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Capital and regulation

IFRS 9

The accounting standard for financial instruments, best known for its forward looking expected credit loss model for provisions.

IFRS 9 governs how financial assets and liabilities are classified, measured and impaired. Its headline change was moving provisions from an incurred loss model to a forward looking expected credit loss model.

It means banks recognise credit losses earlier, based on expected future conditions, which affects both reported profit and capital.

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