a group of substantially similar financial assets).

The portion comprises only a complete proportional (pro rata) participation in the cash flows of a financial asset (or of a group of substantially similar financial assets).

The portion comprises only a proportional participation of certain fully identified cash flows from a financial asset (or of a group of substantially similar financial assets).

b) In any other case, the guidelines relative to the derecognition of financial assets will apply to the financial assets (or to the group of substantially similar financial assets) in their entirety.

Hereinafter, for the purposes of this criterion, the term "financial assets" will comprehensively include, indistinctly, a portion of a financial asset (or a portion of a group of substantially similar financial assets), or a financial asset (or a group of substantially similar financial assets) in its entirety.

Considerations for the Derecognition of Financial Assets

Entities must derecognize a financial asset, only when:

a) the contractual rights on the cash flows expected in the financial asset expire, or

b) when the entity transfers the financial asset in accordance with what is indicated in the two

following paragraphs, and such transfer meets the requirements established in this criterion for the derecognition of financial assets.

It will be understood that entities transfer a financial asset only when:

the contractual rights to receive cash flows from the financial asset are transferred, or

the contractual rights to receive cash flows from the financial asset are retained and at the same time an contractual obligation is assumed to pay said cash flows to a third party, which meets the requirements indicated in the following paragraph.

In cases where an entity retains the contractual rights to receive cash flows from the financial asset and at the same time assumes a contractual obligation to pay said cash flows to a third party, the operation will be considered a transfer if and only if all of the following conditions are met:

The entity does not maintain an obligation to pay cash flows to a third party, unless it collects said flows from the financial asset.

The entity is contractually prohibited from selling or pledging the financial asset, except to the extent that it guarantees to a third party the payment of the committed cash flows.

The entity is obligated to remit the cash flows it collects on behalf of a third party, from the financial asset, without significant delay, without the entity being able to invest the amount corresponding to said flows, except for short-term investments in cash or cash equivalents during a relatively short period of time between the collection date and the remittance date agreed with potential beneficiaries, provided that the interest generated by such investments is also remitted to the third party.

In transfers carried out by entities (that meet the requirements established above), it must be evaluated to what extent the risks and benefits inherent to the ownership of the financial asset are retained or not, in accordance with the following:

If the entity transfers substantially all of the risks and benefits inherent to the ownership of the financial asset, it must derecognize the financial asset and recognize as assets or liabilities, separately, the rights and obligations created or retained in the transfer.

If the entity retains substantially all of the risks and benefits inherent to the ownership of the financial asset, it must maintain the financial asset in its balance sheet.

If the entity does not transfer nor retain substantially all of the risks and benefits inherent to the ownership of the financial asset (for example, due to the existence of options or derivatives implicit in the transfer), it must determine whether it maintains control over said financial asset, taking into account that:

If the entity does not retain control over the transferred financial asset, it must derecognize the financial asset and recognize as assets or liabilities, separately, the rights and obligations created or retained in the transfer.

If the entity retains control over the transferred financial asset, it must maintain it in its balance sheet for the amount by which it retains an economic or contractual involvement with said asset.

The evaluation of the transfer of risks and benefits on a financial asset must be carried out by comparing the entity's exposure, before and after the transfer, to the variation in the amounts and dates of receipt of the future net cash flows of the transferred asset (for example, the present value of future cash flows related to a loan portfolio, net of the estimated allowance for credit risks corresponding). It is assumed that an entity has retained substantially all of the risks and benefits inherent to the ownership of a financial asset if its exposure to the variation in the present value of the future net cash flows of said asset does not change significantly as a result of the transfer (for example, the entity has sold the financial asset with a repurchase option at the fair value prevailing at the time of repurchase, or the entity has transferred all of its participation in the cash flows from the financial asset greater than in a contract that meets the requirements established in this criterion for cases where an entity retains the contractual rights to receive cash flows from the financial asset and at the same time assumes a contractual obligation to pay said cash flows to a third party).

In some cases, it is evident that the transferring entity has transferred or retained substantially all of the risks and benefits inherent to the ownership of a financial asset, so there is no need to perform financial calculations to support this. In other cases, it may be necessary to perform such calculations and compare the entity's exposure to the variability in the present value of future net cash flows, before and after the transfer. Such calculations and comparisons must be performed using an appropriate discount rate based on prevailing market interest rates at the time of evaluation. Any type of variation in net cash flows must be considered, giving greater weight to those scenarios with a higher probability of occurrence.

The fact of maintaining or not maintaining control over the transferred financial asset depends on the practical ability of the transferee to sell said asset. If the transferee has the practical ability to sell the transferred financial asset in its entirety to an unrelated third party and can exercise such ability unilaterally and without the need to impose additional restrictions on the transfer, the transferring entity has not maintained control. In any other case, it is considered that the transferring entity has retained control.

Transfers that meet the requirements for derecognition of financial assets

Result from derecognition of a financial asset in its entirety

At the time the derecognition of a financial asset in its entirety is carried out, the transferring entity must:

Derecognize the transferred financial assets at their last book value, including, if applicable, the estimates and/or supplementary accounts associated with said financial assets. If applicable, the effects pending amortization or recognition, associated with the financial assets, must be recognized in the results of the period.

Recognize the consideration received in the operation, including new financial assets and new obligations assumed, at their fair value. For their recognition, the corresponding criterion will be used, according to the nature of the consideration.

Recognize in the results of the period the gain or loss, for the difference that exists between the book value of the derecognized financial assets, and the sum of (i) the consideration received (recognized at fair value) and (ii) the effect (gain or loss) from valuation accumulated that, if applicable, has been recognized in equity.

Result from derecognition of a portion of a financial asset

If the transferred asset corresponds to a portion of a larger financial asset (for example, when the entity transfers the cash flows corresponding to interest of a debt financial instrument), and the transferred portion meets the requirements for the derecognition of a financial asset in its entirety, the original book value of the larger financial asset must be distributed between the part that continues to be recognized in the entity's balance sheet and the part that is derecognized, based on the relative fair values of both parts at the date of the transfer. At the time the derecognition of a portion of a financial asset is carried out, the transferring entity must:

Derecognize the portion of the transferred financial asset at its last book value, including in its case the proportional part of the estimates and/or supplementary accounts associated with said financial assets. If applicable, the effects pending amortization or recognition associated with the financial assets must be recognized in the results of the period in the proportion that corresponds.

Recognize the consideration received or incurred in the operation, considering the new financial assets and new obligations assumed, at their fair values. For their recognition, the corresponding accounting criterion will be used, according to the nature of the consideration.

Recognize in the results of the period the gain or loss, for the difference that exists between the book value of the portion of the financial asset derecognized, and the sum of (i) the consideration received or incurred (recognized at fair value) and (ii) the effect (gain or loss) from valuation accumulated that, if applicable, has been recognized in equity, attributable to said portion. To this effect, the accumulated loss or gain that has been recognized in equity will be distributed between the part that continues to be recognized in the balance sheet and the part that has been derecognized, based on the relative fair values of both parts.

In the event that the entity distributes the book value of a larger financial asset between the part of the financial asset that continues to be recognized in the balance sheet and the part derecognized, the fair value of the part that continues to be recognized must also be determined. For such determination, recent transaction prices, market prices, values of transactions of similar financial assets, among others, may be used. When there are no market prices or other reliable indicators to determine said fair value, the best estimate will correspond to the difference between the fair value of the larger financial asset in its entirety, and the fair value of the consideration received from the transferor for the transfer of the portion of the financial asset derecognized.

Transfers that do not meet the requirements for derecognition of a financial asset

If as a result of a transfer the requirements to derecognize the transferred financial asset are not met, because the entity has retained substantially all of the risks and benefits of its ownership, said entity must maintain the financial asset in its entirety in its balance sheet, as well as a financial liability for the consideration received. In subsequent periods, the entity must recognize in the results of the period (i) any income obtained from the financial asset, or (ii) any cost or expense incurred due to the financial liability.

Transfers in which an economic or contractual involvement is retained

If the entity does not transfer nor retain substantially all of the risks and benefits inherent to the ownership of a transferred financial asset, but maintains control over it, the entity will continue to recognize said asset in its balance sheet due to its economic or contractual involvement. Such involvement in the transferred financial asset corresponds to the amount by which it is exposed to changes in its value. Examples of the above are:

When the economic or contractual involvement of the transferred financial asset takes the form of a guarantee on the transferred financial asset, the amount of said involvement will correspond to the lesser of (i) the value of the financial asset, or (ii) the value of the guarantee.

When the economic or contractual involvement takes the form of an option issued or purchased (or both) referring to the transferred financial asset, the amount of the economic or contractual involvement will correspond to the value of said asset that the entity can repurchase.

When the economic or contractual involvement takes the form of an option that is settled in cash, or a similar condition on the transferred asset, the amount of the economic or contractual involvement will be measured in the same way as if it were non-cash settled options, as established in the previous letter b).

When the entity continues to recognize a transferred financial asset by virtue of retaining an economic or contractual involvement, it must also recognize an associated liability. Without prejudice to other valuation rules contained in this or other criteria, both the financial asset and the associated liability must be valued on the basis that reflects the rights and obligations that the entity has retained. The associated liability will be valued in such a way that the net amount resulting from adding the book value of the transferred financial asset and the associated liability is:

the amortized cost of the rights and obligations retained by the entity, when the financial asset is valued at amortized cost, or

the fair value of the rights and obligations retained by the entity measured independently, when the transferred financial asset is valued at fair value.

The entity will continue to recognize in the results of the period (i) any income from the transferred financial asset due to its economic or contractual involvement, and/or (ii) any cost or expense incurred relative to the associated liability.

For the purposes of its subsequent valuation, changes in the fair value of the transferred financial asset and the associated liability must be recognized consistently with each other, and will not be offset.

If the retention of the economic or contractual involvement is associated only with a portion of a financial asset, the entity must distribute the original book value of the financial asset between the part that continues to be recognized in the entity's balance sheet by virtue of its economic or contractual involvement, and the part that ceases to be recognized, based on the relative fair values of both parts at the date of the transfer. For the determination of the fair value of said parts, the guidelines indicated in paragraph 30 of this criterion must be observed. To recognize the above in its accounting, the transferring entity must:

Derecognize the portion of the transferred financial asset that ceases to be recognized at its last book value including, if applicable, the proportional part of the estimates and/or supplementary accounts associated with said financial assets. If applicable, the effects pending amortization or recognition, associated with the financial assets, must be recognized in the results of the period in the proportion that corresponds.

Recognize the consideration received or incurred in the operation, considering the new financial assets and new obligations assumed (including the liability associated with the portion of the financial asset on which an economic or contractual involvement is retained), at their fair values. For their recognition, the corresponding accounting criterion will be used, according to the nature of the consideration.

Recognize in the results of the period the gain or loss, for the difference that exists between the book value of the portion of the financial asset that has ceased to be recognized, and the sum of (i) the consideration received or incurred (recognized at fair value) and (ii) the effect (gain or loss) from valuation accumulated that, if applicable, has been recognized in equity, attributable to said portion. To this effect, the accumulated loss or gain that has been recognized in equity will be distributed between the part that continues to be recognized in the balance sheet and the part that has ceased to be recognized, based on the relative fair values of both parts.

As examples of retention of the economic or contractual involvement of the entirety or a portion of a financial asset are the retention of an option to repurchase the entirety or part of the financial asset, or the retention of interest benefits that although in some cases do not constitute a substantial retention of all risks and benefits inherent to the ownership of the asset, could cause the entity to retain total or partial control of the financial asset.

Applicable rules to all transfers

No offsetting of financial assets and liabilities

If the financial asset continues to be recognized in the balance sheet based on the guidelines of this criterion, said assets and the associated liabilities must not be offset against each other. Likewise, the entity must not offset the income from the transferred financial asset with the costs and/or expenses incurred by the associated liability.

Collateral granted and received in cash

Collateral granted and received in cash will be recognized as follows:

The transferor must recognize the outflow of resources granted, affecting the cash item against an account receivable.

The transferee must recognize the inflow of resources received, affecting the cash item, against an account payable.

Collateral granted and received other than cash

If the transferring entity grants collateral (other than cash, such as debt or equity securities) to the transferee, the recognition rules for both will depend on the right that the transferee has to sell or pledge said collateral, as well as on the default, if any, of the transferring entity. Both the transferor and the transferee must recognize the collateral as follows:

The transferee will recognize the received collateral in off-balance sheet accounts. If said transferee had the right to sell or pledge the collateral, the transferring entity must reclassify the asset in its balance sheet, presenting it as restricted.

If the transferee sells the collateral, it must recognize the resources from the sale, as well as a liability (initially measured at the fair value of the collateral) that will be valued at fair value for the obligation to return the collateral (any difference between the price received and the fair value of the liability will be recognized in the results of the period).

In the event that the transferring entity fails to meet the conditions established in the contract, and therefore cannot claim the collateral, it must derecognize it from its balance sheet; on its part, the transferee must recognize the collateral at its fair value, or, if it had previously sold the collateral, it must derecognize the obligation to return it to the transferor.

Except for what is established in the previous letter c), the transferring entity must maintain the collateral in its balance sheet, and the transferee must not recognize it in its financial statements (but only in off-balance sheet accounts).

Appendix A is an integral part of criterion C-1. Its content illustrates the application of this criterion, with the aim of clarifying its meaning.

APPENDIX A

EVALUATION OF DERECOGNITION OF FINANCIAL ASSETS

C-2 RELATED PARTIES

Objective

This criterion aims to establish specific rules regarding the disclosure of operations carried out by entities with related parties.

Definitions

Joint control agreement.- It is an agreement that regulates activities over which two or more parties maintain joint control.

Associate.- It is an entity in which another entity has a permanent investment and exercises significant influence over it. The associate may have a legal form similar or different from that of the holder; for example, it may be a corporation, a civil society, a trust, an association, or a structured entity.

Control.- Control exists when an entity has power over an entity in which it participates (investee), to direct its relevant activities, is exposed or has rights to variable returns from that participation, and has the present ability to affect those returns through its power over the investee.

Joint control.- It is the shared control, established in an agreement, which requires that decisions on relevant activities derived from the agreement require the unanimous consent of the parties sharing control.

Parent.- It is an entity that controls one or more investees called subsidiaries.

Close family member.- It is a member of a person's family who is considered a related party of the reporting entity and who may exercise influence over, or may be influenced by, said related party when the family member carries out operations with the reporting entity; close family members must include:

children and spouse, concubine or concubinary,

children of the spouse, concubine or concubinary,

dependents of the family member or their spouse, concubine or concubinary, and

any other person on which the laws and/or regulations applicable to the entity specify that information on related parties must be presented.

Significant influence.- It is the power to participate in deciding the financial and operating policies of an entity, without having control or joint control over said entity.

Related parties.- For the purposes of this criterion, the following are considered as such:

natural or legal persons who, directly or indirectly, through one or more intermediaries:

control, are controlled by, or are under common control with, the entity, as applicable, or

ii.

exercise significant influence over, are significantly influenced by, or are under common significant influence of, the entity;

legal persons that are associates of the entity;

joint control agreements in which participation exists;

members of the board of directors or executive board of the entity, as applicable, of the parent company or of the financial entities and companies that are part of the financial group to which, if applicable, it belongs;

key management personnel or relevant executives of the entity or its parent;

close family members of any natural person who falls under any of the cases indicated in letters a), d) and e) above;

persons other than key management personnel or relevant executives or employees who, by their signature, can generate obligations for the entity;

legal persons in which key management personnel or relevant executives of the

entidad sean consejeros o administradores u ocupen cualquiera de los tres primeros niveles jerárquicos en dichas personas morales;

las personas morales en las que cualquiera de las personas señaladas en los incisos anteriores ejerzan control o influencia significativa, o bien, en las que tengan poder de mando, y

los fondos derivados de un plan de remuneraciones por beneficios a empleados (incluyendo beneficios directos a corto y largo plazo, beneficios por terminación y beneficios al retiro), ya sea de la propia entidad o de alguna otra que sea parte relacionada de esta.

Key managerial personnel or relevant executive.- Is any person who has authority and responsibility to plan and direct, directly or indirectly, the activities of the entity, including any executive (or equivalent position), as well as officials holding positions with hierarchy immediately below that of the aforementioned.

Power of command.- Is the de facto capacity to decisively influence agreements adopted in shareholder meetings or board of directors sessions, or in the management, conduct, and execution of the business of the entity in question or of the legal entities it controls. It is presumed that persons have power of command in an entity, unless proven otherwise, if they fall under any of the following circumstances:

shareholders who control the administration;

individuals who have ties with the entity or the legal entities comprising the financial group to which it belongs, through lifetime, honorary positions, or with any other title analogous or similar to the aforementioned;

persons who have transferred control of the entity under any title and gratuitously or at a value below market or book value, in favor of individuals considered close relatives, and

those who instruct the board of directors, key managerial personnel, or relevant executives of the entity in decision-making or the execution of operations in the entity itself or in the legal entities it controls.

Subsidiary.- Is an entity that is controlled by another entity; the subsidiary may have a legal form similar or different from that of the parent, for example, it may be a joint-stock company, a civil company, a trust, an association, a structured entity, etc.

Disclosure norms

The economic substance of each possible relationship between related parties must be taken into account, and not only its legal form.

Aggregated information must be disclosed, through notes to the financial statements, regarding related-party operations, as applicable, as follows:

the nature of the relationship in accordance with the definition of related parties;

a generic description of the operations, such as:

credits granted or received,
operations with securities investments in which the issuer and the holder are related parties,
repurchase agreements (repos),
derivatives,
hedging operations,
provision and receipt of services,
guarantees granted and received,
assignment and acquisition of credit portfolios,
settlement or substitution of liabilities on behalf of the entity or by the entity on behalf of another related party,
share-based payments, and
those carried out through any person, trust, entity, or other legal figure, when the counterparty and source of payment for such operations depend on a related party;

the total amount of operations with related parties;

the amount of items considered uncollectible or difficult to collect arising from operations with related parties and the expense recognized in the period for this concept;

the amount of pending balances owed to and/or by related parties and their characteristics (term and conditions, the nature of the consideration established for their settlement, as well as whether they are secured, details of any guarantee granted or received);

the effect of changes in the conditions of existing operations;

any other information necessary for the understanding of the operation, and

the total amount of employee benefits granted to key managerial personnel or relevant executives of the entity.

The aggregated information referred to in the preceding paragraph must be disclosed separately for each of the following categories:

the parent;

entities with significant influence over the entity;

subsidiaries;

associates;

joint control agreements;

key managerial personnel or relevant executives of the entity or its parent, and

other related parties.

When selecting the entities and operations to be disclosed, the following must be taken into account:

disclosure is only required for operations with related parties that represent more than 1% of the net capital of the month prior to the date of preparation of the corresponding financial information. Net capital will be determined in accordance with the capital requirements established by the CNBV through general provisions;

disclosure is not required for operations eliminated in consolidated financial statements, nor for those eliminated as a result of recognizing the equity method;

items with common characteristics must be grouped, unless it is necessary to highlight certain information;

disclosure of operations with related parties is not necessary when the information has already been presented in accordance with the requirements of accounting criteria other than the present one, and

the relationship between controlling and subsidiary entities must be disclosed regardless of whether operations have been carried out between them in the period. The entity must disclose the name of its direct parent and the name of the ultimate parent, if the latter exists.

D-1 BALANCE SHEET

Background

Financial information must meet, among other things, the objective of presenting the financial position of entities at a specific date, requiring the establishment, through specific criteria, of the objectives and general structure that the balance sheet must have.

Objective and scope

This standard aims to establish the general characteristics, as well as the structure that the balance sheet of entities must have, which must adhere to what is provided for in this standard. Likewise, minimum guidelines are established with the purpose of standardizing the presentation of this financial statement among entities, and in this way, facilitate its comparability.

Objective of the balance sheet

The balance sheet aims to present the value of assets and rights, real, direct, or contingent obligations, as well as the equity of an entity at a specific date.

The balance sheet, therefore, must adequately and on a consistent basis show the position of entities regarding their assets, liabilities, equity, and off-balance sheet accounts, so that the economic resources available to such entities can be evaluated, as well as their financial structure.

Additionally, the balance sheet must meet the objective of being a useful tool for the analysis of the various entities, which is why it is convenient to establish the concepts and general structure that such financial statement must contain.

Concepts comprising the balance sheet

In a broad context, the concepts comprising the balance sheet are: assets, liabilities, and equity, understood as such concepts as defined in NIF A-5 "Basic elements of financial statements". Likewise, the off-balance sheet accounts referred to in this standard are part of the concepts comprising the structure of the balance sheet of entities.

Structure of the balance sheet

The structure of the balance sheet must group the concepts of assets, liabilities, equity, and off-balance sheet accounts, in such a way that it is consistent with the relative importance of the different items and reflects their degree of liquidity or exigibility from highest to lowest, as appropriate.

In this way, the minimum items that must be included in the balance sheet are the following:

Assets

cash and cash equivalents;

margin accounts

securities investments;

receivables from repos;

derivatives;

valuation adjustments for hedging financial assets;

total credit portfolio (net);

other receivables (net);

merchandise inventory (net);

assets acquired (net);

properties, furniture, and equipment (net);

permanent investments;

discontinued operations available for sale;

deferred taxes and PTU (net), and

other assets.

Liabilities

securities liabilities;

bank loans, loans from partners, and from other organizations;

collateral sold;

derivatives;

valuation adjustments for hedging financial liabilities;

other payables;

deferred taxes and PTU (net), and

deferred credits and advance collections.

Equity

contributed capital, and

retained earnings.

Off-balance sheet accounts

guarantees granted;

contingent assets and liabilities;

credit commitments;

assets in trust or mandate;

assets under administration;

collateral received by the entity;

collateral received and sold by the entity;

accrued interest not collected derived from past-due credit portfolio, and

other registration accounts.

Presentation of the balance sheet

The items described above correspond to the minimum required for the presentation of the balance sheet; however, entities must break down, either in the said financial statement or through notes, the content of the concepts they consider necessary in order to show the financial position of the same for the user of the financial information. At the end of this standard, a balance sheet prepared with the minimum items referred to in the preceding paragraph is shown.

However, certain items of the balance sheet require special guidelines for their presentation, which are described below:

Margin accounts

Balances arising from margin accounts in cash, securities, or other assets referred to in standard B-4 "Derivatives and hedging operations" will be presented as part of this item.

Receivables from repos

The debtor balance arising from repo operations referred to in the corresponding standard will be presented immediately after the concepts of securities investments.

Derivatives

Financial assets arising from derivatives will be presented immediately after the concept of receivables from repos, disaggregated into derivatives for trading purposes or for hedging purposes, as appropriate.

Valuation adjustments for hedging financial assets

In a fair value hedge for interest rate risk of a portion of a portfolio composed of financial assets, the adjustment to the book value of the hedged item by the gain or loss recognized in the period's results will be presented in this item, immediately after the derivatives item.

Total credit portfolio (net)

In order to obtain higher quality information regarding commercial credits granted by entities to their partners, the current portfolio (unrestricted and restricted), as well as the past-due portfolio, must be disaggregated in the balance sheet according to the type of credit, classified into any of the following categories:

Current credit portfolio

commercial credits

documented with real estate guarantee;

documented with other guarantees;

unsecured;

financial factoring, discount, or assignment of credit rights operations, and

capitalizable leasing operations.

Past-due credit portfolio

commercial credits

documented with real estate guarantee;

documented with other guarantees;

unsecured;

financial factoring, discount, or assignment of credit rights operations, and

capitalizable leasing operations.

Credits denominated in UDIS, whether own or derived from support programs for debtors, must be presented in the category that corresponds to them.

The credit portfolio will be presented, according to the credit in question, net of interest collected in advance and deferred credits corresponding to financial income to be accrued in capitalizable leasing contracts.

Also, within this item, the collection rights related to acquired credits referred to in standard B-10 "Collection rights" will be presented, net of their estimation.

Other receivables (net)

Receivables not included in the credit portfolio will be presented, considering among others, debtor liquidating accounts, debtors for collateral granted in cash, deducted, where applicable, from the estimation for uncollectibility or difficult collection. Likewise, collection rights other than those referred to in the preceding paragraph will be presented.

Permanent investments

Permanent investments in subsidiary shares, those of associates added by the commercial credit that may have been generated, joint ventures, as well as other permanent investments will be presented within this item.

Discontinued operations available for sale

Investments in long-term assets that are available for sale, such as subsidiaries, associates, joint ventures, and other long-term assets available for sale, will be presented within this item.

Other assets

Other assets such as deferred charges, prepaid expenses, and intangible assets must be presented as a single item in the balance sheet, with the exception of deferred taxes and Participation of Workers in Profits (PTU).

The prepaid expense arising in accordance with what is established in NIF D-3 "Employee Benefits" of the NIFs will be part of this item.

Bank loans, loans from partners, and from other organizations

Bank loans, loans from partners, and from other organizations will be grouped within a specific item, disaggregated into:

short-term (amount of amortizations whose term to maturity is less than or equal to one year), and

long-term (amount of amortizations whose term to maturity is greater than one year).

The liability generated in credit portfolio assignment operations in which the conditions established to derecognize a financial asset are not met, as established in standard C-1 "Recognition and derecognition of financial assets", will be presented within this item.

Collateral sold

Collateral sold representing the obligation to return the collateral received from the counterparty in derivative operations and other collateral sold, as well as those collateral sold in repo operations, must be presented within this item in a disaggregated manner.

In the case of repo operations, the creditor balance originating from the compensation carried out in accordance with standard B-3 "Repos" must be presented.

Derivatives

Financial liabilities arising from derivatives will be presented immediately after the collateral sold item, disaggregated into derivatives for trading purposes or for hedging purposes, as appropriate.

Valuation adjustments for hedging financial liabilities

In a fair value hedge for interest rate risk of a portion of a portfolio composed of financial liabilities, the adjustment to the book value of the hedged item by the gain or loss recognized in the period's results will be presented in this item, immediately after the corresponding financial liabilities.

Other payables

Income taxes payable, PTU payable, suppliers, contributions for future capital increases pending formalization in shareholder meetings, creditor liquidating accounts, creditors for collateral received in cash, diverse creditors, and other payables will be part of this item, including in the latter overdrafts in checking accounts and the negative balance of the cash and cash equivalents item that, in accordance with what is established in standard B-1 "Cash and cash equivalents", must be presented as a liability.

The liability arising in accordance with what is established in NIF D-3 will be part of this item.

Deferred credits and advance collections

This item will be integrated by deferred credits, such as advance collections received on account of goods promised for sale or with reservation of ownership, among others.

Equity

At the bottom of this statement, the amount of historical share capital must be disclosed, as established in standard A-2 "Application of particular standards".

When preparing the consolidated balance sheet, the non-controlling interest representing the difference between the subsidiary's equity and the amount of the eliminated permanent investment will be presented in a separate line, immediately after retained earnings.

Likewise, the net result will be presented decreased by the aforementioned non-controlling interest within retained earnings.

Result from holding non-monetary assets

The entity will recognize in this item the result from holding unrealized non-monetary assets, as established in NIF B-10 "Effects of inflation".

Off-balance sheet accounts

At the bottom of the balance sheet, situations or events that, according to the definition of assets, liabilities, and equity mentioned above, should not be included within said concepts in the balance sheet of entities, but that provide information on any of the following events, must be presented:

guarantees granted;

contingent assets and liabilities in accordance with Bulletin C-9 "Liabilities, provisions, contingent assets and liabilities, and commitments" of the NIFs;

credit commitments, such as irrevocable credits and unused credit lines granted;

collateral received by the entity;

collateral received and sold by the entity;

amounts that complement the figures contained in the balance sheet, and

other accounts that the entity considers necessary to facilitate accounting records or to comply with applicable legal provisions.

Assets under administration

The amount derived from share distribution operations of investment funds will be presented in this item.

NAME OF THE CREDIT UNION

ADDRESS

BALANCE SHEET AS OF ____ OF ____________ OF ______

EXPRESSED IN CURRENCY OF PURCHASING POWER OF _______________ OF ______ (1)

(Numbers in thousands of pesos)

ASSETS

LIABILITIES AND EQUITY

CASH AND CASH EQUIVALENTS

SECURITIES LIABILITIES

MARGIN ACCOUNTS

BANK LOANS, LOANS FROM PARTNERS, AND FROM OTHER ORGANISMS

Short-term

SECURITIES INVESTMENTS

Long-term

Securities for trading

Securities available for sale

COLLATERAL SOLD

Securities held to maturity

Repos (Creditor Balance)

Derivatives

RECEIVABLES FROM REPOS (DEBTOR BALANCE)

Other collateral sold

DERIVATIVES

For trading purposes

For hedging purposes

VALUATION ADJUSTMENTS FOR HEDGING FINANCIAL ASSETS

VALUATION ADJUSTMENTS FOR HEDGING FINANCIAL LIABILITIES

CURRENT CREDIT PORTFOLIO

Commercial credits

Documented with real estate guarantee

OTHER PAYABLES

Documented with other guarantees

Income taxes payable

Unsecured

Participation of workers in profits payable

Financial factoring, discount, or assignment of credit rights operations

Suppliers

Capitalizable leasing operations

Contributions for future capital increases pending formalization in shareholder meetings

Creditor accounts for liquidation of operations

TOTAL CURRENT CREDIT PORTFOLIO

Creditors for margin accounts

Creditors for collateral received in cash

PAST-DUE CREDIT PORTFOLIO

Diverse creditors and other payables

Past-due commercial credits

Documented with real estate guarantee

DEFERRED TAXES AND PTU (NET)

Documented with other guarantees

Unsecured

DEFERRED CREDITS AND ADVANCE COLLECTIONS

Financial factoring, discount, or assignment of credit rights operations

Capitalizable leasing operations

TOTAL LIABILITIES

TOTAL PAST-DUE CREDIT PORTFOLIO

EQUITY

CREDIT PORTFOLIO

(-) LESS:

CONTRIBUTED CAPITAL

PREVENTIVE ESTIMATION FOR CREDIT RISKS

Share capital

Contributions for future capital increases formalized by its shareholder meeting

CREDIT PORTFOLIO (NET)

Share premium

ACQUIRED COLLECTION RIGHTS

RETAINED EARNINGS

(-) LESS:

Capital reserves

ESTIMATION FOR UNCOLLECTIBILITY OR DIFFICULT COLLECTION

Results from previous years

Valuation result of securities available for sale

ACQUIRED COLLECTION RIGHTS (NET)

Valuation result of hedging instruments of cash flows

Accumulated effect from conversion

TOTAL CREDIT PORTFOLIO (NET)

Remediations for defined benefits to employees

Result from holding non-monetary assets

OTHER RECEIVABLES (NET)

Net result

MERCHANDISE INVENTORY (NET)

TOTAL EQUITY

ASSETS ACQUIRED (NET)

PROPERTIES, FURNITURE, AND EQUIPMENT (NET)

PERMANENT INVESTMENTS

DISCONTINUED OPERATIONS AVAILABLE FOR SALE

DEFERRED TAXES AND PTU (NET)

OTHER ASSETS

Deferred charges, prepaid expenses, and intangibles

Other short-term and long-term assets

TOTAL ASSETS

TOTAL LIABILITIES AND EQUITY

OFF-BALANCE SHEET ACCOUNTS

Guarantees granted

Contingent assets and liabilities

Credit commitments

Assets in trust or mandate

Assets under administration

Collateral received by the entity

Collateral received and sold by the entity

Accrued interest not collected derived from past-due credit portfolio

Other registration accounts

The historical balance of share capital as of _____ of _____________ of _______ is of ________ thousand pesos

The concepts appearing in this statement are shown in an enumerative but not limiting manner.

(1) This line will be omitted if the economic environment is "non-inflationary".

D-2 STATEMENT OF RESULTS

Background

Financial information must comply, among other things, with the objective of reporting the results of the operations of a specific entity during a defined accounting period, requiring the establishment, through specific criteria, of the object and general structure that the statement of results must have.

Objective and Scope

The purpose of this standard is to establish the general characteristics and the structure that the statement of results must have. Whenever this financial statement is prepared, entities must adhere to the structure and guidelines provided in this standard. Likewise, minimum guidelines are established with the purpose of homogenizing the presentation of this financial statement among entities, and in this way, facilitate its comparability.

Objective of the Statement of Results

The statement of results has the objective of presenting information about the operations carried out by the entity, as well as other economic events that affect it, which do not necessarily come from decisions or transactions derived from the owners of the entity in their capacity as owners, during a specific period.

Consequently, the statement of results will show the increase or decrease in the equity of the entities, attributable to the operations carried out by them, during a set period.

The provisions in the previous paragraph do not apply to those items of the entity that by express provision must be incorporated into the accounting capital, other than those coming from the statement of results, such as those that make up comprehensive income (valuation result of available-for-sale securities, valuation result of cash flow hedging instruments, accumulated effect from translation, as well as the result from holding non-monetary assets). The presentation of the increases or decreases in equity derived from these items is specified in standard D-3 "Statement of Changes in Shareholders' Equity".

Concepts that make up the Statement of Results

In a broad context, the concepts that make up the statement of results are: revenues, costs, expenses, gains and losses, considering as such the concepts defined as such in NIF A-5 "Basic Elements of Financial Statements" of the NIFs.

Structure of the Statement of Results

The minimum items that the statement of results must contain in entities are the following:

· financial margin; · financial margin adjusted for credit risks; · operating result; · result before income taxes; · result before discontinued operations, and · net result.

Presentation of the Statement of Results

The items described above correspond to the minimum required for the presentation of the statement of results; however, entities must break down, either in the cited statement of results or through notes to the financial statements, the content of the concepts they consider necessary in order to show the results of the same for the user of the financial information. At the end of this standard, a statement of results prepared with the minimum items referred to in the previous paragraph is shown.

Characteristics of the items that make up the structure of the Statement of Results

Financial Margin

The financial margin must be composed of the difference between interest income and interest expenses, increased or decreased by the result from net monetary position, related to items of the financial margin (in the case of an inflationary environment).

Interest Income

Interest income is considered to be the returns generated by the credit portfolio, contractually called interest, the amortization of interest collected in advance, the financial income accrued in capitalizable lease operations, as well as premiums and interest from other financial operations typical of entities such as deposits in financial entities, margin accounts, investments in securities, repurchase operations, as well as premiums for debt placement.

Commissions charged for the granting of credit, as well as dividends from equity instruments, are also considered interest income.

Likewise, valuation adjustments derived from items denominated in UDIS or in some other general price index, as well as exchange gains, are considered as interest income, provided that such items come from positions related to income or expenses that are part of the financial margin.

Interest collected relative to credits previously classified as past-due portfolio, whose accumulation is carried out in accordance with their collection, according to what is established in standard B-5 "Credit Portfolio", are part of this item.

Interest Expenses

Interest expenses are considered to be premiums, discounts, and interest derived from stock market liabilities and bank loans, from partners and other organizations, as well as issuance expenses and discounts for debt placement.

Likewise, valuation adjustments derived from items denominated in UDIS or in some other general price index, as well as exchange losses, are considered interest expenses, provided that such concepts come from positions related to expenses or income that are part of the financial margin.

Likewise, the amortization of costs and expenses associated with the granting of credit are considered as interest expenses.

Result from Net Monetary Position (Financial Margin)

The result from net monetary position referred to in paragraph 9 will be that which originates from items whose income or expenses are part of the financial margin (in the case of an inflationary environment).

The result from net monetary position originating from items that are registered directly in the entity's accounting capital will not be considered in this item, since such result must be presented in the corresponding capital item.

Financial Margin Adjusted for Credit Risks

It corresponds to the financial margin reduced by the amounts related to the movements of the preventive estimate for credit risks in a specific period.

Operating Result

It corresponds to the financial margin adjusted for credit risks, increased or decreased by:

a) commissions and fees charged and paid,

b) the intermediation result,

c) other operating income (expenses) other than interest income or expenses that have been included within the financial margin, and

d) administration and promotion expenses.

Commissions and fees charged and paid are those generated by credit operations other than those indicated in paragraphs 11 and 16, received loans, debt placement, and by the provision of services among others, administration of resources, fiduciary activities, and by the granting of guarantees.

Likewise, the intermediation result is considered as part of the operating result, understood as the following concepts:

a) fair value valuation result of trading securities, derivatives for trading or hedging purposes, available-for-sale securities in fair value hedges, as well as sold collateral;

b) impairment loss or effect of reversal of impairment of securities and derivatives;

c) valuation result of currencies linked to its social object;

d) transaction costs for the purchase and sale of trading securities and derivatives;

e) result from the purchase and sale of securities and currencies linked to its social object, and

f) the result from the cancellation of financial assets and liabilities coming from derivatives, including the result from the purchase and sale of said derivatives, as well as the result from the sale of received collateral.

Additionally, other operating income (expenses) are also recognized within the operating result, considered as such the income and expenses derived from the entity's operations and which are not included in the previous concepts, nor are part of administration and promotion expenses, such as:

a) recoveries of credit portfolio, taxes, and collection rights;

b) result from acquisition or cession of portfolio;

c) financial cost for capitalizable lease;

d) allocations to the estimate for uncollectability or difficult collection;

e) losses;

f) dividends from other permanent investments and permanent investments in associates available for sale;

g) donations;

h) impairment loss or effect of reversal of impairment of real estate, goodwill, other long-term assets in use or available for sale, and other assets;

i) loss from adjudication of assets, the result from the valuation of adjudicated assets, the result in the sale of adjudicated assets, as well as the estimate for the loss of value in adjudicated assets;

j) result in the sale of properties, furniture, and equipment, and

k) income and cost of sales from commercialization and transformation activities of goods, merchandise, and various articles.

In addition to the items previously mentioned, the monetary position result, in the case of an inflationary environment, and the exchange result generated by items not related to the financial margin of the entities will be presented in the item of other operating income (expenses).

Finally, administration and promotion expenses must be considered within the operating result, which must include all types of direct benefits granted to the employees of the entity, PTU (Profit Sharing) incurred and deferred, fees, rents, insurance and bonds, promotion expenses, technology expenses, non-deductible expenses, technical assistance expenses, maintenance expenses, consumables and minor supplies, depreciation and amortizations, the net cost of the period derived from employee benefits, as well as taxes and duties other than income taxes.

Result Before Income Taxes

It will be the operating result, incorporating the participation in the result of unconsolidated subsidiaries, associates, and joint ventures.

Result Before Discontinued Operations

It is the result before income taxes, reduced by the effect of income tax expenses incurred in the period, increased or decreased as the case may be, by the effects of deferred income taxes generated or realized in the period, in its case, net of its estimate.

Net Result

It corresponds to the result before discontinued operations increased or decreased as appropriate, by the discontinued operations referred to in Bulletin C-15 "Impairment in the value of long-term assets and their disposal" of the NIFs.

Consolidated Statement of Results

When the consolidated statement of results is presented, the segregation of the portion of the net result corresponding to the non-controlling interest will be presented as the last item of said financial statement.

Disclosure Standards

The following must be disclosed in notes to the financial statements:

a) composition of the financial margin, identifying by type of currency interest income and interest expenses, distinguishing them by the type of operation from which they come (investments in securities, repurchase operations, credit portfolio, stock market liabilities, as well as bank loans, from partners and other organizations, among others);

b) in the case of credit portfolio, additionally, the amount of interest income by type of credit must be identified (documented with real estate guarantee, with other guarantees, without guarantee, financial factoring operations, discount or cession of credit rights, and capitalizable lease operations);

c) composition of the intermediation result, identifying the fair value valuation result and, if applicable, the purchase and sale result, according to the type of operation from which they come (investments in securities, as well as sold collateral);

d) amount of charged commissions disaggregated by the main products handled by the entity, and

e) the amounts of commissions and of the costs and expenses incurred for the granting of credit recognized in results; weighted average term for their amortization; description of the concepts that make up the commissions for initial origination and restructuring of such credits and the costs and expenses associated with such commissions, as well as elements that justify their direct relationship with the granting of credit.

NAME OF THE CREDIT UNION

ADDRESS

STATEMENT OF RESULTS FROM ____________ TO ________________ OF _____

EXPRESSED IN CURRENCY OF PURCHASING POWER OF _____ OF _______ (1)

(Numbers in thousands of pesos)

Interest Income $

Interest Expenses "

Result from Net Monetary Position (Financial Margin) "

FINANCIAL MARGIN $

Preventive Estimate for Credit Risks "

FINANCIAL MARGIN ADJUSTED FOR CREDIT RISKS $

Commissions and Fees Charged $

Commissions and Fees Paid "

Intermediation Result "

Other Operating Income (Expenses) "

Administration and Promotion Expenses " "

OPERATING RESULT $

Participation in the result of unconsolidated subsidiaries, associates, and joint ventures "

RESULT BEFORE INCOME TAXES $

Income Taxes Incurred $

Deferred Income Taxes (Net) " "

RESULT BEFORE DISCONTINUED OPERATIONS $

Discontinued Operations "

NET RESULT $

The concepts appearing in this statement are shown in an enumerative but not exhaustive manner.

(1) This line will be omitted if the economic environment is "non-inflationary".

D-3 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Background

Financial information must comply, among other things, with the objective of reporting the modifications in the owners' investment during a defined accounting period, requiring the establishment, through specific criteria, of the objectives and general structure that the statement of changes in shareholders' equity must have.

Objective and Scope

The purpose of this standard is to establish the general characteristics, as well as the structure that the statement of changes in shareholders' equity of entities must have, which must adhere to what is provided in this standard. Likewise, minimum guidelines are established with the purpose of homogenizing the presentation of this financial statement among entities and in this way, facilitate its comparability.

Objective of the Statement of Changes in Shareholders' Equity

The statement of changes in shareholders' equity has the objective of presenting information about the movements in the investment of the owners of an entity during a specific period.

Consequently, said financial statement will show the increase or decrease in the equity of the entities, derived from two types of movements: inherent to the decisions of the owners and to the recognition of comprehensive income.

The purpose of this standard is not to establish the mechanics by which the aforementioned movements are determined, as they are the subject of accounting standards for credit unions or specific NIFs established regarding this matter.

Concepts that make up the Statement of Changes in Shareholders' Equity

In a general context, the concepts by which modifications to shareholders' equity are presented are the following:

Movements Inherent to the Decisions of the Owners

Within this type of movements are those directly related to the decisions that owners take regarding their investment in the entity. Some examples of this type of movements are the following:

a) subscription of shares;

b) capitalization of profits;

c) establishment of reserves;

d) transfer of net result to prior years' results, and

e) payment of dividends.

Movements Inherent to the Recognition of Comprehensive Income

They refer to increases or decreases during a period, derived from transactions, other events, and circumstances, coming from sources not linked to the decisions of the owners. The purpose of reporting this type of movements is to measure the performance of the entity by showing the variations in shareholders' equity that are derived from the net result of the period, as well as from those items whose effect by specific provisions of some accounting standards for credit unions or NIFs, is reflected directly in shareholders' equity and do not constitute contributions, reductions, or distributions of capital, such as:

a) valuation result of available-for-sale securities;

b) valuation result of cash flow hedging instruments;

c) accumulated effect from translation;

d) remeasurements of defined employee benefits, and

e) result from holding non-monetary assets.

Structure of the Statement of Changes in Shareholders' Equity

The statement of changes in shareholders' equity will include all the concepts that make up shareholders' equity; their valuation will be carried out in accordance with the corresponding accounting standards for credit unions. These concepts are listed below:

· share capital; · contributions for future capital increases formalized in shareholders' meetings; · share premium; · capital reserves; · result of prior years; · valuation result of available-for-sale securities; · valuation result of cash flow hedging instruments; · accumulated effect from translation; · remeasurements of defined employee benefits; · result from holding non-monetary assets, and · net result.

Presentation of the Statement of Changes in Shareholders' Equity

The concepts described above correspond to the minimum required for the presentation of the statement of changes in shareholders' equity; however, entities must break down, either in the cited statement of changes in shareholders' equity or through notes to the financial statements, the content of the concepts they consider necessary to show the financial situation of the entity to the user of the financial information. At the end of this standard, a statement of changes in shareholders' equity prepared with the minimum concepts referred to in the previous paragraph is shown.

Characteristics of the concepts that make up the structure of the Statement of Changes in Shareholders' Equity

Movements must be incorporated into the concepts described in paragraph 9, according to the chronological order in which the events occurred:

a) Movements Inherent to the Decisions of the Owners:

Each of the concepts relative to this type of decision must be separated, in accordance with what is established in paragraph 7 of this standard, describing the concept and the date on which they were generated.

b) Movements Inherent to the Recognition of Comprehensive Income:

They must be separated according to the specific event or standard that originates them, in accordance with the concepts mentioned in paragraph 8 of this standard.

General Considerations

The statement of changes in shareholders' equity must indicate the variations of the periods being reported; the foregoing implies starting from the balances that make up the shareholders' equity of the initial period, analyzing the movements that occurred from that date.

Likewise, in the event of an inflationary environment, all balances and movements incorporated in the statement of changes in shareholders' equity must be shown expressed in monetary units of purchasing power relative to the date of presentation of the financial statements.

NAME OF THE CREDIT UNION

ADDRESS

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FROM ___ OF ___ __________ TO __ OF ____________ OF ___

EXPRESSED IN CURRENCY OF PURCHASING POWER OF _________ OF ____ (1)

(Numbers in thousands of pesos)

Concept

Contributed Capital

Earned Capital

Net Result

Total

Shareholders' Equity

Share Capital

Contributions

for future

capital increases

formalized in

shareholders' meeting

Share Premium

Capital Reserves

Result of

Prior Years

Valuation Result of

Available-for-Sale

Securities

Valuation Result of

Cash Flow Hedging

Instruments

Accumulated

Effect from

Translation

Remeasurements

of Defined

Employee Benefits

Result from

Holding Non-

Monetary Assets

Balance at ___ of __________ of ___

MOVEMENTS INHERENT TO THE

DECISIONS OF THE OWNERS

Subscription of Shares

Capitalization of Profits

Establishment of Reserves

Transfer of Net Result to Prior Years' Results

Payment of Dividends

Total

MOVEMENTS INHERENT TO THE

RECOGNITION OF COMPREHENSIVE INCOME:

Comprehensive Income

Net Result
Valuation Result of Available-for-Sale Securities
Valuation Result of Cash Flow Hedging Instruments
Accumulated Effect from Translation
Remeasurements of Defined Employee Benefits
Result from Holding Non-Monetary Assets

Total

Balance at ___ of __________ of ___

The concepts appearing in this statement are shown in an enumerative but not exhaustive manner.

(1)

This line will be omitted if the economic environment is "non-inflationary".

D-4 STATEMENT OF CASH FLOWS

Background

Financial information must comply, among other things, with the objective of showing the manner in which entities generate and use cash and cash equivalents, which are essential to maintain their operations, cover their obligations, as well as distribute dividends.

To this end, it is required to substitute the statement of changes in financial position with the statement of cash flows, as a basic financial statement, since: the first shows changes in the financial structure of the entity, which may or may not be identified with the generation or application of resources in the period; while, the second presents the cash flows that represent the generation or application of resources of the entity during the period.

For the above, it is required to establish, through specific criteria, the objectives and general structure that the statement of cash flows must have.

Objective and Scope

The purpose of this criterion is to establish the general characteristics, as well as the structure that the statement of cash flows of entities must have, which must adhere to what is provided in this criterion. Likewise, minimum guidelines are established, with the purpose of homogenizing the presentation of this financial statement among entities and, in this way, facilitating its comparability.

Objective of the Statement of Cash Flows

The statement of cash flows has as its main objective to provide users of financial statements with information about the entity's ability to generate cash and cash equivalents, as well as the manner in which entities use such cash flows to meet their needs.

When the statement of cash flows is used together with the rest of the financial statements, it provides information that allows users to:

evaluate changes in the entity's assets and liabilities and in its financial structure (including its liquidity and solvency), and

evaluate both the amounts and dates of receipts and payments, in order to adapt to circumstances and opportunities for generating and applying cash and cash equivalents.

Likewise, the statement of cash flows presents the operations that were carried out for accounting purposes in the period, that is, when the collection or payment of the item in question is realized; while the income statement shows the operations accrued in the same period, that is, when they are recognized accounting-wise at the moment they occur, regardless of the date they are considered carried out for accounting purposes.

The statement of cash flows allows entities to improve the comparability of information on the operational performance of different entities, because it eliminates the effects generated by the use of different accounting treatments for the same transactions and economic events.

Historical information on cash flows is used as an indicator of the amount, timing of generation, and probability of future cash flows. Likewise, this information is useful to verify the accuracy of past forecasts of future cash flows, to analyze the relationship between profitability and net cash flows, as well as, if applicable, the effects of inflation when there is an inflationary environment.

Definition of Terms

Financing Activities.- Those that imply movements in the size and composition of resources coming from the entity's owners, as well as from creditors granting financing not related to operating activities.

Investing Activities.- Those related to the acquisition and disposal of long-term assets (such as property, plant and equipment, and permanent investments).

Operating Activities.- Those that constitute the main source of income for the entity; they include other activities that cannot be classified as investing or financing.

Cash and Cash Equivalents.- This concept shall be understood in terms of criterion B-1 "Cash".

Cash Inflows.- Increases in the balance of cash and cash equivalents.

Cash Flows.- Inflows and outflows of cash and cash equivalents. Movements between the items that constitute cash and cash equivalents shall not be considered cash flows, since these components are part of the management of the entity's cash and cash equivalents, rather than its operating, investing, or financing activities.

Cash Outflows.- Decreases in the balance of cash and cash equivalents.

Nominal Value.- The amount of cash and cash equivalents paid or received in an operation.

Presentation Standards

General Considerations

Entities must exclude from the statement of cash flows all operations that did not affect cash flows. For example:

conversion of debt to equity and distribution of dividends in shares;

acquisition of a subsidiary with payment in shares;

share-based payments to employees, and

operations negotiated with asset exchange.

Structure of the Statement of Cash Flows

Entities must classify and present cash flows, according to their nature, in operating, investing, and financing activities, attending to their economic substance and not the form used to carry them out.

The structure of the statement of cash flows must include, at a minimum, the following items:

operating activities;

investing activities;

financing activities;

net increase or decrease in cash and cash equivalents;

effects from changes in the value of cash and cash equivalents;

cash and cash equivalents at the beginning of the period, and

cash and cash equivalents at the end of the period.

Operating Activities

Cash flows related to these activities are those derived from operations that constitute the entity's main source of income; therefore, they include activities involved in determining its net income or loss, except those associated with either investing or financing activities. Some examples of cash flows from operating activities are:

Payments for the acquisition of investments in securities.

Payments of premiums for the acquisition of options.

Receipts of premiums for the sale of options.

Cash and cash equivalents outflows for receivables under repurchase agreements (reporto).

Cash and cash equivalents outflows for the granting of credits.

Cash and cash equivalents inflows from stock market liabilities.

Cash and cash equivalents inflows from the receipt of bank loans, from partners, and from other entities.

Cash and cash equivalents inflows from sold collateral.

Receipts of income from interest as referred to in criterion D-2 "Income Statement", as well as its main associated, coming from, among others, the following concepts:

cash and cash equivalents (except for gains or losses from exchange arising from this concept);

margin accounts;

credit portfolio;

investments in securities, and

receivables under repurchase agreements.

Payments of interest expenses as referred to in criterion D-2, as well as its main associated, coming from, among others, the following concepts:

stock market liabilities, and

bank loans, from partners, and from other entities.

Receipts and payments, as applicable, of commissions and expenses associated with the granting of credit.

Receipts and payments, as applicable, of commissions and fees generated by:

credit operations other than those indicated in the previous clause;

loans received;

debt placement, and

provision of services (management of resources and granting of guarantees, among others).

Receipts and payments from the purchase and sale of currencies linked to their social object, investments in securities, derivatives, and credit portfolio.

Payments for the acquisition of collection rights.

Receipts from the sale of adjudicated goods.

Receipts and payments generated by derivatives for trading purposes.

Receipts and payments associated with hedging instruments of covered items classified as operating activities.

Cash payments for the supply of goods, merchandise, and various articles.

Cash receipts from the sale of goods, merchandise, and various articles.

Payments for direct benefits to employees, fees, rents, promotion and advertising expenses, among other administrative expenses.

Payments of income tax.

Receipts of income tax (refunds).

Receipts from recoveries of collection rights and credit portfolio.

Taxes on Income

Cash flows related to taxes on income must be presented in a separate item within the classification of operating activities, unless it is practical to relate them to investing or financing activities, as is the case of the tax derived from discontinued operations, which is related to investing activities.

Investing Activities

Cash flows related to investing activities represent the extent to which entities have allocated resources to items that will generate income and cash flows in the future.

Cash flows from investing activities are, for example, the following:

Receipts from the disposal of property, plant and equipment.

Payments for the acquisition of property, plant and equipment.

Receipts from the disposal of subsidiaries, associates, and joint control agreements.

Payments for the acquisition of subsidiaries, associates, and joint control agreements.

Receipts from the disposal of other permanent investments.

Payments for the acquisition of other permanent investments.

Receipts of cash dividends.

Payments for the acquisition of intangible assets.

Receipts from the disposal of long-term assets available for sale.

Receipts from the disposal of other long-term assets.

Payments for the acquisition of other long-term assets.

Receipts associated with hedging instruments of covered items classified as investing activities.

Payments associated with hedging instruments of covered items classified as investing activities.

Investments in Unconsolidated Subsidiaries, Associates, and Joint Ventures

Cash flows between the holding entity and its unconsolidated subsidiaries, associates, or joint ventures must be presented in the statement of cash flows; that is, they must not be eliminated, such as cash flows related to the receipt and payment of dividends.

Acquisitions and Disposals of Subsidiaries and Other Businesses

Cash flows derived from acquisitions or disposals of subsidiaries and other businesses must be classified as investing activities; likewise, they must be presented in a single separate line item involving the entire acquisition operation or, if applicable, the disposal operation, instead of presenting the individual acquisition or disposal of the assets and liabilities of said businesses at the date of acquisition or disposal. Cash flows derived from acquisitions must not be offset with those from disposals.

Cash flows paid for the acquisition of subsidiaries and other businesses must be presented net of the balance of cash and cash equivalents acquired in said operation.

Cash flows received from the disposal of subsidiaries and other businesses (discontinued operations) must be presented net of the balance of cash and cash equivalents disposed of in said operation. Likewise, this amount must be net of the income tax attributable to such disposal. In the case of foreign operations, this net amount must show the accumulated adjustment for conversion attributable to said operations.

Financing Activities

Cash flows destined to financing activities show the entity's ability to restore to its owners and creditors the resources they allocated to the entity at the time, and, if applicable, to pay them returns.

Cash flows from financing activities are, for example, the following:

Cash and cash equivalents receipts from the issuance of shares of the entity itself, net of related issuance expenses.

Cash and cash equivalents payments to owners for capital repayments, dividends, or associated with the repurchase of own shares.

Net Increase or Decrease in Cash and Cash Equivalents

After classifying cash flows in operating activities, investing activities, and financing activities, the net cash flows from these three sections must be presented.

Effects from Changes in the Value of Cash and Cash Equivalents

Entities must present in a separate line item, as applicable, the following:

the effects from conversion referred to in paragraph 42, which arise from having used different exchange rates for the conversion of the initial balance, the final balance, and the cash flows, of a foreign operation.

the effects from gains or losses from exchange of cash and cash equivalents referred to in paragraph 45, which includes the difference generated by the conversion of the initial balance of cash and cash equivalents to the exchange rate published by the Bank of Mexico in the Official Gazette of the Federation (DOF) on the next business day following the closing date of the previous period, and of the final balance of cash and cash equivalents to the exchange rate published by the Bank of Mexico in the DOF on the next business day following the closing date of the current period;

the effects on the balances of cash and cash equivalents from changes in their value resulting from fluctuations in their fair value, and

the effects from inflation associated with the balances and the cash flows and cash equivalents of any of the entities that make up the consolidated economic entity and that are in an inflationary economic environment.

Cash and Cash Equivalents at the Beginning of the Period

Entities must present a separate item named "Cash and Cash Equivalents at the Beginning of the Period", which corresponds to the balance of cash and cash equivalents presented in the balance sheet at the end of the previous period (including restricted cash), in order to reconcile it with the balance of cash and cash equivalents at the end of the current period.

Cash and Cash Equivalents at the End of the Period

Entities must present a separate item named "Cash and Cash Equivalents at the End of the Period", which must be determined by the algebraic sum of the items: "Net Increase in Cash and Cash Equivalents" or "Net Decrease in Cash and Cash Equivalents", "Effects from Changes in the Value of Cash and Cash Equivalents", and "Cash and Cash Equivalents at the Beginning of the Period". This sum must correspond to the balance of cash and cash equivalents presented in the balance sheet at the end of the period.

Additional Considerations

Financial Instruments for Hedging Purposes

When a financial instrument is held for hedging purposes, the cash flows of said instrument must be classified in the same way as the cash flows from the covered item.

Procedure for Preparing the Statement of Cash Flows

To determine and present the cash flows from operating activities, the entity must apply the indirect method, through which the net result of the period is increased or decreased by the effects of transactions of items that do not imply a cash flow; changes that occur in the balances of operating items, and by the cash flows associated with investing or financing activities.

The net cash flows related to operating activities must be determined by increasing or decreasing the net result by the effects of:

items that do not imply a cash flow, such as: losses from impairment or effect from reversal of impairment associated with investing activities (for example, of real estate, commercial credit, and other long-term assets); depreciation of property, plant and equipment; amortization of intangible assets; provisions; income taxes incurred and deferred; participation in the result of unconsolidated subsidiaries, associates, and joint ventures, as well as discontinued operations (for example, in the case of the abandonment of a subsidiary or other business);

changes that occur in the balances of the operating items of the entities' balance sheets during the period, such as: changes coming from margin accounts, investments in securities, receivables under repurchase agreements, derivatives (asset), credit portfolio (net), acquired collection rights (net), adjudicated goods (net), stock market liabilities, bank loans, from partners, and from other entities, sold collateral, derivatives (liability), and

the cash flows associated with investing or financing activities.

Entities must determine and present separately, after the operating activities item, the cash flows derived from the main concepts of gross receipts and payments related to investing and financing activities; that is, receipts and payments must not be offset against each other.

Conversion of the Statement of Cash Flows of a Foreign Operation to the Reporting Currency

In the conversion of the statement of cash flows from the functional currency to the reporting currency, of a foreign operation that is in a non-inflationary economic environment, entities must adhere to the following:

the cash flows of the period must be converted at the historical exchange rate, which shall be the one published by the Bank of Mexico in the DOF on the next business day following the date on which each cash flow in question was generated;

the initial balance of cash and cash equivalents must be converted to the exchange rate published by the Bank of Mexico in the DOF on the next business day following the closing date of the previous period, and

the final balance of cash and cash equivalents must be converted to the exchange rate published by the Bank of Mexico in the DOF on the next business day following the closing date of the current period.

In the conversion of the statement of cash flows from the functional currency to the reporting currency of a foreign operation that is in an inflationary economic environment, entities must adhere to the following:

the cash flows of the period must be converted to the exchange rate published by the Bank of Mexico in the DOF on the next business day following the closing date of the current period;

For the conversion of the cash flows of the period, for practical reasons, a representative exchange rate of the conditions existing on the dates when the cash flows were generated may be used, such as the weighted average exchange rate of the period; notwithstanding the foregoing, when exchange rates have varied significantly during the period, said exchange rate must not be used.

The effect from conversion that arises from having used different exchange rates for the conversion of the initial balance, the final balance, and the cash flows must be presented in the item called "Effects from Changes in the Value of Cash and Cash Equivalents", referred to in paragraph 32. This effect must correspond to what would have been obtained by converting both the initial balance of cash and the cash flows of the period, to the closing exchange rate with which the final balance of cash and cash equivalents was converted.

Conversion of Balances or Cash Flows in Foreign Currency

In order to determine the changes in the balances of operating items in foreign currency of operating activities, these must be converted to the closing exchange rate published by the Bank of Mexico in the DOF on the next business day following said closing date.

Cash flows from foreign currency transactions related to investing and financing activities shall be converted to the entity's reporting currency by applying to the amount in foreign currency the exchange rate at the date when each flow occurred, which shall be the one published by the Bank of Mexico in the DOF on the next business day following the date on which said flow was generated.

Gains or losses from exchange originating from variations in the exchange rate are not cash flows. However, the effect of variations in the exchange rate of cash and cash equivalents held or payable in foreign currency is presented in the statement of cash flows in order to reconcile cash and cash equivalents at the beginning and at the end of the period. This effect must be presented separately from the items of operating, investing, and financing activities, within the item called "Effects from Changes in the Value of Cash and Cash Equivalents", referred to in paragraph 32, which includes the differences, if any, of having presented the cash flows at the closing exchange rate of the current period.

Effects of Inflation

When, in terms of what is established in NIF B-10 "Effects of Inflation", the economic environment corresponds to a non-inflationary environment, entities must present their statement of cash flows expressed in nominal values, while if said economic environment is inflationary, entities must present their statement of cash flows expressed in monetary units of purchasing power at the closing date of the current period.

In cases where the economic environment of the entities is inflationary, as part of the operations that did not affect cash flows, the effects of inflation recognized in the period within the financial statements must be excluded, in order to determine a statement of cash flows at nominal values. Such cash flows must be presented expressed in monetary units of purchasing power at the closing date of the current period.

When the environment of the entities has changed from non-inflationary to inflationary, the statements

of cash flows from prior periods must be presented expressed in monetary units of purchasing power of the closing date of the current period.

In cases where the economic environment of the entities has changed from inflationary to non-inflationary, the cash flow statements of prior periods must be presented expressed in the monetary units of purchasing power of the last cash flow statement presented within an inflationary environment and included in said comparative presentation.

Consolidated Statement of Cash Flows

In the preparation of the consolidated statement of cash flows, cash flows that occurred in the period between the entities that form part of the consolidating economic entity must be eliminated. For example, cash flows derived from intercompany operations, capital contributions, and dividends paid.

In cases where a controlling entity purchases or sells shares of a subsidiary to the non-controlling interest, the cash flows associated with said operation must be presented as financing activities, within the consolidated statement of cash flows. This is because this operation is considered a transaction between owners.

Disclosure Standards

The following must be disclosed in the notes to the financial statements:

when cash flows related to income taxes have been segregated into the different groups of activities within the statement of cash flows, the total flows for said taxes must be disclosed;

the amount of unused loans that may be available for operating activities or for the payment of investment or financing operations, indicating restrictions on the use of funds from said loans;

relevant operations, investing, and financing, that have not required the use of cash or cash equivalents. For example, the acquisition of properties, furniture, and equipment through capitalizable leasing or any other similar financing means;

the total amount of cash flows that represent increases in operational capacity, separated from the cash flows that are essentially required to maintain the entity's operational capacity.

Likewise, the following must be disclosed with respect to the acquisitions and disposals of subsidiaries and other businesses:

the total consideration derived from said acquisitions or disposals, broken down:

the portion of the consideration paid or received in cash and cash equivalents, and

ii)

the amount of cash and cash equivalents held by the subsidiary or business acquired or disposed of at the date of acquisition or disposal;

the amount of assets and liabilities other than cash and cash equivalents of the subsidiary or business acquired or disposed of at the date of acquisition or disposal. These amounts must be grouped by significant items, and

the amount of income tax payment attributable to the disposals of subsidiaries, associates, and joint control agreements.

NAME OF THE CREDIT UNION

ADDRESS

STATEMENT OF CASH FLOWS

FROM __ OF __________ TO __ OF __________ OF ____

EXPRESSED IN CURRENCY OF PURCHASING POWER OF ________ OF _______ (1)

(Figures in thousands of pesos)

Net income

Adjustments for items that do not imply cash flow:

Losses from impairment or effect of reversal of impairment associated with investing activities

Depreciations of properties, furniture, and equipment

Amortizations of intangible assets

Provisions

Income taxes incurred and deferred

Participation in the result of unconsolidated subsidiaries, associates, and joint ventures

Discontinued operations

Operating Activities

Change in margin accounts

Change in investments in securities

Change in repo debtors

Change in derivatives (asset)

Change in credit portfolio (net)

Change in acquired receivables (net)

Change in adjudicated assets (net)

Change in inventory

Change in other operating assets (net)

Change in securities liabilities

Change in bank loans, partner loans, and other organisms

Change in sold collateral

Change in derivatives (liability)

Change in other operating liabilities

Change in hedging instruments (of covered items related to operating activities)

Collections of income taxes (refunds)

Payments of income taxes

Net cash flows from operating activities

Investing Activities

Collections from disposal of properties, furniture, and equipment

Payments for acquisition of properties, furniture, and equipment

Collections from disposal of subsidiaries, associates, and joint control agreements

Payments for acquisition of subsidiaries, associates, and joint control agreements

Collections from disposal of other permanent investments

Payments for acquisition of other permanent investments

Collections of cash dividends

Payments for acquisition of intangible assets

Collections from disposal of long-term assets available for sale

Collections from disposal of other long-term assets

Payments for acquisition of other long-term assets

Collections associated with hedging instruments (of covered items related to investing activities)

Payments associated with hedging instruments (of covered items related to investing activities)

Net cash flows from investing activities

Financing Activities

Collections from issuance of shares

Payments for refunds of social capital

Payments of cash dividends

Payments associated with the repurchase of own shares

Net cash flows from financing activities

Net increase or decrease in cash and cash equivalents

Effects from changes in the value of cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

The concepts appearing in this statement are shown in an enumerative, not exhaustive, manner.

( 1 ) This line will be omitted if the economic environment is "non-inflationary".

In the document you are viewing, there may be text, characters, or objects that are not displayed correctly due to conversion to HTML format, so we recommend always taking the digitized image of the DOF or the PDF file of the edition as reference. The content, form, and scope of published documents are the strict responsibility of their issuer.

CONSULT

BY DATE

Do Mo Tu We Th Fr Sa

INDICATORS

Exchange Rate and Rates as of 08/31/2026

DOLLAR 17.0427 UDIS 8.810483 TIIE 28 DAYS 6.7659% TIIE 91 DAYS 6.8033% TIIE 182 DAYS 6.8577% TIIE OF FUNDING 6.51%

SURVEYS

Did you like the new image of the Official Federal Gazette website?

No Yes

Official Federal Gazette

Río Amazonas No. 62, Col. Cuauhtémoc, C.P. 06500, Mexico City Tel. (55) 5093-3200, where you can access our service menu

Electronic address: dof.gob.mx

111