Recognize significant increase in credit risk as deterioration since origination, not just absolute risk.
Staging is about the distance traveled since origination, not the name of today's grade. The idea IFRS 9 expected credit loss analysis is dynamic. The staging question is not simply whether the borrower looks weak today. It is whether credit risk has increased significantly since initial recognition, enough that lifetime expected loss should be recognized. Why it works Two loans can share a current grade and still deserve different staging conclusions. One may have been risky from the start and performed as expected. The other may have started strong and then deteriorated sharply. SICR analysis therefore needs origination benchmarks, current…
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