The impact of IFRS 9 on the banking industry

The major findings of the report:

• Banks require 3 years implementation time so may come under pressure even with a 2018 effective date.
• Over half of banks surveyed believe that the expected loss approach will result in banks’ provisions increasing by up to 50% across all loan asset classes.
• Coordinating multidisciplinary effort including finance, credit, risk and IT and resource constraints cited as the key IFRS 9 implementation challenge.
• Increasing expectations that banks’ pricing will be affected by accounting change.

    2011: 9%

    2014: 56%

• 70% of banks surveyed anticipate their IFRS 9 expected loss provision to be higher than current regulatory expected loss. However, capital planning uncertainty is set to continue as regulators’ responses to changes are not yet known.
• 56% of banks surveyed are concerned about credit data reconciliation and credit data quality.