KBank Subsidiaries and ASEAN Economic Strategy
K
KASIKORNTHAI
ธนาคารกสิกรไทย
开泰银行 KASIKORNBANK
Expected Credit Loss: Going Forward (Effective: January 1, 2020)
TFRS 9 requires ECL estimation to be based on past events, current conditions, and forecasts of future economic
conditions where judgement should be used for emerging issues and uncertain future events.
On-going
Key Driving Factors
Observed Evolution
Prudent
Management
Expected Credit Loss (ECL) should not be too volatile, as risks in each loan stage are clearly
identified and there is management overlay, unless economic view changes, loans shift from Stage
1 to Stage 2, and exposure moves between on- and off-balance sheet
Changing economic view
■ Shift between Stage 1 and Stage 2
■ Movement between on- and off-balance
sheet
■ Bank size
Non-
comparable
■ Portfolio mix
■ Risk appetite
Apply %ECL by stage
Apply "total ECL" for ECL adequacy analysis, e.g.
NPL coverage (Coverage Ratio)
■ Focus on trend and derive own normalized level
■ Monitor detailed disclosure of ECL movement
analysis and basis of assumption
บริการทุกระดับประทับใจ
K
KASIKORNTHAI
ธนาคารกสิกรไทย
开泰银行 KASIKORN BANK
TFRS9 Impacts to Financial Numbers and Ratios (Effective: January 1, 2020)
TFRS 9 reflects the true economic value of financial instruments at a point in time where financial impacts to
net profit (high, moderate, and low) vary for each area
TFRS 9: Changes in definition and calculation method
Impacts to Financial Numbers: Non-comparable between TFRS 9 and current numbers
Interest Income
Fee Income
Non-Interest
Income
Provisioning Expense
.
Higher from credit fee /
⚫ Lower from
Volatile from
Higher underperforming loan
•
future interest;
•
Volatility is expected
transforming into
interest income on an
amortized basis
from behavioral lives
assumption
unrealized gain/loss of
treasury products'
marking to market
& required reserve from more
stringent requirement
Volatile from change in
economic outlook and shift of
stage 1 to stage 2
Modified Loans
Higher modified loan
than current
restructured loan
from different
definition
Impacts to Financial Ratios: Non-comparable between TFRS 9 and current numbers
Net Interest
Margin (NIM)
Higher but more volatile
Non-Interest Income Growth
Lower and more volatile
Credit
Cost
Potentially volatile
Coverage
Ratio
Insignificant impact,
considering total ECL
New
Stage 2
Ratio
Higher than the current
Special Mention Loan
* Financial instruments where main products of banks are lending, investment, financial guarantee, derivatives, deposits, and borrowings
Note: ECL = Expected Credit Loss will drive more accurate economic valuations of loan portfolios and promote earlier recognition of credit losses avoiding the delays
observed during the credit crisis.
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