The Banking Sector Shifts to IFRS in Reporting Non-Performing Loans
For the
first time, the National Bank of Ukraine publishes
data on non-performing (default)
loans compiled in line with the Regulation on Credit Risk Assessment. This regulation brings the definition of
“non-performing asset/loan” into full alignment with the internationally
accepted definition "non-performing exposures / loans" (NPE/NPL).
Under the new rules, a non-performing exposure/loan is one that is past due
more than 90 days (30 days for debtor banks) or
one in which the debtor is unlikely to fully meet obligations without
the foreclosure of collateral.
For
further details on the new definition of “non-performing asset/loan”, please
see the presentation.
The share
of non-performing loans accounted for 55.1% as at the end of Q1 2017, as
calculated in accordance with a new methodology. A significant increase in NPL ratios as compared to
December 2016 can be attributed to the new principles underlying the definition
of non-performing loans. The other two
contributing factors include: 1)the exclusion of
off-balance sheet assets from the
calculation of non-performing loans and 2)the recognition of non-performing
loans by Privatbank after its nationalization.
Data on
the amounts of non-performing loans/ assets and non-performing loan/asset
ratios will be published on a monthly basis.
