The CECL and IFRS 9 impairment accounting standards require organizations to regularly assess the impact of future conditions on their expected credit loss (ECL) estimates, as well as the implications on loan loss provisioning and capital requirements in their balance sheet. However, volatile market conditions and macroeconomic forecasts have made calculating ECL accurately and efficiently increasingly complex.
Navigate this era of exponential risk and elevate your allowance analysis with Moody’s Impairment Accounting module. With our expertise in risk assessment and forecasting, we incorporate the full range of Moody’s data, behavior models and economic scenarios into the impairment accounting process with one user-friendly, auditable platform.
Designed to evolve with your organization, our solution addresses both the technical and operational challenges of compliance with impairment accounting standards, providing a deep understanding of your portfolio and its credit risks.
We offer comprehensive data, advanced modeling, forecasting and expert advice with the power of cutting-edge technology. This combination helps you simplify your allowance analysis and understand its impact on your balance sheet and income statement, so you can confidently turn insight into action. With decades of experience and award-winning expertise in risk and forecasting, Moody’s works with hundreds of organizations for both the adoption and ongoing processing of their ECL allowance estimates.
Expand your solution from a single standalone module to the full suite. Leveraging the fully integrated solution suite empowers your institution to turn risk into resilience and unlock opportunity.
Accounting standards such as current expected credit losses (CECL) and IFRS 9 place significant requirements on a company’s data management programs. This includes the need for current information as well as extensive historical data to consider within your accounting estimates. Moody’s can assist with our award-winning data to help you develop, improve, and validate your data and credit risk models. We offer credit, economic, and financial datasets.
Moody’s can help your institution by providing our industry-leading economic scenarios that have been developed using our proprietary econometric models.
Many institutions have chosen to solve for CECL and IFRS 9 using credit loss models to determine the likelihood and extent of future losses. Moody’s can assist you in addressing this challenge for your unique portfolio composition with our best-in-class modeling methodologies. We help clients assess, manage, and validate models for ECL requirements and consistency with industry standards.
Moody’s has generated an award-winning framework to run your ECL process across various asset classes and methodologies. Our solution will allow you to run an integrated credit allowance process and step-by-step ECL analysis. The powerful engine features built-in analysis tools for meaningful and efficient decision-making.
Build a deeper understanding of your portfolio with our range of reporting and analytical capabilities. We help you to look beyond the journal entry by isolating the individual drivers of risk and their future impact on your portfolio, so you can confidently make strategic decisions guided by our industry-leading ECL benchmarking.
Moody’s is uniquely positioned to help you implement the CECL accounting standard and seamlessly integrate significant changes into your allowance and credit infrastructure. We provide comprehensive data, modeling, forecasting, and advisory services that help enable institutions to develop more profitable, forward-looking strategies.
Moody’s IFRS 9 solution includes award-winning data, models, economic scenarios, and automation tools for credit loss calculations. Our credit and accounting experts guide you to the right solution, integrating modular components seamlessly into your internal systems.
Moody’s worked with TFCU to identify solutions from the Risk & Finance Suite to help create a fully integrated treasury and credit risk management platform, including the full solution of Impairment Studio for CECL.
The monthly CECL process within Impairment Studio is streamlined with automated data files eliminating the need for any manual data loading, or remediation, allowing the team to dedicate their time to analyzing the results using the pre-built standard reports, which are easily accessible from the application. This enables them to gain a better understanding of the credit risk of their portfolios.
In this paper, the linkages between accounting impairment provisions, earnings, and capital are analyzed and a set of strategies to provide better visibility of impacts of impairments on earnings and capital are defined.
After successful CECL implementations, credit and accounting executives now possess working relationships with multidisciplinary experts across the back-office, detailed knowledge of credit data and use cases, and deep experience developing controlled processes for delivering actionable insight.
In this paper, we set out to estimate, based on 14 top financial institutions, a lower-and upper-bound current expected credit loss (CECL) estimate as of March 31, 2020.
In this article, we use recent observations in commercial funding markets and empirical evidence from consumer lending markets to analyze the potential range of impacts to capital levels at US financial institutions, caused by the drawdown of commercial lines of credit.
For institutions that are considering incorporating future conditions using a probability–weighted multiple scenarios approach, the choice of scenario weights is critical. This paper presents the theoretical motivation behind these weights and suggests reasonable ways of choosing these weights in practice.
In this article, we define constant severity scenarios and the models used to estimate their probabilities, before considering the use of these economic scenarios when complying with the CECL accounting standard.
We discuss some of the options that institutions have for incorporating economic forecasts into their expected loan loss reserve calculations, including the benefits and costs of each approach and provide practical recommendations based on institution size and complexity.
With the CECL guidelines on mean reversion open to multiple interpretations, our paper discusses some approaches institutions can take for reversion beyond the reasonable and supportable horizon.
In this article, we suggest solutions for meeting IFRS9 requirements in areas such as portfolio segmentation, thresholds for transitions among impairment stages, and calculating expected credit losses, leveraging Moody's expertise in credit risk modeling.
This article discusses how to address the specific challenges that IFRS9 poses for retail portfolios, including incorporating forward-looking information into impairment models, recognizing significant increases in credit risks, and determining the length of an instrument's lifetime.
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