The Central Bank of Kuwait has specified a mechanism to address the impact of the banks ’decision to postpone consumer and housing loan installments and credit card installments for all customers for a period of 6 months.

The Central Bank said, in a bank circular, that “based on discussions with external auditors and chief executives, we inform you that banks are obligated to address deferred loan repayment losses according to IFRS 9 as shown by the external auditors’ certificate, as a deduction for retained earnings In the equity terms, the amounts used will be rebuilt from the retained earnings. ”

He added that “for the purpose of calculating the capital base according to the provisions of the Basel III agreement when preparing data related to the relevant regulatory controls, the effect of handling the deferral losses due to treatment as previously mentioned can not be taken into account by calculating it at 25 percent for each year during a four-year period beginning in 2021 and ending in 2024 “.

The Central Bank requested that it be provided with a certificate from the external auditors clarifying the effect of postponing the installments, according to the interim financial statements for the period ending June 30.

He stressed that the current circumstances and the Corona crisis, it is necessary to continue to adopt prudent precautionary policies and the continuation of the approach taken in the formation of precautionary allocations, in order to enhance the durability of financial safety indicators, and that Kuwaiti banks remain able to exercise their active role in providing banking and financial services and to serve the national economy in all Its sectors without interruption. “

He added that those measures should be in line with what the pressure test results show in light of the unprecedented crisis, in order to confront the various shocks of credit, market and liquidity risks according to a wide range of macro and micro economic scenarios.

SOURCE:ALJARIDA