IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions, is a global accounting standard that sets out the disclosure requirements for banks and similar financial institutions. The standard requires banks and financial institutions to disclose information about their financial position, performance, and risk management practices.
The standard requires banks and financial institutions to provide a range of quantitative and qualitative disclosures in their financial statements, including:
- Loan Portfolio: Disclosures about the composition and quality of the loan portfolio, including information on non-performing loans, loan loss provisions, and collateral.
Example: A bank must disclose the composition of its loan portfolio by type, such as commercial, residential, consumer, and other loans. It must also disclose the amount of non-performing loans and loan loss provisions, as well as information about the collateral held against loans.
- Funding: Disclosures about the sources and cost of funding, including information on deposits, borrowings, and capital.
Example: A bank must disclose the sources and cost of its funding, including the amounts and types of deposits and borrowings, and the cost of capital.
- Market Risk: Disclosures about market risk, including information on interest rate risk, foreign exchange risk, and equity price risk.
Example: A bank must disclose information about its exposure to market risk, including the sensitivity of its earnings and capital to changes in interest rates, foreign exchange rates, and equity prices.
- Credit Risk: Disclosures about credit risk, including information on credit rating systems, credit concentrations, and credit risk mitigation.
Example: A bank must disclose information about its credit rating systems and credit concentrations, as well as its use of credit risk mitigation techniques such as guarantees and credit insurance.
- Liquidity Risk: Disclosures about liquidity risk, including information on funding sources and maturity profiles.
Example: A bank must disclose information about its funding sources and maturity profiles, including information on its liquidity buffers and its ability to meet its liquidity needs under stressed conditions.
- Capital Adequacy: Disclosures about capital adequacy, including information on the bank’s capital structure, regulatory capital requirements, and capital ratios.
Example: A bank must disclose information about its capital structure, regulatory capital requirements, and capital ratios, including its tier 1 and total capital ratios and any capital buffers it holds.
In summary, IAS 30 requires banks and similar financial institutions to provide a range of quantitative and qualitative disclosures in their financial statements. These disclosures provide important information about the bank’s financial position, performance, and risk management practices. Examples of the disclosures required by IAS 30 include information on loan portfolio quality, funding sources and costs, market and credit risk exposure, liquidity risk, and capital adequacy.