Baku, Azerbaijan, Feb. 12
Trend:
The Azerbaijan Banking Association in cooperation with EY organized a seminar on the practical aspects of impairment calculations following the adoption of the new IFRS 9 accounting standard by banks. The event was held on Wednesday 7 February at Unibank, and most Azerbaijan banks participated. The presentation was delivered by Radek Lastovicka, Senior Manager at EY Czech Republic. Common practices were presented on a variety of IFRS 9 impairment topics and warnings were made on certain bad practices.
Yokub Sharafitdinov, Senior Manager from EY Azerbaijan, shared: “EY has all the necessary resources and knowledge to become leading advisor in IFRS 9 related services in our market. We are already running pilot projects for some banks, bringing in subject-matter EY experts from other EY offices and transferring their know-how to our team.”
Radek Lastovicka added: “We have highlighted practical solutions adopted by banks in Eastern Europe, Turkey and the Middle East of a similar size to those in Azerbaijan. Particular attention was given to approaches towards the definition of Significant Increase in Credit Risk (SICR), which has a major impact on resulting figures. On the markets that I mentioned, banks have invested a lot of time and effort to retrospectively create structured data on risk assessment at origination of their existing assets, which are then used for the definition of SICR. In addition, we raised the topic of Purchased or Originated Credit Impaired assets (POCI), as they might complicate IFRS 9 adoption for many Azerbaijan banks. Special accounting treatment is designed by the Standard for these assets, which primarily emerge from the restructuring of problem loans.”
The presentation was followed by a discussion on macroeconomic forecasts for Azerbaijan and their reflection in the future IFRS 9 impairment calculation of the banks.
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