Accumulated losses already reflected in retained earnings: IBB 4.13 and 4.39

IBB 4.13(c) includes retained earnings in Common Equity Tier 1 capital, and the Guidance to 4.13, which under IBB 1.3(b) is part of the rules, states that retained earnings and other comprehensive income include appropriated profit or loss. IBB 4.13(f) includes the regulatory adjustments under 4.30, which points to 4.31 to 4.45, and IBB 4.39 requires an Islamic Bank to deduct from its CET1 capital the amount of any accumulated losses, without distinguishing losses already reflected in retained earnings. Read as written, a loss of prior years reduces CET1 capital twice: an Islamic Bank with common shares of USD 100 million and retained earnings of minus USD 20 million would report CET1 of USD 60 million, or USD 80 million if 4.39 does not apply to losses already reflected in retained earnings. BBR 4.14(c) and 4.28(11) have the same structure, and BPG Chapter 4 paragraph 7 states the same for BBR 4.14.

Proposed correction

Please clarify whether 4.39 is meant to reduce CET1 capital again for losses already reflected in retained earnings; if not, consider stating that it applies only to losses not yet reflected there (for example the loss for the current financial year). The same question applies to BBR 4.28(11).

Jurisdiction

Kazakhstan — AIFC

Act

AIFC Islamic Banking Business Prudential Rules

Place

IBB 4.13, p.24

Record

Question of reading or data

Class

Question of reading or data

Where it arose

The text of the act

Arxo's conclusion

Confirmed

Official text

Unchanged at last check

Last checked

2026-10-25

Evidence

Reproduced by execution. Quotations are verbatim from the official material; translations are ours and marked.

Common Equity Tier 1 Capital (or CET 1 Capital) is the sum of the following elements:

Retained earnings and other comprehensive income include appropriated profit or loss.

However, examples and guidance are part of these rules.

An Islamic Bank must deduct from its CET 1 Capital the amount of any accumulated losses.

A Bank must deduct from CET 1 Capital the amount of any accumulated losses.

For BBR Rule 4.14, retained earnings and other comprehensive income include appropriated profit or loss.

How to check it without Arxo's tools

1. Open AIFC Islamic Banking Business Prudential Rules and find IBB 4.13, p.24; IBB 4.13 Guidance, p.24; IBB 1.3(b), p.13; IBB 4.39, p.35. Compare the text with the quotation above. A copy is kept in this register: e8b3c15b1ff574fd-aifc-islamic-banking-business-prudential-rules.pdf (SHA-256 e8b3c15b1ff574fd59504ade7cc9e0488ed5fa6ecfdc7816e3dc603bf4caedeb, copy of the official file).
2. Open AIFC Banking Prudential Rules_V6 (with amendments as of 13 April 2025, which commence on 13 October 2025) and find BBR 4.28(11) (sister rule). Compare the text with the quotation above. A copy is kept in this register: 6384caa7b1938818-bbr_v6_13.10.2025_ma.pdf (SHA-256 6384caa7b19388180b780ec19044e1261cae3021c63c670f14ceb35285107022, copy of the official file).
3. Open AIFC BANKING PRUDENTIAL GUIDELINE and find BPG Chapter 4 para 7 (for BBR 4.14). Compare the text with the quotation above. A copy is kept in this register: c0ab57e226481347-aifc-banking-prudential-guideline.pdf (SHA-256 c0ab57e226481347e28c09650f905debc948a442ad7b65fa2db2d196d0b22009, copy of the official file).
4. The finding holds if the quoted passages read as shown and the comparison gives the result stated at the top of this page. If it does not, write to us with the record ID.

How this finding was made

AI agents read the official texts, turned the provisions concerned into executable rules and ran the comparison; they also drafted this record. A person at Arxo checked the finding and approved the report before it was sent (2026-10-27).

Responsible institutions

• Astana Financial Services Authority (AFSA) — author of the AIFC Rules

Reported to

Responses

No response recorded.

Documents and reproduction

• AIFC Islamic Banking Business Prudential Rules
• AIFC Banking Prudential Rules_V6 (with amendments as of 13 April 2025, which commence on 13 October 2025)
• AIFC BANKING PRUDENTIAL GUIDELINE

History

1. 2026-10-25Confirmed by Arxo
2. 2026-10-27Entered in the register
3. 2026-10-27Reported to Astana Financial Services Authority (AFSA) (e-mail)

Cite this record

Arxo Law, Arxo Findings Register, ARXO-2026-0147, https://arxo.io/findings/ARXO-2026-0147/ (status as of 2026-10-25). Data: ARXO-2026-0147.json.