Template-Type: ReDIF-Article 1.0

Author-Name: Eva Gulyas
Author-Workplace-Name: Corvinus University of Budapest
Author-Email: eva.gulyas@uni-corvinus.hu

Author-Name: Marton Miklos Ratky 
Author-Workplace-Name: OTP Bank
Author-Email: Marton.Miklos.Ratky@otpbank.hu


Title: Fair Value of Retail Loans: Are We Following IFRS9 or Misinterpreting It?

Abstract: This study examines the accounting treatment applied to retail loans using
a multiplication factor of 1.3. Answers are sought to the following questions: What
is the correct IFRS accounting treatment of loans with a 1.3 multiplication factor in
their interest rate, which have appeared in the Hungarian banking sector since 2016?
Does the sector report these loans correctly? Is there a possibility for substancebased
accounting treatment? How does the different accounting treatment of
identical loan types affect the comparability of banks' financial statements? After
discussing the results from the literature and presenting the main features of the
loans under review, the methodology of the study is described, before turning to
the dilemmas and consequences of the accounting treatment. In this context, the
IFRS requirements applicable when choosing the measurement principle for the
loans concerned are also analysed. After drawing the conclusions, the paper argues
in favour of measurement at amortised cost.

Classification-JEL: G21, M41, M42
Keywords: bank accounting, IFRS 9, SPPI test, cash flow characteristics, subsidised retail loans
Pages: 77-103
Volume: 22
Issue: 1
Year: 2023
File-URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-22-1-st3-gulyas-ratky.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:22:y:2023:i:1:p:77-103