BAKU, Azerbaijan, February 25. The Board of the
Central Bank of Azerbaijan (CBA) approved the "Methodological
guidance on the application of IFRS 9 in the classification of
assets and the provisioning" on December 23, 2025, to align the
classification of assets and the provisioning in banks with the
Ninth International Financial Reporting Standard (IFRS 9), Trend reports via the
CBA.
The adoption of the guidance, which has been approved for the
implementation of the "Strategy for the Development of the
Financial Sector 2024-2026," marks a pivotal step in the
integration of IFRS standards into prudential regulation and
reporting frameworks. This initiative is crucial for aligning
prudential regulation with leading international practices, thereby
enhancing both accountability and transparency within the banking
sector. Furthermore, it fosters greater comparability between banks
on a global scale.
The guidance outlines the classification of bank assets in
accordance with IFRS 9 for the purposes of prudential supervision.
Additionally, it introduces a harmonized approach to provisioning
practices. Starting in 2026, asset classification and provisioning
within banks will be conducted concurrently under both IFRS 9 and
the existing prudential requirements, ensuring a dual framework of
compliance.
In order to provide banks with the necessary methodological
support and clarify questions of interest to banks regarding the
application of the guidance, the CBA held meetings with bank
specialists who will be responsible for preparing IFRS 9 reports,
and detailed discussions of practical issues were held.
The guidance document can be found at the link:
https://uploads.cbar.az/assets/93968292987fc27975a90fcfd.pdf
