IFRS 9 versus IAS 39

IFRS 9 versus IAS 39

The following significant changes are identified in the ESRB report

• The shift from an incurred loss approach to an Expected Credit Loss approach for measuring impairment allowances is the most important change introduced by IFRS 9
• Debt instruments including embedded derivatives will no longer qualify to have their pure debt component separated and measured at amortised cost.
• Except for dividend income, none of the gains or losses from equity instruments measured at fair value through other comprehensive income (FVOCI) will be reported in profit or loss.
• Highly liquid assets eligible for inclusion in the regulatory liquidity buffer but which, on the basis of their management during normal times, belong to a hold-to-collect business model may be measured at amortised cost (raising concerns about the emergence of unrealised fair value gains or losses if they need to be sold in times of acute stress)

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