After the first year of reporting, IFRS 9 has resulted in an increase in banks’ provisioning levels on transition. However, what still remains unknown is the long term consequences of banks implementing differing IFRS 9 impairment provision modelling judgements. This includes, but not limited to, assumptions on the probability of default, cash/unsecured recovery rates, cure rates, collateral projections, estimation of EIR and re-default probabilities.
Consequently, we have carried out a study on the banking industry using five (5) of the largest commercial banks in Nigeria as case study. The report highlights the differences in assumptions, methodology and disclosures. It also shows a comparatively analysis of the impact of IFRS 9 amongst the selected banks including impact on capital.