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v3.19.3.a.u2

Accounting Changes | 12 Months Ended
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Dec. 31, 2019
Accounting Changes |
ACCOUNTING CHANGES | NOTE 02 ACCOUNTING CHANGES
| A. | IFRS 16 ADOPTION
On January 1, 2019, IFRS 16 Leases has become effective; this standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, thus a lessee is required to recognise a right-of-use asset representing its right of use the underlying leased asset and a lease liability representing its obligation to make lease payments. IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The Bank has elected to adopt IFRS 16 using a modified retrospective approach at the date of initial application, therefore, it has recognise a right-of-use asset for an amount equal to the lease liability, which amounted MCh$154,284. Below is the detail of impacts as of January 1, 2019:
|  | Balance as |  |  |  |  |  | Balance as |
|  | of December 31, 2018 |  |  | Additions |  |  | of January 01, 2019 |
|  | MCh$ |  |  | MCh$ |  |  | MCh$ |
Right of use assets |  |  | - |  |  |  | 154,284 |  |  |  | 154,284 |
Subtotals Assets |  |  | - |  |  |  | 154,284 |  |  |  | 154,284 |
Lease liability |  |  | - |  |  |  | 154,284 |  |  |  | 154,284 |
Subtotals Liabilities |  |  | - |  |  |  | 154,284 |  |  |  | 154,284 |
For more details, see Note 14.
| B. | IFRS 9 ADOPTION – Transition disclosure
The following disclosure provides the impact of adopting IFRS 9 on the statements of financial position and retained earnings including the effect of replacing IAS 39's incurred credit loss provision with IFRS 9's ECLs.
|  |  |  | IAS 39 carrying amount |  |  |  |  |  |  |  |  | IFRS 9 carrying amount |
|  |  |  | Category |  |  | Amount |  |  | Reclassification |  |  | Remeasurement |  |  | Amount |  |  | Category |
|  | Ref |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |
AMORTISED COST |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and deposit in banks |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Opening balance under IAS 39 and closing under IFRS 9 |  |  |  |  | AC |  |  |  | 1,452,922 |  |  |  | - |  |  |  | - |  |  |  | 1,452,922 |  |  |  | AC |
Interbank loans, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Opening balance under IAS 39 |  |  |  |  | AC |  |  |  | 162,213 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Remeasurement: ECL Allowance |  | A |  |  | - |  |  |  | - |  |  |  | (162,213 | ) |  |  | - |  |  |  | - |  |  |  | - |
Closing balance under IFRS9 |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loans and accounts receivable from customers, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Opening balance under IAS 39 |  |  |  |  | AC |  |  |  | 26,772,544 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Addition: from interbank loans |  | A |  |  | - |  |  |  | - |  |  |  | 162,213 |  |  |  | - |  |  |  | - |  |  |  | - |
Subtraction to FVOCI (net of allowance) |  | B |  |  | - |  |  |  | - |  |  |  | (107,846 | ) |  |  | - |  |  |  | - |  |  |  | - |
Remeasurement: ECL Allowance |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (97,322 | ) |  |  | - |  |  |  |  |
Closing balance under IFRS 9 |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 26,729,589 |  |  |  | AC |
Total financial assets measured at amortised cost |  |  |  |  |  |  |  |  | 28,387,679 |  |  |  | (107,846 | ) |  |  | (97,322 | ) |  |  | 28,182,511 |  |  |  | - |
FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVOCI) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for sale investment (debt securities) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Opening balance under IAS 39 |  |  |  |  | FVOCI |  |  |  | 2,574,546 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Remeasurement: ECL Allowance |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Closing balance under IFRS 9 |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,574,546 |  |  |  | FVOCI |
Loans and accounts receivable from customers, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Opening balance under IAS 39 |  |  |  |  | AC |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Addition: from amortised cost (net of allowance) |  | B |  |  | - |  |  |  | - |  |  |  | 107,846 |  |  |  | - |  |  |  | - |  |  |  | - |
Remeasurement: from cost to FV |  | B |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (236 | ) |  |  | - |  |  |  | - |
Remeasurement: ECL Allowance |  | B |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 291 |  |  |  | - |  |  |  | - |
Closing balance under IFRS 9 |  |  |  |  | - |  |  |  | - |  |  |  | 107,846 |  |  |  | 55 |  |  |  | 107,901 |  |  |  | FVOCI |
Investment in associate and other companies – Bladex (equity instruments) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Opening balance under IAS 39 |  |  |  |  | Cost |  |  |  | 136 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Remeasurement: from cost to FV |  | C |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 306 |  |  |  | - |  |  |  | - |
Closing balance under IFRS 9 |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 306 |  |  |  | 442 |  |  |  | FVOCI |
Investment in associate and other companies- Stock exchange (equity instruments) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Opening balance under IAS 39 |  |  |  |  | FV |  |  |  | 287 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Remeasurement: from cost to FV |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Closing balance under IFRS 9 |  | C |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 287 |  |  |  | FVOCI |
Total financial assets measured at FVOCI |  |  |  |  | - |  |  |  | 2,574,969 |  |  |  | 107,846 |  |  |  | 361 |  |  |  | 2,683,176 |  |  |  | - |
| Ref | IAS 39 carrying amount |  |  | IFRS 9 carrying amount
| Category | Amount | Reclassification | Remeasurement | Amount | Category
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$
FAIR VALUE THROUGH PROFIT OR LOSS (FVPL) |  |  |  |  |
Trading investment |  |  |  |  |  |  |
Opening balance under IAS 39 and closing under IFRS 9 |  | FVPL | 485,736 | - | - | 485,736 | FVPL
Derivative contracts (hedging + trading) |  |  |  | - | - | - | -
Opening balance under IAS 39 and closing under IFRS 9 |  | FVPL | 2,238,647 | - | - | 2,238,647 | FVPL
Total financial assets measured at FVTPL |  |  | 2,724,383 | - | - | 2,274,383 | -
The following explains how applying the new requirements of IFRS 9 led to changes in classification of certain financial assets held by the Bank as shown in the table above:
| (A) | Interbank loans
According to the new balance presentation, the Bank has grouped interbank loans with the loans and account receivable since both are measured at amortised cost, and evaluated together for impairment purposes.
| (B) | Loans and account receivable measured at fair value through other comprehensive income
The Bank enters into arrangements with its major customers for project finance and syndicated loans and, sometimes the amount requested exceeds the Bank's limit for a single client exposure under the established credit risk policy, accordingly, the transaction is approved under the condition to sell a portion of the facility in the near term, which is classified under this category. Also, the Bank has decided to include loans that the Bank are expecting to sell if the market conditions are favorable to the Bank in this category. These loans are measured at fair value through other comprehensive income, and subject to impairment requirements.
| (C) | Investment in equity instrument
The Bank has elected to irrevocably designate non-trading equity securities required to operates in Chile and outside at FVOCI as permitted under IFRS 9. Bladex and stock exchange securities were previously measured at cost as permitted by IAS 39. The changes in fair value will no longer be reclassified to profit or loss when they are disposed of. The following table reconciles the December 31, 2017 period's closing impairment allowance measured in accordance with the IAS 39 incurred loss model to the new impairment model:
|  | Loans loss allowance under IAS 39 |  |  | Reclassification |  |  | Remeasurement |  |  | Loans loss allowance under IFRS 9 |
|  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |
Loans and receivable (IAS 39)/ Financial assets at amortised cost (IFRS 9) |  |  |  |  |  |  |  |  |  |  |  |
Interbank loans |  |  | 472 |  |  |  | (472 | ) |  |  | - |  |  |  | - |
Loans and account receivable from customers |  |  | 790,685 |  |  |  | 84 |  |  |  | 97,322 |  |  |  | 888,091 |
Total loans and account receivable at amortised cost |  |  | 791,157 |  |  |  | (388 | ) |  |  | 97,322 |  |  |  | 888,091 |
Available for sale investment (IAS39)/Financial assets at FVOCI (IFRS 9) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and account receivable from customer – at FVOCI |  |  | - |  |  |  | 388 |  |  |  | (291 | ) |  |  | 97 |
Total financial assets at FVOCI |  |  | - |  |  |  | 388 |  |  |  | (291 | ) |  |  | 97 |
Other credit- related commitments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent liabilities |  |  | 8,404 |  |  |  | - |  |  |  | (3,767 | ) |  |  | 4,637 |
Loan commitments |  |  | - |  |  |  | - |  |  |  | 19,124 |  |  |  | 19,124 |
Total contingents |  |  | 8,404 |  |  |  | - |  |  |  | 15,357 |  |  |  | 23,761 |
Total provision for loan losses |  |  | 799,561 |  |  |  | - |  |  |  | 112,388 |  |  |  | 911,949 |
The composition of the loan portfolio as of January 1, 2018 is as follows:
|  | Assets before allowances |  |  | ECL allowance |  |  |  |
As of January 1, 2018 |  | Stage 1 |  |  | Stage 2 |  |  | Stage 3 |  |  | Total |  |  | Stage 1 |  |  | Stage 2 |  |  | Stage 3 |  |  | Total |  |  | Net Assets |
|  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |  |  | MCh$ |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interbank loans |  |  | 162,685 |  |  |  | - |  |  |  | - |  |  |  | 162,685 |  |  |  | 13 |  |  |  | - |  |  |  | - |  |  |  | 13 |  |  |  | 162,672 |
Commercial loans |  |  | 8,743,179 |  |  |  | 595,436 |  |  |  | 543,807 |  |  |  | 9,882,422 |  |  |  | 56,546 |  |  |  | 36,541 |  |  |  | 246,870 |  |  |  | 339,957 |  |  |  | 9,542,465 |
Foreign trade loans |  |  | 1,464,059 |  |  |  | 56,110 |  |  |  | 54,344 |  |  |  | 1,574,513 |  |  |  | 4,883 |  |  |  | 849 |  |  |  | 33,480 |  |  |  | 39,212 |  |  |  | 1,535,301 |
Checking accounts debtors |  |  | 173,738 |  |  |  | 8,005 |  |  |  | 13,953 |  |  |  | 195,696 |  |  |  | 2,302 |  |  |  | 411 |  |  |  | 9,385 |  |  |  | 12,098 |  |  |  | 183,598 |
Factoring transactions |  |  | 441,014 |  |  |  | 4,035 |  |  |  | 4,841 |  |  |  | 449,890 |  |  |  | 837 |  |  |  | 91 |  |  |  | 3,366 |  |  |  | 4,294 |  |  |  | 445,596 |
Student loans |  |  | 70,984 |  |  |  | 7,402 |  |  |  | 9,904 |  |  |  | 88,290 |  |  |  | 3,644 |  |  |  | 2,329 |  |  |  | 6,092 |  |  |  | 12,065 |  |  |  | 76,225 |
Leasing transactions |  |  | 1,235,103 |  |  |  | 161,882 |  |  |  | 60,019 |  |  |  | 1,457,004 |  |  |  | 8,946 |  |  |  | 9,553 |  |  |  | 27,835 |  |  |  | 46,334 |  |  |  | 1,410,670 |
Other loans and account receivable |  |  | 110,307 |  |  |  | 5,663 |  |  |  | 36,623 |  |  |  | 152,593 |  |  |  | 2,640 |  |  |  | 1,549 |  |  |  | 24,551 |  |  |  | 28,740 |  |  |  | 123,853 |
Subtotal |  |  | 12,401,069 |  |  |  | 838,533 |  |  |  | 723,491 |  |  |  | 13,963,093 |  |  |  | 79,811 |  |  |  | 51,323 |  |  |  | 351,579 |  |  |  | 482,713 |  |  |  | 13,480,380 |
Mortgage loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans with mortgage finance bonds |  |  | 21,529 |  |  |  | 1,230 |  |  |  | 1,301 |  |  |  | 24,060 |  |  |  | 25 |  |  |  | 51 |  |  |  | 172 |  |  |  | 248 |  |  |  | 23,812 |
Endorsable mortgage mutual loans |  |  | 107,900 |  |  |  | 2,973 |  |  |  | 4,205 |  |  |  | 115,078 |  |  |  | 100 |  |  |  | 143 |  |  |  | 628 |  |  |  | 871 |  |  |  | 114,207 |
Other mortgage mutual loans |  |  | 8,061,800 |  |  |  | 465,146 |  |  |  | 430,811 |  |  |  | 8,957,757 |  |  |  | 14,477 |  |  |  | 20,033 |  |  |  | 72,390 |  |  |  | 106,900 |  |  |  | 8,850,857 |
Subtotal |  |  | 8,191,229 |  |  |  | 469,349 |  |  |  | 436,317 |  |  |  | 9,096,895 |  |  |  | 14,602 |  |  |  | 20,227 |  |  |  | 73,190 |  |  |  | 108,019 |  |  |  | 8,988,876 |
Consumer loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment consumer loans |  |  | 2,378,614 |  |  |  | 234,044 |  |  |  | 298,084 |  |  |  | 2,910,742 |  |  |  | 51,172 |  |  |  | 46,866 |  |  |  | 157,811 |  |  |  | 255,849 |  |  |  | 2,654,893 |
Credit card balances |  |  | 1,324,742 |  |  |  | 20,916 |  |  |  | 19,322 |  |  |  | 1,364,980 |  |  |  | 20,443 |  |  |  | 7,633 |  |  |  | 11,982 |  |  |  | 40,058 |  |  |  | 1,324,922 |
Leasing transactions |  |  | 4,627 |  |  |  | 47 |  |  |  | 41 |  |  |  | 4,715 |  |  |  | 1,013 |  |  |  | 23 |  |  |  | 74 |  |  |  | 1,110 |  |  |  | 3,605 |
Other consumer loans |  |  | 270,410 |  |  |  | 2,573 |  |  |  | 4,272 |  |  |  | 277,255 |  |  |  | 84 |  |  |  | 35 |  |  |  | 223 |  |  |  | 342 |  |  |  | 276,913 |
Subtotal |  |  | 3,978,393 |  |  |  | 257,580 |  |  |  | 321,719 |  |  |  | 4,557,692 |  |  |  | 72,712 |  |  |  | 54,557 |  |  |  | 170,090 |  |  |  | 297,359 |  |  |  | 4,260,333 |
Total |  |  | 24,570,691 |  |  |  | 1,565,462 |  |  |  | 1,481,527 |  |  |  | 27,617,680 |  |  |  | 167,125 |  |  |  | 126,107 |  |  |  | 594,859 |  |  |  | 888,091 |  |  |  | 26,729,589

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