ECB Banking Supervision has announced that institutions will be able to submit their supervisory profit and loss templates under either the old IAS 1 standard or the new IFRS 18. IFRS 18 takes effect on 1 January 2027, while the EBA's amended technical standards incorporating it are expected to apply from the September 2027 reference period. Significant banks may voluntarily use FINREP templates aligned with IFRS 18. For less significant banks, the option applies only if the national supervisor allows it.

What it means: IFRS 18 changes how the income statement is presented, with new categories and subtotals, and it applies to every company using International Financial Reporting Standards. For banks the problem was that for several months of 2027 they would have to prepare financial statements under the new standard but file supervisory reports under the old one. The ECB's decision removes that double burden, in line with its wider push to simplify supervision. Greece's systemic banks, supervised directly by the ECB, can use the option, while for less significant banks the Bank of Greece will decide whether to allow it and will collect each bank's choice. The practical impact reaches software suppliers too: accounting and regulatory reporting systems must be able to produce data under both standards, at least during the transition. Companies outside banking that apply IFRS should also start preparing for IFRS 18, since 2026 comparative figures will need to be restated. Early cooperation between finance, auditors and IT reduces the risk of errors in the first year of application. Banks that choose the new templates early should document the decision, since national authorities will collect information on which option each institution uses.

Read the original on ECB Banking Supervision

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