IFRS 9 INSIGHTS
29 January 2019
BDO’s Financial Services team conducted a study on the transition reports and interim financial statements of 15 top banks, mid-tier banks and building societies.1
Some of the findings from this IFRS 92 study include the following:
- The majority of financial asset reclassifications arose from the Amortised Cost measurement basis to the Fair Value Through Profit or Loss measurement basis.
- The impairment balance generally increased upon the date of initial application with this increase largely being represented by loans that fell within Stage 3; however, there were some releases.
- At least three multiple-economic scenarios have been used and these have typically been developed by factoring in GDP growth, unemployment rates, the Bank of England’s base rate and house prices.
- Management overlays have been used to provide for economic scenarios in light of current political uncertainty.
We will continue to monitor these and other trends as market practice under IFRS 9 develops and we will share these periodically.
1The banks transition reports and interim financial statements that we reviewed were:
- Barclays Bank plc
- HSBC Holdings plc
- The Royal Bank of Scotland Group plc
- Lloyds Banking Group plc
- Santander UK Group Holdings plc
- Standard Chartered PLC
- Metro Bank PLC
- Virgin Money plc
- OneSavings Bank plc
- Secure Trust Bank PLC
- Nationwide Building Society
- Yorkshire Building Society
- Leeds Building Society
- Principality Building Society
- Newcastle Building Society
2 IFRS 9 Financial Instruments is effective for annual periods beginning on or after 1 January 2018.