Expected credit loss

Financial reporting - impairment of financial assets - IFRS 9

(ECL).

Expected credit loss is a calculation of the present value of the amount expected to be lost on a financial asset, for financial reporting purposes.

It is calculated as:

ECL = PD x EAD x LGD x Discount Factor

Where:

ECL = expected credit loss

PD = probability of default

EAD = exposure at default

LGD = loss given default

Discount Factor is based on the expected date of default

See also

• Default
• Exposure At Default
• Financial asset
• IFRS 9
• Impairment
• Loss Given Default
• Probability of Default