Dubai – Mubasher: UAE banks are set to begin implementing the International Financial Reporting Standards (IFRS) for provisions in their balance sheets starting January, as per the directives of the Central Bank of the UAE.

Last year, the central bank announced that all banks should begin applying IFRS 9 instead of 39, according to the International Accounting Standards Board (IASB) recommendations.

Under IFRS 9, banks will be required to provide for loans and investments, not measured at fair value, based on the expectation of a credit loss rather than the loss being incurred.

“This change will impact diverse areas of a bank’s business including accounting, risk management, capital management, regulatory reporting, data collection, governance framework, processes, IT systems, investment decisions, product structuring decisions and hedging decisions,” according to a previous report by Khaleej Times.

The standard involves dealing with low-value assets by using only one method for all financial instruments.