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Are you on track for IFRS 9? 

September 5, 2016

Tommy Morse, Mortgage Finance Gazette

IFRS 9 is a new accounting standard that will change financial reporting, particularly customer default and expected losses. It’s a big change but also an opportunity to improve data quality for the benefit of your business. 

If 1 January 2018 seems far away, it shouldn’t. Starting from that date, International Financial Reporting Standards 9 (IFRS 9) will replace International Accounting Standards 39 (IAS 39) and materially influence the financial statements of mortgage lenders and other organisations all over the world, with impairment calculations the most affected.

The impacts on models, people, processes, data, financials and reporting are so sweeping that firms are urged to run IFRS 9 and IAS 39 calculations in parallel for up to 12 months before implementation — which means starting in January 2017.

“The new accounting standard means that each reporting period, a lender must reassess the probability of any of their customers defaulting, as well as the resulting expected losses for all exposures. This will impact on all forms of mortgage lending including BTL [buy-to-let] and certainly high loan-to-value lending. In short, increased provisioning is required, which means less cash to lend.” Read more

 
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