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Article
IFRS 9 - From Compliance To Alpha
IFRS 9 isn't just a regulatory burden—it can be a powerful tool for understanding customer behaviour, driving smarter credit decisions, and enhancing profitability when leveraged beyond compliance.
Oct 29, 2025
Jakob Lavröd, Senior Quantitative Risk Analyst, Handelsbanken
The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization
- IFRS 9 Expected Credit Loss can be leveraged beyond compliance to drive strategic decisions in credit origination pricing and resilience planning
- Historical Swedish banking culture of conservative risk management offers a foundation for deeper ECL integration
- Lifetime Probability of Default for all exposures at origination preferred over Stage based PD to align with business decisions and enable dynamic updates
- Survival modeling allows flexible intuitive default timing estimation enabling near real time ECL adjustments as seen during COVID when credit risk fell
- Swedish unsecured lending market’s broker driven structure and upfront commissions require behavioral EAD adjustments to avoid distorted interest income and profitability measures
- Stage transitions can misrepresent credit adjusted fair value highlighting need for integrated PD EAD and cash flow modeling in a modular IFRS 9 engine
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