THE Philippine banking system bucked the trend in the implementation of the new global standard of accounting, an international ratings agency said, as banks sought to gain from the International Financial Reporting Standard 9 (IFRS 9).
In its report on the new standard, Moody’s Investors Service said the implementation of the IFRS 9 had a positive impact on the Philippine banking system’s capital, contrasting the trend of a “modestly negative” impact on most Asia-Pacific banks.
The IFRS 9 is an international accounting standard that sets the bar on accounting for financial instruments.
In August this year, the Bangko Sentral ng Pilipinas (BSP) approved the adoption of the Philippine Financial Reporting Standards (PFRS) 9, the local iteration of the IFRS 9.
The new policy sets out the supervisory expectations in classifying and measuring financial instruments and in recognizing impairment to promote prudence and transparency in financial reporting.
The assessed 16 banking systems in Asia Pacific, according to Moody’s, are at varying stages of implementation and have been given a neutral rating on banks’ credit profiles.
“The transition to IFRS 9 so far has resulted in average declines of 10 basis points in banks’ Common Equity Tier 1 [CET1] ratios, a very manageable outcome and more modest than the impact on European banks,” Moody’s said.
“There have been a few outliers in Apac. Among them are banks in the Philippines and Taiwan, which saw their CET1 ratios rise, thanks to gains from revaluation and measurement of some assets,” it added.
By specific banks, Moody’s cited two local banking giants as major outliers to the Asia-Pacific trend.
“By contrast, at Metropolitan Bank & Trust Co. [‘Baa2 stable’] and Bank of the Philippine Islands [‘Baa2’ stable] in the Philippines, gains from revaluation and measurement of some financial assets under IFRS 9 resulted in improvements in capital buffers,” Moody’s said.