IFRS 9 Staging Cards
Recall the practical differences among IFRS 9 Stage 1, Stage 2, and credit-impaired treatment.
Stage 1 What is the practical Stage 1 question? Has credit risk stayed within origination expectations, with no significant increase in credit risk? Payment performance helps, but the comparison is still against origination risk. Stage 2 What is the practical Stage 2 question? Has credit risk increased significantly since initial recognition? Use PD movement, qualitative flags, forbearance, sector stress, and forward-looking information. Common confusion Current loan with doubled PD: Stage 1 or Stage 2? Arrears are not the only staging trigger. Forbearance Any concession means the loan is automatically credit-impaired. Borrower requested temporary payment relief during a sector shock. Your…
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