IFRS 9 Accounting Would Make Banks Appear More Robust During A Downturn

The new IFRS 9 accounting rules mandate that banks enhance their reserves and coverage ratios before problem loans peak, and Moody’s analysts believe the rules will indeed make banks better prepared to deal with loan losses during a downturn. Jorge Rodriguez-Valez and colleagues at Moody’s Investors Service said in their August 3 research piece that they believe the front-loaded reserves under IFRS 9 will facilitate early recovery in banks’ solvency metrics.

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Banks will front-load provisions under IFRS 9

After analyzing the impacts of the new...