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IFRS9 Module

Our IFRS products meet the extensive demand from the credit industry, due to the obligation for all to comply with IFRS reporting requirements starting in 2018. IFRS 9 requires a change in how financial assets are classified, measured and expected credit loss is accounted for. Our offer will enable you to meet a regulatory requirement in a cost-effective way, using Mala'a data alongside them.

What is IFRS 9?

IFRS 9 is a new international accounting standard replacing IAS 39. It sets out the requirements for recognising and measuring financial assets and liabilities. In particular, it sets requirements on the assessment of the risk of a loan portfolio, based on statistical forecasts of expected losses from defaulted loans. For each existing Credit contract, an Expected Credit Loss must be calculated against which provisions must be set aside by the Credit Provider.

The basic formula for calculating Expected Credit Losses is:

Expected Credit Losses must be calculated either for the next 12 months of the contract’s life or the remaining lifetime of the contract.

Asset @ Stage 1

Initial recognition of asset OR credit risk has not increased significantly since initial recognition.

12M ECL

Asset @ Stage 2

Credit risk has increased significantly since initial recognition AND the resulting level isn’t considered to be a low Credit Risk.

Lifetime ECL

Asset @ Stage 3

Credit impaired asset:
likely to be in default.

Lifetime ECL

Mala’a IFRS 9 Product Offer

As Mala’a offers a uniquely strong Probability of Default model to its members to be used in calculating the financial institution’s ECL and impairment levels. These models cover PD at Origination, PD over 12 months and PD over Lifetime.

Mala’a IFRS 9 PD models will cover all types of retail credit (consumer credit, real estate, SME lending). The IFRS 9 models will also contain forward-looking macroeconomic variables to ensuring IFRS 9 compliance.

In addition, Mala’a can automate the production of a member’s IFRS 9 report subject to the following being provided:

  • Loss Given Default values for each product
  • Staging Policy to determine ECL 12 months or ECL Lifetime calculation

Benefits of Mala’a IFRS 9 

Mala’a IFRS 9 solution brings multiple benefits to its members:

  • IFRS 9 compliance
  • Cost and time effective IFRS 9 report production
  • Most accurate available assessment of your portfolio risk

Are you interested? Let us know!

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