The National Bank of Ukraine hosted an international round table on the the implementation of the International Financial Reporting Standard (IFRS) 9. Financial Instruments (hereinafter - IFRS 9), organized with the support of the Canada-IMF’s NBU Institutional Capacity Building project and the World Bank.
Representatives of the central banks of Belarus, Bosnia and Herzegovina, Armenia, Georgia, Macedonia, Moldova, Turkey, Croatia and Ukraine participated in the round table.
At the beginning of the event, NBU Deputy Governor Roman Borysenko said that it was the second round table of this format. NBU is open for the exchange of new information with international counterparts and hopes that such meetings will become regular.
“At the first meeting held in Kyiv, we discussed the implementation of IFRS 9. Then the discussion mostly focused on plans and market expectations. At that moment, the NBU could share practical information only about its own experience in adopting the new standard. The Ukrainian side can now speak about the results of IFRS 9 implementation by Ukrainian banks”, said Roman Borysenko.
As the NBU Deputy Governor said, the introduction of IFRS 9 by banks from 1 January 2018 did not have a significant impact on their operating performance.
“At first banks’ owners and top-managers were concerned about the need to increase capital because of the new standard. IFRS 9 implementation was estimated to influence equity of banks, but this did not reduce the regulatory capital and the level of its adequacy,” - said Roman Borysenko.
The main topic of the round table was the practice of implementing IFRS 9 by central banks. Representatives of central banks agreed that the transition to IFRS 9 had no significant impact on performance indicators. During the discussion, the round table participants noted that the transition resulted in certain changes in the classification of assets in the balance sheets of central banks. Also during the discussion, they agreed that, in general, debt instruments issued by the state or its central bank in the currency of that state are such for which the credit risk is conventionally absent (insignificant), and therefore there is no need for provisioning.
In addition, the round table participants stressed that the transition to the new standard of financial reporting consolidated the work of all units involved in this process: accounting, risk management, front office units, and others. Particular attention was also paid to financial statements under new standard and disclosure of information according to new requirements.
The participants of the round table were also interested in the SPPI-test of financial assets (analysis of contractual cash flows to single out repayments of principal and interest); estimation of expected credit losses; the impact of the introduction of IFRS 9 on profitability, peculiarities of building communication with key stakeholders.
A new round of discussions was the discussion of recent amendments to IFRS and their possible impact on the financial statements of central banks in future periods. In particular, new IFRS 15. Revenue from Contracts with Customers”, IFRS 16. Leases, IFRS 17. “Insurance Contracts, a new conceptual framework for financial reporting, and recommendations of the Board on International Accounting Standards on Materiality Judgment were considered.
The round table participants have agreed that it is important and useful to hold such meeting on a regular basis in order to exchange ideas and experience on the implementation of new and application of current international financial reporting standards, in particular in the context of central bank activities.