In 2018, IFRS 9 came into effect, replacing IAS 39. IFRS 9 has important implications especially for banks, as they mostly hold financial assets. IAS 39 is based on the incurred-loss model, which allows recognition of credit losses (in the form of provisions) only when there is objective evidence of impairment, dividing loans into performing and impaired loans. IFRS 9 introduces the more forward-looking expected loss model, under which provisions are equal to the expected credit losses. IFRS 9 classifies loans into three stages: Stage 1 loans (performing loans), Stage 2 loans (underperforming loans) and Stage 3 loans (nonperforming loans).
The full article is available at https://bankunderground.co.uk/2021/06/11/where-is-ifrs-9-taking-the-cost-of-funding-of-banks/