With the 2019 deadline looming for Egypt, financial institutions are working to understand the implications of the latest impairment requirements IFRS9 introduced by IASB.  And if this was not enough, we add another global regulatory initiative requiring them to perform stress testing on these potential losses, related capital and income impact for the entire enterprise.  Not only do we expect IFRS9 and stress testing to have a significant financial impact for the majority of large banks, we also know that the journey to reach the end goal will not be an easy one.

For those banks who have begun this journey, the bigger challenge includes data availability, coordination between units, mainly Risk and Finance,  and having an acceptable understanding of the IFRS9 requirements and level of comprehensiveness of stress tests.  A well thought of assessment plan is crucial to ensure that all necessary considerations are made and proper gap analysis is done.  It is important that given the limited time, banks can achieve an acceptable financial impact that minimizes implementation effort but is still sufficiently prudent to ensure compliance.

In addressing IFRS9 requirements:

Do we build new IFRS9 models, or do we leverage on our Basel models?

How do we know when an asset will have to move from 12 month Expected loss to a Lifetime expected loss?

Do we compute both 12 month expected loss and lifetime expected loss for each of my exposure?
 

How do we forecast future economic conditions?
 

With so little time, and so many things to do, how are banks moving along in their quest to comply with the IFRS9 deadline?            
 

Banks planning for IFRS 9 compliance are likely going to need to invest in new and complementary information technology to meet performance, data management, analytics and integration between Risk and Finance. So choosing the right partner – one with the right banking industry experience and IFRS 9 domain expertise and broad solution capabilities – will be vital to success.

Key Take-Aways:

Learn how to prepare and address IFRS9 challenges

Introduction to SAS’ offering for IFRS9 compliance