Global IFRS Banking Survey – Sixth edition

The Sixth Global IFRS Banking survey focuses on how technical IFRS 9 impairment requirements and modelling challenges are being addressed and seeks to provide clients, regulators and the wider market with insights into current thinking across the sector. The survey captures the views of 91 banks, including 16 global systemically important financial institutions. Key findings include:

• Total estimated program budgets continue to increase. However, more than three quarters of these budgets have yet to be spent, with less than two years to transition date.
• Almost half of banks think they do not have enough technical resources to deliver their IFRS 9 project and almost a quarter of these do not think that there will be sufficient skills available in the market to cover shortfalls.
• 60% of banks either did not or could not quantify the transition impact of IFRS 9. Of the banks who responded, the majority estimate that total impairment provisions will increase by up to 25% across asset classes.
• 70% of respondents anticipate a reduction of up to 50 bps in core tier 1 capital ratio due to IFRS 9. The vast majority does not know yet how their regulators will incorporate IFRS 9 numbers into regulatory capital estimates.
• Most price makers expect that moving to an ECL model will have an impact on product pricing, while most price takers still think that this is unlikely to have an impact on product pricing.
• In general, approximately half of participants are unsure of the answer to many key modelling design questions, which may delay banks’ IFRS 9 programs.
• Data quality and, in particular, the availability of the origination lifetime PD, is the biggest data concern for the majority of banks.
• Despite IAS 8 requirements and EDTF recommendations, over 40% of banks do not plan to disclose quantitative information before 2018.