IFRS 9 Impairment Survey 2011
A changing landscape
The replacement of IAS 39 with IFRS 9 promises to be the biggest change in banks’ financial reporting under IFRS since its introduction. Although change to impairment represents only one component of IFRS 9, it is likely to have the biggest impact on the financial statements of banking businesses. The first edition of Deloitte’s global banking IFRS 9 Impairment Survey was undertaken to understand the banking industry’s current thinking on this topic.
The views of 56 banking groups in different geographies and with varied loan portfolios were gathered. Banks surveyed included 7 of the top 10 global banking groups measured by total assets and span banks headquartered in Europe, Middle East & Africa, Asia Pacific and North America.
- Respondents expected the final impairment rules to be based on an expected loss approach, however, many were not convinced that this would enhance the overall usefulness of financial statements.
- Respondents were typically most concerned with the effect on capital and accounting reserves on transition to the new requirements.
- Respondents’ views were mixed on whether the introduction of an expected loss model would affect the way lending is priced.
- 89% of respondents will have started their impairment project by 2012.
- Most banks aim to implement their IFRS 9 impairment solution in parallel with their implementation of Basel III or other credit risk and finance transformation initiatives in order to minimise cost and maximise use of common data sets.
- Expected spend to implement the impairment proposals varied widely from under EUR 10m to over EUR 100m.
We have also created a webcast which explores the findings of Deloitte's global banking IFRS 9 Impairment Survey 2011 and discusses current developments and the IASB's progress on the IFRS 9 impairment project. We also address the impact of the new rules and the associated implementation challenges for organisations.
|View the IFRS 9 Impairment webcast|