ECL Impairment Modelling (IFRS 9)

Overview

IFRS 9’s expected credit loss framework requires forward-looking, probability-weighted estimation of credit losses, a significant methodological shift from the incurred-loss models it replaced. LeapWise builds and validates ECL impairment models: probability of default (PD), loss given default (LGD) and exposure at default (EAD) estimation, staging criteria and movement, and the underlying risk-policy documentation that supports the model in front of auditors and regulators.

We work with banks, non-bank financial companies, and corporates with material receivables or lending exposure, building models that are methodologically defensible, properly documented, and genuinely usable by your risk and finance teams, not just delivered as a one-time report.

Who Needs This Service

Banks and NBFCs required to report ECL under IFRS 9
Corporates with material trade receivables requiring simplified ECL approaches
Lenders whose existing ECL model needs validation or a methodology refresh
Institutions facing auditor or regulator challenge on impairment provisioning
Organisations updating risk policies following portfolio or market changes
Finance teams needing staging criteria clarified and consistently applied

Our Approach

Data & Portfolio Assessment

We assess available historical data, portfolio segmentation and existing methodology as the starting baseline.

Model Design

PD, LGD and EAD methodologies are designed or refined to fit your data quality, portfolio type and regulatory context.

Staging & Documentation

Staging criteria are defined and documented, along with the full model methodology paper required for audit.

Validation & Handover

The model is tested, results validated, and your team is walked through ongoing application and updates.

Key Benefits

An ECL methodology that withstands auditor and regulator scrutiny
Staging criteria applied consistently across the portfolio
Documented, defensible PD, LGD and EAD assumptions
Reduced provisioning surprises at year-end
A model your own risk team can operate and update going forward
Risk policies aligned with the model’s actual methodology

Frequently Asked Questions

Do you build the model from scratch or work with our existing one?

Both. We can design a new model where none exists, or review, validate and refine an existing model that is facing challenge or needs updating.

What data do we need to have ready before starting?

Historical default and recovery data where available, portfolio segmentation, and existing credit policies. We assess data readiness as the first step and work with what is available.

Can you help with the simplified approach for trade receivables?

Yes, for corporates with trade receivables rather than a lending book, we apply the simplified ECL approach appropriate to that exposure type.

Will the model documentation satisfy our external auditors?

That is a core objective, the methodology paper and supporting documentation are built specifically to withstand audit review.