To help meet the challenges and complexity of implementing IFRS 9, TMB Bank Public Company Limited (TMB) has appointed global information services company Experian to support its IFRS9 adoption and compliance efforts ahead of the standard’s global implementation deadline in 2018 and Thai implementation by 1st January 2019.
International Financial Reporting Standard (IFRS) 9 was developed by the International Accounting Standards Board (IASB) to plug gaps which were believed to have contributed to the economic meltdown during the 2008 global financial crisis. Thailand will adopt the local equivalent TFRS 9 and this will apply to all companies and public interest entities in the kingdom. The new standard, which will require companies and banks to recognise and provide for expected credit losses (ECL) within 12 months from their reporting date, is expected to have substantial impact on any organisations that have financial aspects, particularly banks.
“IFRS9 brings with it many challenges for banks, with a huge potential to negatively impact profitability. This will have a knock-on effect on consumers and businesses who may see their mortgage rates go up and access to loans go down,” said Dev Dhiman, Managing Director Experian Southeast Asia. “We are excited to be able to support TMB as they develop ways to better meet the challenges from the new standard and help ensure that they can provide the best quality services to their customers.”
The 6-month initiative will see Experian leveraging its capabilities to validate TMB’s in-house developed IFRS9 Expected Credit Loss (ECL) models. Experian will help TMB perform a thorough and independent validation of their IFRS9 impairment calculations, models and assumptions. This is important because high quality modelling plays a critical role in avoiding any over-provisioning or under-provisioning for a bank’s portfolios. Experian’s expertise will help TMB avoid volatile and inappropriate provisions arising from model shortcomings and improper assumptions, all of which will have a direct impact on the bank’s financial performance and on stakeholder confidence.
“As a leading bank in Thailand, with an advanced analytics strategic plan in place, it is essential for us to leverage the best-in-class analytics to help ensure we provide the highest quality service to our retail and commercial clients so that they can get more from banking with TMB,” said Jan Dodion, EVP, Head of Credit Risk Intelligence. “Experian’s proven track record of customising its global expertise into a regional context will help us meet our needs and provide us the actionable recommendations that can lead to continuously improved models. This will also ensure we maintain appropriate provisioning to deliver a competitive advantage while meeting our regulatory needs.”
The scope of the Experian project covers the validation of IFRS9 ECL models for all Retail and Non-Retail portfolios of the bank and involve the comprehensive qualitative and quantitative validation of these models. Experian will deploy an analytics team from its Analytics Centre of Excellence which is fully equipped with the knowledge of international best practices required to successfully deliver IFRS9 projects, coupled with deep regional knowledge.
In photo: Experian led by Dev Dhiman (2nd from left), Managing Director, Southeast Asia; Luca Zuccoli (1st from left), Head of analytics and Data Lab together with TMB led by Jan Dodion (3rd from left), EVP, Head of Credit Risk Intelligence and Etelka Dallon (4th from left), Team Head of Credit Risk Modelling & Analytics together at the Experian Appointment Ceremony in support of the IFRS9 standard’s global implementation, the first bank in Thailand, hosted at Grand Hyatt Erawan, Bangkok.