Expected credit loss

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Financial reporting - impairment of financial assets - IFRS 9.


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


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