Pursuant to Paragraph 2 of Article 26 of Regulation (EU) No. 575/2013 (CRR), a financial undertaking needs the prior approval of the Financial Supervisory Authority to include interim or year-end profits in Common Equity Tier 1 capital (CET1) before the relevant undertaking has taken a formal decision confirming the final profit or loss of the financial undertaking.
A financial undertaking must satisfy two of the following conditions in order to be granted such a licence:
the profits have been verified by persons independent of the institution that are responsible for the auditing of the accounts of the relevant financial undertaking, i.e. its auditors, and
the financial undertaking has demonstrated to the satisfaction of the Financial Supervisory Authority that any foreseeable charge or dividend has been deducted from the amount of those profits, in accordance with Articles 2 and 3 of Commission Delegated Regulation (EU) No. 241/2014, cf. Rules no. 696/2024 (in Icelandic) on the calculation of financial undertakings’ own funds and eligible liabilities.