Clarification on Stanbic IBTC Bank's Expected Credit Loss Reporting

Stanbic IBTC Statement

It has come to our attention that there have been some misconceptions circulating in recent media reports regarding Stanbic IBTC Bank’s approach to recognizing expected credit losses (ECL) on our risk asset portfolio. 

We would like to take this opportunity to clarify our methods and the principles guiding our financial reporting.

Stanbic IBTC Bank adheres strictly to International Financial Reporting Standards (IFRS), particularly IFRS 9, which dictates the accounting for financial instruments. One of the core aspects of IFRS 9 is the requirement for banks to make provisions for expected credit losses rather than incurred losses. 

This standard is designed to provide a more realistic representation of a bank’s financial health by anticipating potential future risks rather than merely reacting to incurred losses.

Our ECL provisioning is a forward-looking measure reflective, not of losses already realised but of those that our comprehensive risk assessment models predict over the next 12 months. This approach allows us to manage risks proactively rather than reactively. The provision is influenced by detailed macroeconomic projections, including factors such as GDP growth rates, employment figures, industry health, and geopolitical stability, among others.

It is crucial to understand that these provisions are not indicative of actual financial losses but are prudential estimates designed to safeguard the bank against future credit risk exposures. Such proactive measures are a testament to our robust risk management framework, which rigorously evaluates and monitors the creditworthiness of our clients continually.

In line with our commitment to transparency and sound financial practices, we also maintain a strong risk acceptance process. We actively monitor our credit exposures, and any accounts that show signs of significant risk are promptly addressed to mitigate potential adverse impacts on our portfolio.

Stanbic IBTC Bank remains dedicated to upholding the highest standards of banking practice, ensuring that our stakeholders can rely on the accuracy and integrity of our financial reporting. Our proactive risk management measures are a cornerstone of our strategy to maintain financial stability and protect the interests of our clients and investors.

Thank you for your understanding and continued trust in Stanbic IBTC Bank.