The impact of IFRS 9 on bank earnings
Ola Warikoru, Equity Research Analyst at Stanbic IBTC joins CNBC Africa to assess the impact the new reporting standard has on bank earnings so far.
Thu, 03 May 2018 14:04:12 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Banks are adopting differing approaches to the allocation of provisions under IFRS 9, impacting their reported earnings and retained earnings.
- The implementation of IFRS 9 is expected to have a nuanced effect on dividend payouts by banks, with a focus on retaining earnings to maintain shareholder value.
- Concerns arise regarding the impact of IFRS 9 on loan growth, particularly for riskier assets, prompting banks to reassess their lending strategies.
Nigeria's banking sector has been undergoing a period of transformation with the implementation of the International Financial Reporting Standards 9 (IFRS 9) by the Central Bank. This move has raised concerns about the potential impact on bank earnings and profits, leading to a closer examination of how financial institutions are adapting to the new reporting standard. Ola Warikoru, Equity Research Analyst at Stanbic IBTC, shed light on the implications of IFRS 9 on bank earnings in a recent interview with CNBC Africa. As banks navigate through the challenges posed by the new standard, key points have emerged regarding the allocation of provisions, dividend payouts, and the impact on loan growth. While the implementation of IFRS 9 aims to enhance transparency and comparability across banks, it also brings about a shift in the way financial institutions approach risk management and provisioning. The spotlight is now on how banks will strike a balance between regulatory compliance and sustaining profitability amidst evolving market dynamics.
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