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Global assessment of the COVID-19 impact on IFRS 9 loan loss provisions

Bernd Engelmann (Faculty of Banking and Finance, Ho Chi Minh City Open University, Ho Chi Minh City, Vietnam)
Thi Thanh Lam Nguyen (Independent Researcher, Auckland, New Zealand)

Asian Review of Accounting

ISSN: 1321-7348

Article publication date: 21 September 2022

Issue publication date: 9 February 2023




This article aims to analyze the impact of COVID-19 measures by governments and central banks on International Financial Reporting Standards (IFRS) 9 loan loss provisions (LLPs). Changes in the total amount of LLPs, distribution of outstanding loan balance among IFRS 9 stages and credit risk parameters used for calculation are investigated for each world region where banks report under IFRS.


Data for a global selection of 105 banks reporting under IFRS were collected from 2019 to 2020 annual reports, financial statements, and Pillar III reports. These data provide the basis to empirically analyze the impact of COVID-19 on LLPs.


In most world regions Stage 2 balances increase while Stage 3 balances remain comparatively stable. The credit risk parameters used for computing LLPs remained stable in 2020. However, in China, the impact of COVID-19 on banks was not detected. Mean Stage 1 balances for Chinese banks increased slightly during the pandemic. Aside from the COVID-19 impact, we find that LLPs, credit risk parameters, and loss absorption capacities are significantly lower for banks in Canada, Oceania and Western Europe compared to those in the rest of the world.


There exists previous research examining the COVID-19 impact on financial stability, implementation of emergency rules and country-wide analyses to anticipate default rates depending on recovery scenarios. However, this is the first global study on the immediate impact of COVID-19 on LLPs. It reveals the significant differences between world regions and provides implications about their resilience against future credit shocks.



Engelmann, B. and Lam Nguyen, T.T. (2023), "Global assessment of the COVID-19 impact on IFRS 9 loan loss provisions", Asian Review of Accounting, Vol. 31 No. 1, pp. 26-41.



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