BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL. In the last few months, many reporting entities have granted a significant number of payment holidays on loans, which has an impact on profit and loss. BoE aims to clarify its expectation of how this will impact the Form PL reporting. Form PL is used to collect data on the income and expenditure of a reporting institution. The data should be submitted via online statistical collection application (OSCA).
As per the notice, the preferred treatment on the Form PL is that the accrued interest is reported as normal under interest receivable, but that the modification loss caused by granting the payment holiday is recorded as a negative amount in exceptional items (PL14D). This approach most effectively allows to distinguish between the banking services that have been provided by reporters on an ongoing basis during this period—including where payment holidays have been granted—and the exceptional PL impact of the pandemic. BoE also highlighted that any expected credit losses should be reported as usual on the provisions section of the Form PL. In an earlier statistical notice (2020/06) from July 2020, BoE had set out guidance on how interest receivable on loans under the three government coronavirus loan guarantees should be reported on Form PL. The three government coronavirus loan guarantees are Coronavirus Large Business Interruption Loan Scheme (CLBILS), Coronavirus Business Interruption Loan Scheme (CBILS), and Bounce Back Loan Scheme (BBLS).
Keywords: Europe, UK, Banking, COVID-19, Credit Risk, Form PL, Statistical Reporting, Payment Holiday, Loan Guarantee, BoE
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