Article
In this paper, the linkages between accounting impairment provisions, earnings, and capital are analyzed and a set of strategies to provide better visibility of impacts of impairments on earnings and capital are defined.
February 2023
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Article
Addressing ALM uncertainties during inflection points in the business cycle
Article
Environmental, social and governance (ESG) is a huge and emerging risk area for financial institutions. A common taxonomy and level of understanding around risk areas are essential for an effective enterprise-wide risk control and reporting framework.
October 2022
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Tim Handley
Article
A framework to understand the extent of your allowance (updated for Q1 2022)
Article
This article looks at how firms can position for resilient financial performance in any rate scenario, and covers topics such as interest rate risk, CECL, and hedging.
Article
A framework to understand the extent of your allowance (updated for Q4 2021)
Article
In this article, we offer some criteria to consider when evaluating a CECL solution provider, along with some of the less obvious, “hidden costs” of CECL that institutions should examine before selecting the best partner to fit their needs.
February 2022
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Alex Cannon
Article
In this paper, we continue the research analysis that has been performed for more than a year, which lets us establish a point of view on whether banks will keep building, maintain, or start releasing allowances into the next quarter.
Article
In this paper, we continue the research analysis that has been performed for more than a year, which lets us establish a point of view on whether banks will keep building, maintain, or start releasing allowances into the next quarter.
Article
As US financial institutions have filed allowance estimates for Q3 2020, Moody's Analytics analyzed whether Current Expected Credit Loss (CECL) leads to larger and more volatile levels of allowance than under the Incurred Loss Model (ILM).
Article
In this paper, we provide an update, based on 14 top financial institutions, of our triangulation benchmark as of December 31, 2020 to understand the range of reserve action to be expected for Q4 2020 as well as benchmarking for Q1 2021 reserve levels.
Article
Twenty-one Moody's Analytics experts share their views on what will drive markets and risk management strategies in 2021.
December 2020
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Whitepaper
Moody's Analytics has developed a framework that addresses areas of uncertainty and provides ongoing comparability analysis.
August 2020
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Alex Cannon, Ian McCready, Laurent Birade, Phillip Lai
Whitepaper
In this paper, we set out to estimate, based on 14 top financial institutions, a lower- and upper-bound current expected credit loss (CECL) estimate as of March 31, 2020.
Whitepaper
COVID-19 created additional complexities for institutions navigating CECL accounting standard. This paper provides a natural quantitative approach for incorporating concentration in the allowance process and portfolio management.
Article
The initial intent of the CECL guidelines was to make loan-loss allowances more reactive to the credit environment. By setting aside greater allowances, organizations would be better prepared for a default.
February 2020
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Amnon Levy
Article
One benefit CECL will bring to the accounting space is moving away from the complicated and burdensome accounting for Purchase Credit Impaired (PCI) assets.
Article
Recent CECL impact disclosures point directly to credit cards as the largest driver of the allowance. We can confirm those recent disclosures by looking at the consumer default volumes chart in Figure 1,which clearly point to the credit card segment as being one of the largest contributors of loss today.
Article
Using multiple scenarios in CECL can temper some of the volatility in the economic forecasts – the part that results from our inability to forecast the economy with complete precision.
Article
The industry is currently a hive of CECL-related activity. Many banks are busily testing their systems or finalizing their preparations for the go-live date, which is either in January 2020 or somewhat later, depending on the organization. Some are still making plans for implementation, and the rest are worried that they should be.
August 2019
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Dr. Tony Hughes
Article
With many of the larger SEC filers well ahead in their CECL preparations and gearing up for validation, we examine how the requirements of an R&S forecast and reversion may be interpreted.
Article
Loan-loss provisioning models must take a variety of economic and client factors into account, but, with the right approach, banks can develop sensible loss forecasts that are more accurate and less susceptible to volatility.
June 2019
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Dr. Tony Hughes
Article
This paper explores the CECL standard's background, the choices community banks, regional banks, and credit unions face, and some suggested approaches for dealing with these challenges.
Article
Alternative economic scenarios are invaluable for quantifying and managing forecast risk. In this article, we define these constant severity scenarios and the models used to estimate their probabilities.
Article
From an accounting standpoint, the changes in how to account for credit-loss reserves within the banking, insurance, and lending industries stemming from the Financial Accounting Standards Board's (FASB) current expected credit losses (CECL) guidance are significant.
Article
Moody's Analytics Director Robby Holditch recently visited the Barret School of Banking to discuss the upcoming current expected credit loss (CECL) accounting standard and its ramifications for the community banking space.
May 2019
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Whitepaper
This paper studies how earnings volatility induced by credit risk can impact share price performance for financial institutions under CECL and IFRS 9, and quantifies the benefit of an active credit risk management practice.
April 2019
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Amnon Levy, Xuan Liang, Pierre Xu
Article
Good-quality CECL projections can be developed using high-quality data that is available free of charge.
April 2019
Pdf
Dr. Tony Hughes
Article
While many institutions are currently in the throes of implementing the current expected credit loss (CECL) accounting standard, some are thinking ahead and some that are not. CECL will have an unavoidable impact on management disclosures, specifically around explaining period-over-period changes in allowance.
Whitepaper
Moody's Analytics provides financial intelligence and analytical tools supported by risk expertise, expansive information resources, and the application of new technology. Its solutions, made up of research, data, software and professional services, are assembled with the aim of delivering a seamless customer experience.
February 2019
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