My first Publication ocbc_ar17_fullreport_english | Page 274

NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2017
50. FULL CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING
STANDARDS AND ADOPTION OF NEW ACCOUNTING STANDARDS
AND INTERPRETATIONS (continued)
50.1 APPLICABLE TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2018 (continued)
(II) SFRS(I) 9 (continued)
(ii) Impairment (continued)
Regulatory framework
Under the revised MAS 612 requirement, the Group is required to maintain a minimum regulatory loss allowance (“MRLA”) of 1% of the
gross carrying amount of selected credit exposures, net of collaterals. Where the accounting loss allowance computed under SFRS(I) 9
falls below the MRLA, the Group shall maintain the shortfall in a non-distributable regulatory loss allowance reserve (“RLAR”) account
through the appropriation of Revenue Reserves. Where the aggregated accounting loss allowance and RLAR exceeds the MRLA, the
Group may transfer the excess amount in the RLAR to Revenue Reserves.
Upon transition to SFRS(I) 9, the Group expects the accounting loss allowance to be in the range of 70% to 80% of the MRLA, with the
RLAR at 20% to 30%.
The Group is currently finalising its testing of the expected credit loss model and the final transition adjustments may be different.
(iii) Hedge accounting
SFRS(I) 9 provides new requirements on hedge accounting which align hedge accounting more closely with risk management. The
standard establishes a more principle-based approach to hedge accounting and addresses inconsistencies and weaknesses in the hedge
accounting model in FRS 39. The Group is adopting an accounting policy choice in applying the hedge accounting requirements of
SFRS(I) 9, and does not expect to have any significant impact on the financial statements.
50.2 APPLICABLE TO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2019 AND THEREAFTER
As of the balance sheet date, certain new standards, amendments and interpretations to existing accounting standards have been
published. The Group has not adopted the following relevant new/revised financial reporting standards and interpretations that have
been issued but not yet effective.
FRS
SFRS(I) 9 (Amendments)
SFRS(I) 16
SFRS(I) 1-28
SFRS(I) INT 23
SFRS(I) 10,
SFRS(I) 1-28 (Amendments)
Title
Prepayment Features with Negative Compensation
Leases
Long-term Interests in Associates and Joint Ventures
Uncertainty over Income Tax Treatments
Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
Effective for financial year
beginning on or after
1 January 2019
1 January 2019
1 January 2019
1 January 2019
To be determined
The Group is still in the process of assessing the impact of new SFRS(I)s, amendments to and interpretations of SFRS(I)s on the
financial statements.
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OCBC ANNUAL REPORT 2017