UAE
Saudi Arabia
Tanzania
Russia
Fiji
Kyrgyzstan
Uzbekistan
Pakistan
Kazakhstan
Australia
United Kingdom
New Zealand
Nepal
Oman
Hong Kong
Qatar
Germany
Automates PD, EAD, and LGD calculations with precision
Full alignment with IFRS 9 standards
Transparent and accurate financial statements
Eliminates human errors in complex calculations
Reduces reporting time and operational costs
Enterprise-grade data protection
Perfect for financial institutions of all sizes
Ideal for portfolio management companies
Essential for regulatory reporting
Protection through ethical financial coverage.
Post 2008 financial crisis, regulators around the world realized that history based accounting standards can be extremely misleading and a paradigm shift in accounting methodologies is needed.
In July 2014, IASB issued IFRS 9 standard which replaced existing IAS 39 provisioning method. The IASB stated that the IAS 39 incurred cost method leads to delayed recognition of credit losses, thus a forward looking approach is being introduced.
IFRS 9 became effective worldwide on Jan 2018 and has since then posed huge challenges for accounting firms, auditors and corporations who were neither used to deal with such predictive analytics nor qualified to do so.
Incurred Loss Provisioning Method under IAS 39 has been replaced by Expected Loss Provisioning Approach of IFRS 9 where provisions are taken upfront and Expected Credit Loss (ECL) is estimated as a product of EAD, PD and LGD.
Definition of EAD is different for each of 3 buckets, term structure of applicable point in time PD is also different for each of 3 buckets of EAD, and LGD is estimated differently for collateralized and non collateralized exposures.
Segmentation & pooling of portfolio on the basis of discriminant analysis and statistical mass.
Identification of statistically significant macro-economic variables for each segment’s default rates.
Projections of macro-economic scenarios and assignment of probabilistic weight to each scenario.
Distribution of current exposure under each segment into three days past due (DPD) buckets as defined by IFRS 9.
Estimation of point in time probability of default term structure for each segment of portfolio exposure.
Estimation of point in time loss given default distribution for each segment of portfolio exposure.
