BANCI | ENGLISH

IASB releases revised proposals on accounting for impairment of loans and other financial assets, moving to an expected loss model

Autor: Bancherul.ro
2013-03-19 11:03

KPMG press release:

IASB releases revised proposals on accounting for impairment of loans and other financial assets, moving to an expected loss model

The IASB has issued last week its revised proposals on accounting for impairment of financial assets, long-awaited especially by financial institutions. The proposals aim to address concerns about ‘too little, too late’ provisioning for loan losses and would accelerate recognition of losses by requiring provisions to cover both already-incurred losses and some losses expected in the future.

“The proposals are a steep change in accounting for impairment and are expected to have a significant impact on banks and similar financial institutions” , says Șerban Toader, KPMG in Romania’s Senior Partner.
Accounting for impairment has been hotly debated by standard setters on both sides of the Atlantic. Regrettably, the initial commitment of the IASB and the FASB to work together on joint proposals ended last year. In December 2012, the FASB issued its own proposals, which are quite different from the IASB’s.

The IASB proposals introduce a new ‘expected loss’ impairment methodology that would reflect deterioration in the credit quality of financial assets such as loan portfolios. The proposed model would require recognition of lifetime expected credit losses for financial assets whose credit risk has deteriorated significantly since initial recognition and a 12-month expected loss allowance for other financial assets.

Cezar Furtună, Financial Services Partner in KPMG Romania, said: “Estimating impairment is an art, rather than a science, involving difficult judgements about whether loans will be paid as due and, if not, how much will be recovered and when. The proposed model widens the scope of these judgements. It introduces a new threshold for determining whether there has been a significant deterioration in credit quality – which in turn is used to assess whether a loan should have an allowance to cover losses in the next 12 months, or to cover all expected losses over its life. These new rules would give rise to challenges for banks, as they would have to make new judgements which have to be reviewed by auditors and understood by financial statement users, including supervisory authorities.”

The new model would apply to all financial assets that are measured either at amortised cost or at fair value with gains and losses recognised in other comprehensive income, such as loans or government bonds, as well as to certain loan commitments and financial guarantees. The proposals would also introduce extensive new disclosures on impairment of financial assets.

The revised proposals are expected to have a significant impact on the Romanian banks, which apply IFRS as basis of accounting as of 1 January 2012. In addition to the financial impact, they would be likely to need additional systems in order to collect and process the information required by the new methodology.

Angela Manolache (foto), Advisory Director in KPMG Romania, encouraged companies applying IFRS, in particular banks, not to delay assessing the impact of the proposals on their business: “Credit risk is at the heart of a bank’s business and the proposed model is expected to have far-reaching implications for their credit systems and processes. As a result, banks may face significant implementation issues.” Companies would also be affected, but the impact on short-term trade receivables is likely to be small.

The proposals are open for comment until 5 July 2013. The IASB will establish the effective date for the revised standard after the public comment period ends. Romanian entities which have a legal requirement to prepare financial statements in accordance with IFRS will apply the new impairment model after endorsement by the European Commission.

Comentarii

Adauga un comentariu

Adauga un comentariu folosind contul de Facebook

Alte stiri din categoria: ENGLISH

Merger of Alpha Bank and UniCredit Bank Romania

Press Release: "Alpha Services and Holdings announces a strategic partnership with UniCredit in Romania Merger of Alpha Bank Romania and UniCredit Bank Romania and creation of third largest bank in Romania by total assets, with Alpha Bank retaining a detalii

National Bank of Romania (NBR) Board decisions on monetary policy

NBR Board decisions on monetary policy In its meeting of 4 April 2023, the Board of the National Bank of Romania decided: • to keep the monetary policy rate at 7.00 percent per annum; • to leave unchanged the lending (Lombard) facility rate at 8.00 percent per annum and the deposit facility rate at 6.00 percent per annum; • to keep the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions. The annual inflation rate went down to 15.52 percent in February 2023, from 16.37 percent in December 2022, relatively in line with forecasts. The decrease was mainly driven by the sizeable drop in the dynamics of fuel and detalii

ING posts 2022 net result of €3,674 million, dividend of €0.389 per share

ING press release: ING posts FY2022 net result of €3,674 million,
proposed final 2022 dividend of €0.389 per share

4Q2022 profit before tax of €1,711 million; CET1 ratio remains strong at 14.5%
•
Profit before tax up 29% on 4Q2021 and 24% on 3Q2022, mainly driven by higher income
•
Higher net interest income, as a further increase in liability margins helped offset TLTRO impact this quarter
•
Risk costs declined to 17 bps of average customer lending

Full-year 2022 net result of €3,674 million, supported by growing customer base and increase in lending and deposits
•
On a full-year basis, our primary customer base grew by 585,000 detalii

BT Financial Results as at 30 September 2022

BT Financial Results as at 30 September 2022 Banca Transilvania – sustained growth in customers and operations during the first nine months of the year "We continued our robust growth in the number of clients and transactions, with a dynamic well above the market average. We have been growing steadily and continued financing companies and individuals, despite the fact that the financial market is more fraught with uncertainty than ever and
the funding costs and capital requirements are additional factors driving the uncertainty in the economy. We remain committed to our objective - to be the main supporter of the economy and of the state for the development of Romania", states Mr. Ӧmer Tetik, Chief Executive detalii

Vezi toate stirile

10.11.2024

1 EUR = lei
1 USD = lei

Sursa BNR

Profil de Bancher

Liana Gabriela Lascu, Inspector
BNR

... vezi profil

Toate Profilele

Profil de Banca

CEC Bank

vezi detalii

Toate Bancile

Filmul Parking, un cliseu plictisitor

Toate stirile

ING Bank

Toate stirile

Ultimele Comentarii

Bancnote vechi
Numar de ... detalii
Bancnote vechi
Am 3 bancnote vechi:1-1000000lei;1-5000lei;1-100000;mai multe bancnote cu eclipsa de ... detalii
Schimbare numar telefon Raiffeisen
Puteti schimba numarul de telefon la Raiffeisen din aplicatia Smart Mobile/Raiffeisen Online, ... detalii
Vreau sa schimb nr de telefon
Cum pot schimba nr.de telefon ... detalii
Eroare aplicație
Am avut ora și data din setările telefonului date pe manual și nu se deschidea BT Pay, în ... detalii

Nume	*
E-mail	*
E-mail prieten	*
Mesaj
Cod validare	*
	Tastati codul din imagine (doar cifre)
	195.154.184.126