CSSF Views Of IFRS 9 Implementation By Credit Institutions

In the summer, we looked at IFRS 9 from the point of view of the investors. Here, we bring you the insightful and valuable findings shared by our local regulator CSSF in their IFRS 9 follow-up study covering 126 banks. In this blog we focus on their findings related to the qualitative aspects of IFRS 9. If you are interested in the quantitative impact, read more here.

Qualitatively speaking

Calculating ECL (Expected Credit Losses)

The CSSF found that most banks covered in general all required points regarding the methodology used to calculate ECL, but one or more items (e.g. the calibration of input parameters, the discounting factor or the scenarios) have been disregarded by some banks. It identified that 23% of banks had inaccuracies in their ECL calculation including minor rounding errors to issues around the formula itself (no discounting or omission of interest accruals, for instance).