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Article:

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:

  1. Barclays Bank plc
  2. HSBC Holdings plc
  3. The Royal Bank of Scotland Group plc
  4. Lloyds Banking Group plc
  5. Santander UK Group Holdings plc
  6. Standard Chartered PLC
  7. Metro Bank PLC
  8. Virgin Money plc
  9. OneSavings Bank plc
  10. Secure Trust Bank PLC
  11. Nationwide Building Society
  12. Yorkshire Building Society
  13. Leeds Building Society
  14. Principality Building Society
  15. Newcastle Building Society

2 IFRS 9 Financial Instruments is effective for annual periods beginning on or after 1 January 2018.