What This Bank has Done to Meet IFRS 9 Deadline in Indonesia

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Bank Rakyat Indonesia (BRI) is using SAS Expected Credit Loss to meet the IFRS 9 deadline in its home market, said SAS recently.

The BRI is one of the largest banks in Indonesia—with a customer base of more than 50 million—and a top 10 Association of Southeast Asian Nations (ASEAN) bank for tier 1 capital.

According to the tech vendor, SAS Expected Credit Loss is a web-based product that can be used to calculate and account for expected credit loss—also known as impairments—and perform loss reserving.

In less than a year—Jan 2020, Indonesia's adaptation of IFRS 9, known as PSAK 71: Instrumen Keuangan in Indonesia, will officially go into effect.

As a result, banks in the country will need to make significant changes in how they estimate, reserve and report on losses. Such changes are expected to affect financial institutions’ operations, financial planning and portfolio strategy as well.

To meet the compliance requirements, banks need to analyze large volumes of data efficiently and tailor approaches to deploy risk management solutions across their organizations, BRI pointed out.

The Indonesian bank is using the SAS product to help itself meet regulatory changes across its 12 business segments.

BRI will use the product to ensure risk model implementation as well as for testing and maintenance efforts after the IFRS 9/PSAK 71 implementation deadline in Indonesia, said Sheldon Goh, regional head of Risk Solutions for SAS in ASEAN markets.

In addition, Standard Chartered Bank—present in all 10 ASEAN markets of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam—has also implemented SAS Expected Credit Loss for IFRS compliance, SAS noted.