GICALE, DEANNA MAE T.

ACT1107 – Sec 5

Webinar #2: PFRS 9 for Banks

Speaker: Mr. Mart Anthony Dela Pena

In the webinar, the speaker talks about how bank uses PFRS 9 standard to classify and
measure financial and liabilities. Applying PRFS 9 in bank became challenging to them as it
really changes everything, and it could cause high impact to the operations and a challenge on
what will be their next step or how they will be going to implement this and what would they do
to successfully implement this standard. However, this change would also lead to a better
decisions and better result.

This standard requires bank institution to recognize impairment and estimate lifetime
expected credit losses. The speaker discussed about the expected credit losses whereas this
approach has three stages; stage 1 is a 12-month ECL measurement that has no 'significant
increase' and not 'defaulted', the stage 2 having a 'significant increase’, but it is not defaulted
then, it has a lifetime ECL measurement lastly, the stage 3 having both 'significant increase' and
it is defaulted will be measured a lifetime ECL. Given this model, the banks should decide which
stage should applied to different financial asset. They should also need to develop enhance
controls to ensure judgment is exercised accordingly in deciding of which among the stage.

In this webinar, it was mentioned that the standard drives all the bank institution to use
all their obtained information in order to build unbiased and probability-weighted estimate of
expected credit losses through evaluating the possible outcomes. I think it helps us to be more
careful of our judgments and always based it on facts presented to us because every decision
we are going to made are important and could affect the future.