Banking accounting
Plain-English guides to the accounting issues banking companies face, each with a worked example from the industry.
Banking accounting guides
- Bank accounting: the key IFRS issues5 minute readBank accounting explained: IFRS 9 classification and ECL, effective interest and loan fees, hedge accounting, fair value, capital and IFRS 7 disclosures.
- Loan fees and the effective interest rate3 minute readHow banks account for loan origination fees under IFRS 9: arrangement fees and direct costs in the effective interest rate, commitment fees, with an example.
- Hedge accounting for banks' interest rate risk3 minute readHow bank hedge accounting works for interest rate risk: fixed-rate loans hedged with swaps, portfolio fair value hedges, the IAS 39 option, cash flow hedges.
- Regulatory capital vs IFRS equity3 minute readRegulatory capital vs IFRS equity explained: the bridge from shareholders' equity to CET1, the main deductions, and how accounting choices affect capital.
- Customer deposits and funding3 minute readHow banks account for customer deposits under IFRS: amortised cost and the effective interest rate, demand deposits, structured deposits, dormant accounts.
- Forbearance and loan modifications3 minute readHow banks account for forbearance under IFRS 9: modification losses at the original effective rate, staging of forborne loans and probation periods.
- Write-off policies for banks3 minute readHow banks set a write-off policy under IFRS 9: no reasonable expectation of recovery, partial write-offs, effects on coverage ratios, recoveries and disclosure.
- Fair value levels in bank accounts3 minute readHow banks apply the IFRS 13 fair value hierarchy: Level 1, 2 and 3 instruments, valuation adjustments, day one gains and Level 3 disclosures, with examples.
- Offsetting and netting agreements3 minute readOffsetting financial instruments under IAS 32 for banks: a legally enforceable right, net settlement, master netting agreements and IFRS 7 disclosures.
- Islamic banking products under IFRS3 minute readHow Islamic banking products are accounted for under IFRS: murabaha, ijarah, musharaka, mudaraba, sukuk and profit sharing investment accounts, with an example.
- Bank fee income under IFRS 153 minute readHow banks recognise fee income under IFRS 15: account and card fees, interchange, asset management and performance fees, and fees that belong in the EIR.
- Securitisation and derecognition3 minute readHow securitisation is accounted for under IFRS 9 and IFRS 10: consolidating the vehicle, the derecognition tests, retained notes and continuing involvement.
- Liquidity and market risk disclosures3 minute readBank risk disclosures under IFRS 7: credit, liquidity and market risk, the contractual maturity analysis, sensitivity analysis and VaR, with an example.
- How to read a bank's financial statements3 minute readHow to read bank financial statements: the bank balance sheet, net interest margin, cost-to-income, cost of risk, loan-to-deposit ratio, CET1, with an example.
- Stage 2 lending: what banks watch3 minute readStage 2 loans at banks explained: what drives the stage 2 ratio, coverage levels, stage transfers, how forecasts and SICR thresholds move them, with an example.
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About these guides
Each guide starts from an accounting issue banking companies actually face and works through it with numbers from the industry. 15 of 15 planned guides are published; more are added with every batch.