26.Deferred tax assets (DTAs) typically arise when a bank:

1. •suffers a net loss in a financial year and is permitted to carry forward this loss to offset future profits when calculating its tax bill (net losses carried forward)
2. •has to reduce the value of an asset on the balance sheet, but this 'loss in value' is not recognised by the tax authorities until a future period (temporary timing difference)

27.DTAs arising from net losses carried forward have to be deducted in full from a bank's CET1 (5.1.8.2). This recognises that their value can only be derived through the existence of future taxable income. On the other hand, a DTA relying on future profitability and arising from temporary timing differences is subject to the 'threshold deduction rule' (5.1.9.2).