The Bank Statement – Q2 2015

The Bank Statement – Q2 2015

This newsletter looks at IFRS and regulatory matters affecting accounting for banks.

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The Bank Statement is KPMG’s IFRS newsletter for the banking sector, updated each quarter

The Bank Statement is KPMG’s quarterly banking newsletter.

It provides updates on IFRS developments that directly impact banks, and considers the potential accounting implications of regulatory requirements.

Download Issue 18 to read about the developments in Q2 2015. Previous issues can be found on our IFRS Newsletters web page.

And visit our IFRS for Banks and IFRS – Financial instruments hot topics pages for more on these and other related developments.

IFRS 9 SPPI analysis

Many implementation projects for IFRS 9 Financial Instruments focus on the new expected credit loss model. However, banks shouldn’t underestimate the impact of other changes – in particular, the judgement required, and the potential complexities involved, in assessing how a financial asset should be classified.

We look at some of the complexities of performing the ‘solely payment of principal and interest’ (SPPI) analysis, used to assess whether a basic lending arrangement exists.


“Just asserting that a financial asset feels like a basic lending arrangement does not mean that it meets the contractual cash flows test in IFRS 9.”

Reinhard Klemmer, Financial Services, KPMG in Singapore 

Leverage ratio

The introduction of the regulatory leverage ratio is encouraging banks to consider the size of their balance sheet. This may involve a review of whether client money should be recognised on-balance sheet.

The accounting analysis is usually very specific to the particular facts and circumstances, so we highlight some of the key factors to consider.

Other IFRS 9 developments and IASB projects

Also in this issue, we report on:

  • EFRAG’s draft endorsement advice on the use of IFRS 9 in the EU; and
  • the IASB’s projects on macro hedging and financial instruments with characteristics of equity.

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