In a statement to the Kuwait Stock Exchange, the bank attributed the decline to “the application of accounting standard No. 29 to condensed consolidated interim financial information on high inflation related to our operations in Turkey, which was not applied during the comparison period”. ”
Last February, Burgan Bank of Kuwait announced that it had completed the sale of its 51.8% stake in Bank of Baghdad to Jordan Kuwait Bank for $125 million, explaining that it had transferred $129.478 million shares of Bank of Baghdad to Jordan Kuwait Bank in February. 23.
The bank said that this process will result in an improvement in Burgan Bank’s capital ratio by 70 basis points, and that the sale process will allow it to strengthen the protection of the non-performing debt ratio.
It should be noted that the rating agency Fitch had forecast that the losses of Gulf banks with banking branches in Turkey would reach 4.7 billion dollars until 2024.
Fitch said banks’ regulatory capital ratios would remain above minimum requirements even if subsidiaries were fully written down and before pre-impairment operating profit was taken into account.
Gulf banks that have subsidiaries in Turkey: Qatar National Bank, Emirates NBD, Kuwait Finance House, Commercial Bank of Qatar and Burgan Bank of Kuwait, have approved hyperinflation reports in the first half of 2022 under the accounting standard International No. 29, which requires approval Losses when three-year cumulative inflation exceeds 100%.
IAS 29 requires banks to restate non-monetary assets and liabilities to reflect the impact of hyperinflation, which results in a net monetary loss in the income statements.
The agency said Gulf banks will have to calculate these losses until 2025, and that losses are expected to reach $1.5 billion and $1.3 billion in the current year and the next few years. .
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