Announcement on the adoption of International Financial Reporting Standard (IFRS) 9

As of 1 January 2018, IFRS 9 “Financial Instruments” replaced International Accounting Standard (IAS) 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 introduces new requirements for a) the classification and measurement of financial instruments, b) impairment of financial assets and c) hedge accounting.

The adoption of IFRS 9 on 1 January 2018, is expected to impact the Group shareholders’ equity by approximately €1.45 billion, of which €1.2 billion due to changes in impairment requirements and €0.25 billion due to classification and measurement. As a result of the new impairment requirements, the Group’s allowance for loan losses is expected to increase by approximately 10.7%.

By applying the regulatory transitional arrangements, introduced by Regulation (EU) 2017/2395 of the European Parliament and the Council of the European Union, which allow financial institutions to gradually apply the impact from the first time adoption of the IFRS 9 impairment requirements to own funds until 2023, the Group’s Common Equity Tier 1 (CET1) ratio as at 1 January 2018, is estimated to decrease by approximately 50bps. On a fully loaded basis, the Group’s CET1 ratio is expected to decrease by approximately 350bps.

The IFRS 9 impact estimates disclosed in this announcement are based on the accounting policies, assumptions and judgments of the Bank, as determined to date, which will be finalized during the preparation of the financial statements for the year ending 31 December 2018. Consequently, the aforementioned estimates remain subject to change in 2018. The final impact upon transition to IFRS 9 will be included in the 2018 Annual Financial Report.