ICAB webinar highlights data, modelling gaps in IFRS 9 rollout

Implementing IFRS 9 in Bangladesh will require stronger models, cleaner data, and closer coordination between Risk and Finance, speakers said at an Institute of Chartered Accountants of Bangladesh (ICAB) webinar, "Implementing IFRS 9: Global Insights and Bangladesh Perspectives".

Key pain points

• Data scarcity beyond defaults: Banks often have default data but limited recovery or loss-given-default (LGD) histories, which weakens model discrimination and slows roll-out.
• Forward-looking estimates: Limited macroeconomic time series and weak correlations with default rates are undermining probability-weighted scenario design.
• Model maturity: Validation exercises are revealing immature expected credit loss (ECL) frameworks and gaps in probability of default (PD) and LGD methodology—some banks are building from scratch.

Regulatory view
Chief Guest Dr Md Kabir Ahmed, Deputy Governor of Bangladesh Bank, described IFRS 9 as a "paradigm shift" that prepares institutions for future losses and shocks. He added that the central bank will work with ICAB to enhance transparency and reporting quality.

ICAB's stance
ICAB President N K A Mobin, FCA, stated that IFRS adoption is not merely a matter of compliance but is foundational for transparency, stability, and investor confidence. He urged joint action by Bangladesh Bank, BSEC, and FRC, alongside preparers.

Technical insights

• Rajith Perera (EY; Risk Management Leader, CA Sri Lanka) noted that many banks' ECL models are not robust enough for reliable PD or LGD calculations, with some lacking legacy models entirely.
• Sk Ashik Iqbal, FCA (NFH & Co.), said the shift from incurred loss to ECL is a survival test amid high non-performing loans (NPLs), limited capital, and fragile confidence. IFRS 9 can restore trust if models and definitions are robust.

Practitioner perspectives
Mohammad Abdul Ohab Miah, FCA (BRAC Bank), and Mohammad Monowar Hossain, FCA (Standard Chartered), outlined current pitfalls and offered bank-level implementation tactics.

What banks should do now

• Invest in technology and data: Develop platforms for automation, integration, lineage, and real-time reporting; build granular recovery and collateral datasets.
• Reinforce governance: Establish clear model risk management, independent validation, and board-level oversight of scenario design and overlays.
• Align Risk and Finance: Close the loop on ECL ownership, reconciliations, disclosures, and ICAAP or capital planning impacts.
• Resegment portfolios: Ensure risk-aligned segmentation that supports staging, significant increase in credit risk (SICR) thresholds, and forward-looking calibrations.
• Document & disclose: Strengthen model documentation, assumptions, and sensitivity disclosures to meet audit/regulatory expectations.