Issue 39 – Next steps on the DRM project | KPMG | GLOBAL

Financial instruments – Next steps on the DRM project

Financial instruments – Next steps on the DRM project

This IFRS newsletter reports on the IASB’s May discussions on financial instruments.

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We report on the IASB’s discussions at its May meeting.

Discussions on DRM activities continue

At its May meeting, the Board continued its discussions on its dynamic risk management (DRM) project by considering two of the focus areas for the project: DRM activities undertaken to stabilise net interest margin (NIM) and core deposit modelling.

 

 “We welcome the Board revisiting the important area of dynamic risk management. The project appears to have started from a fresh perspective so there’s a long way to go to finalise an accounting solution.”

 

Chris Spall
KPMG’s global IFRS financial instruments leader

For more detail on the discussions, read Issue 39 of our IFRS Newsletter: Financial Instruments (PDF 471 KB).

Dynamic risk management

The IASB staff presented an education session to the Board. The staff:

  • discussed using DRM activities to stabilise NIM;
  • demonstrated how derivatives may be used to achieve the target portfolioin the context of stabilising NIM;
  • discussed how NIM reconciliations could be used to measure the accuracy
  • of the DRM function; and
  • outlined the relevant information that could be considered for financial reporting.
     

The next steps will be to schedule discussions over the next few months on the following areas of focus:

  • prepayment risk and the dynamic nature of portfolios;
  • how DRM is currently reflected in financial statements; and
  • how to evaluate a proposed accounting model.

Find out more

Visit our IFRS Newsletters page for the latest discussions on these issues.

And go to our IFRS – Financial instruments hot topics page for more on these and other aspects of financial instruments accounting under IFRS.

© 2017 KPMG IFRG Limited is a UK company, limited by guarantee. All rights reserved. KPMG IFRG Limited, registered in England No 5253019. Registered office: 15 Canada Square, London, E14 5GL, UK.

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