IFRS 9 adopts a principles-based approach to classification of financial assets and liabilities based on business models and cash flow. The standard also provides for a single impairment model to facilitate the recognition of expected credit losses.
This new model also overhauls hedge accounting policies, which align accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. The changes also give users of financial statements better information about the use of derivatives for risk management purposes. The new rule replaces IAS 39, which recognizes loan losses at the point of default. IFRS 9, on the other hand, will require banks to estimate ECL (expected credit losses) on financial assets on an ongoing basis and provision for these.
Regulation Asia and S&P Global Market Intelligence surveyed risk and finance professionals across Europe, the Middle East, and Africa with respondents largely from the banking sector. The results in the report below derive from the survey, as well as detailed conversations with several respondents.