Moratorium – IFRS 9 treatment

6.5 Will the moratorium lead to a transfer to stage 2?

The fact that IFRS 9 is based on principles calls for the application of expert judgment instead of strict automatism. According to the EBA statement published on 25 March 2020, the application of public or private moratoria, aimed at addressing the adverse systemic economic impact of the COVID-19 pandemic, should not be considered by themselves as an automatic trigger to conclude that a significant increase in credit risk has occurred. As highlighted by the EBA, it does not remove the obligations for credit institutions to assess the credit quality of the exposures benefiting from these measures and identify any situation of significant increase in credit risk of the exposures accordingly. This assessment is particularly important in the case of prolongation of moratoria.

When performing this assessment under IFRS 9, it is important to consider all reasonable and supportable information regarding the risk of default over the total lifetime of the exposure.