27. IAS 37, Provisions, Contingent Liabilities and Contingent Assets, deals generally with accounting for, and disclosure of, contingent liabilities. The Standard is of particular relevance to banks because banks often become engaged in many types of contingent liabilities and commitments, some revocable and others irrevocable, which are frequently significant in amount and substantially larger than those of other commercial enterprises.
28. Many banks also enter into transactions that are presently not recognised as assets or liabilities in the balance sheet but which give rise to contingencies and commitments. Such off balance sheet items often represent an important part of the business of a bank and may have a significant bearing on the level of risk to which the bank is exposed. These items may add to, or reduce, other risks, for example by hedging assets or liabilities on the balance sheet.
Editorial note: Last sentence deleted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "Off balance sheet items may arise from transactions carried out on behalf of customers or from the bank's own trading position."

26. A bank should disclose the following contingent liabilities and commitments:
(a) the nature and amount of commitments to extend credit that are irrevocable because they cannot be withdrawn at the discretion of the bank without the risk of incurring significant penalty or expense; and
(b) the nature and amount of contingent liabilities and commitments arising from off balance sheet items including those relating to:
(i) direct credit substitutes including general guarantees of indebtedness, bank acceptance guarantees and standby letters of credit serving as financial guarantees for loans and securities;
(ii) certain transaction-related contingent liabilities including performance bonds, bid bonds, warranties and standby letters of credit related to particular transactions;
(iii) short-term self-liquidating trade-related contingent liabilities arising from the movement of goods, such as documentary credits where the underlying shipment is used as security;
(iv) […]
(v) […]
(vi) other commitments, note issuance facilities and revolving underwriting facilities.
Editorial note: Sub-paragraphs (b)(iv) and (v) deleted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "(iv) those sale and repurchase agreements not recognised in the balance sheet; (v) interest and foreign exchange rate related items including swaps, options and futures; and"

25. IAS 39 provides for four classifications of financial assets: loans and receivables, held-to-maturity investments, financial assets at fair value through profit or loss, and available-for-sale financial assets. A bank shall disclose the fair values of its financial assets for these four classifications, as a minimum.
Editorial note: Substituted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "IAS 39 provides for four classifications of financial assets: loans and receivables originated by the enterprise, held-to-maturity investments, financial assets held for trading, and available-for-sale financial assets. A bank will disclose the fair values of its financial assets for these four classifications, as a minimum."
Contingencies and Commitments Including Off Balance Sheet Items

22. A bank generally does not know the holders of its certificates of deposit because they are usually traded on an open market. Hence, a bank discloses separately deposits that have been obtained through the issue of its own certificates of deposit or other negotiable paper.
23. […]
Editorial note: Deleted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "The amount at which any asset or liability is stated in the balance sheet should not be offset by the deduction of another liability or asset unless a legal right of set-off exists and the offsetting represents the expectation as to the realisation or settlement of the asset or liability."
24. A bank shall disclose the fair values of each class of its financial assets and liabilities as required by IAS 32 Financial Instruments: Disclosure and Presentation.
Editorial note: Substituted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "A bank should disclose the fair values of each class of its financial assets and liabilities as required by IAS 32, Financial Instruments: Disclosure and Presentation, and IAS 39, Financial Instruments: Recognition and Measurement."

20. The most useful approach to the classification of the assets and liabilities of a bank is to group them by their nature and list them in the approximate order of their liquidity; this may equate broadly to their maturities. Current and non-current items are not presented separately because most assets and liabilities of a bank can be realised or settled in the near future.
21. The distinction between balances with other banks and those with other parts of the money market and from other depositors is relevant information because it gives an understanding of a bank's relations with, and dependence on, other banks and the money market. Hence, a bank discloses separately:
(a) balances with the central bank;
(b) placements with other banks;
(c) other money market placements;
(d) deposits from other banks;
(e) other money market deposits; and
(f) other deposits.

Balance Sheet
18. A bank should present a balance sheet that groups assets and liabilities by nature and lists them in an order that reflects their relative liquidity.
19. In addition to the requirements of other International Accounting Standards, the disclosures in the balance sheet or the notes to the financial statements should include, but are not limited to, the following assets and liabilities:
Assets
Cash and balances with the central bank;
Treasury bills and other bills eligible for rediscounting with the central bank;
Government and other securities held for dealing purposes;
Placements with, and loans and advances to, other banks;
Other money market placements;
Loans and advances to customers; and
Investment securities.
Liabilities
Deposits from other banks;
Other money market deposits;
Amounts owed to other depositors;
Certificates of deposits;
Promissory notes and other liabilities evidenced by paper; and
Other borrowed funds.

15. Gains and losses arising from each of the following are normally reported on a net basis:
(a) disposals and changes in the carrying amount of dealing securities;
(b) disposals of investment securities; and
(c) dealings in foreign currencies.
16. Interest income and interest expense are disclosed separately in order to give a better understanding of the composition of, and reasons for changes in, net interest.
17. Net interest is a product of both interest rates and the amounts of borrowing and lending. It is desirable for management to provide a commentary about average interest rates, average interest earning assets and average interest-bearing liabilities for the period. In some countries, governments provide assistance to banks by making deposits and other credit facilities available at interest rates which are substantially below market rates. In these cases, management's commentary often discloses the extent of these deposits and facilities and their effect on net income.

13. Income and expense items shall not be offset except for those relating to hedges and to assets and liabilities that have been offset in accordance with IAS 32.
Editorial note: Substituted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "Income and expense items should not be offset except for those relating to hedges and to assets and liabilities which have been offset in accordance with paragraph 23."
14. Offsetting in cases other than those relating to hedges and to assets and liabilities that have been offset as described in IAS 32 prevents users from assessing the performance of the separate activities of a bank and the return that it obtains on particular classes of assets.
Editorial note: Substituted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "Offsetting in cases other than those relating to hedges and to assets and liabilities which have been offset as described in paragraph 23 prevents users from assessing the performance of the separate activities of a bank and the return that it obtains on particular classes of assets."

Editorial note: First paragraph and tenth item substituted by improvements project standard IAS 39 with effect for annual periods beginning on or after 1 January 2005. If an entity applies this Standard for an earlier period, these amendments shall be applied for that earlier period. Previously "In addition to the requirements of other International Accounting Standards, the disclosures in the income statement or the notes to the financial statements should include, but are not limited to, the following items of income and expenses: […] Losses on loans and advances;"
11. The principal types of income arising from the operations of a bank include interest, fees for services, commissions and dealing results. Each type of income is separately disclosed in order that users can assess the performance of a bank. Such disclosures are in addition to those of the source of income required by IAS 14, Segment Reporting.
12. The principal types of expenses arising from the operations of a bank include interest, commissions, losses on loans and advances, charges relating to the reduction in the carrying amount of investments and general administrative expenses. Each type of expense is separately disclosed in order that users can assess the performance of a bank.

9. A bank should present an income statement which groups income and expenses by nature and discloses the amounts of the principal types of income and expenses.
10. In addition to the requirements of other Standards, the disclosures in the income statement or the notes to the financial statements shall include, but are not limited to, the following items of income and expenses:
Interest and similar income;
Interest expense and similar charges;
Dividend income;
Fee and commission income;
Fee and commission expense;
Gains less losses arising from dealing securities;
Gains less losses arising from investment securities;
Gains less losses arising from dealing in foreign currencies;
Other operating income;
Impairment losses on loans and advances;
General administrative expenses; and
Other operating expenses.