PETALING JAYA: Most banks are unlikely to undertake fresh equity capital raising come 2018 when the new International Financial Reporting Standard (IFRS) 9 takes effect despite an estimated increase of between 30% and 35% in provisions which could dampen earnings. The new standard requires banks to put up appropriate provisions in anticipation of future potential losses. “Our recent discussions with some banks have yielded minimum guidance on the potential quantum increase in provisions required under IFRS 9. Meanwhile, Fitch Ratings said the migration to IFRS 9 would have a negative initial effect on capital, and potentially raise the volatility of earnings and regulatory capital ratios across many banks in Asia-Pacific. “Regulators in most of these countries have also been progressively forcing banks to hold higher reserves, which will provide a buffer against potential losses,’’ it noted.

Source: The Star October 09, 2016 23:26 UTC