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Hi!
We add it to the gross carrying balance since what happens is that the customer's monthly payments go up because of them (they have to amortize of the fee for the rest of the loan).

Hi! I can only speak for how we do this, but we do revise the gross-carrying amount, at least partially. Since the customers earn overdue fees, these will accrue interest using the nominal rate, so the balance the customer owes us goes up. However, the recalculation is less formal than what is descr...

Found this from EY that makes the same interpretation: For demand deposits that have no fixed maturity and can be withdrawn by the holder on very short notice (e.g., one day) (assuming there is no contractual or legal constraint that could prevent the holder from withdrawing its cash at any time), t...

Hi! Interesting question. If you have the money as a non-maturity deposit, I would refer to: IFRS 9.5.5.19 The maximum period to consider when measuring expected credit losses is the maximum contractual period (including extension options) over which the entity is exposed to credit risk and not a lo...

Tax is not all my field, but if you have a receivable outstanding, would it not fall under the scope of IFRS 9 and you take an impairment on it based on the ECL model?

I realized that I might have misread the question and that it might have been asked from the lender's perspective. In such a case, it depends on who decides if a drawdown occurs. If it is the lender, then you can treat them separately since the lender can do a separate assessment for each, but if it...

I only worked on the receivable side, so little to no experience with a credit line as a liability. Still, the only reason a lender needs to care about the distinction is due to the need to forecast the consequence of additional drawdowns on ECL on the combined line. From the borrower's side, you wo...

Hi! In the case of pass-through, I would look at IFRS 9.3.2.5 to see if these conditions are valid (company A being the entity in this case, the government being the eventual recipients and the original asset being the loan receivables from company B): 9.3.2.5: When an entity retains the contractual...

Thanks a lot for the help in better understanding the matter!

Thank you for the response! The rationale for the 0.9 CU is as follows (please do not hesitate to point out if there are any flaws you see in the argument): Right after the modification, the contractual balance is still 90.5, that is the amount we can go after the customer to try to collect (since t...

Hi! Thank you for the response Marek! Using typical numbers, we would expect a PD12 of around 4 % and LGD = 50 %. If the instrument is assumed to be in stage 1, the 1 year PD would then just be (since the payments are yearly), 4 % x 90.5 x 50 % = 1.8 CU. While this number is small compared to the lo...

Hi! I would be interested in hearing what you members in this Forum think about the interaction between the rules for contractual modification and ECL calculation in IFRS 9. A specific example: A loan of 100 CU with eir = 10 % and payment at the end of each year, with a maturity of 15 years, is issu...

PnL or P&L gives the correct impression that one is looking at a combined concept

P/L gives the impression of a ratio (like C/I or P/E), which it is not. Not a problem if you know what it means, but good terminology should really explain itself

We use PnL

Thank for the answer Leo, fully agree with the interpretation and good explanation!

Hi! Thank you, Leo, for the response; I fully agree with that interpretation. To give a concrete example. On a typical 10-year loan product that we offer, we have a very high default rate during the first year and much lower the rest of the term. For example, assume that on a portfolio level, the li...

Hi! I am currently reviewing the policy for IFRS 9 significant increase in credit risk for my firm and we are discussing how to interpret the standard. In particular, our discussion is on the following section: B5.5.11 Because of the relationship between the expected life and the risk of a default o...

Hi finmase! There are many methods for turning a 1-year PD into a monthly PD, so I will illustrate a simple one (which only requires the PD12 value) and a more complex one (which requires access to additional information). 1: Simple method Assume that the hazard of default is constant over the perio...