The European Banking Authority allows banks to use the new IFRS 18 forms earlier to avoid double reporting.
Always see our news on Google
The European Banking Authority calls on national authorities to allow financial institutions to voluntarily use the new FINREP forms aligned with IFRS 18 starting January 2027, before they become mandatory at the end of September 2027. The measure covers the interim period between the application of the new accounting standard in public financial statements and the application of the modified technical standards for supervisory reporting. EBA states that the solution reduces the risk of banks maintaining two different formats for the profit and loss account.
The European Banking Authority, EBA, has issued an opinion recommending national supervisory authorities to allow financial institutions to voluntarily use the new FINREP forms aligned with IFRS 18 during the interim period between January 1, 2027, and the mandatory application of the modified technical standards, expected at the end of September 2027.
In short
IFRS 18 applies to the public financial statements of institutions that use IFRS for accounting periods starting on or after January 1, 2027.
The modified FINREP forms for supervision are expected to become mandatory only at the end of September 2027.
EBA recommends that banks be allowed to voluntarily use the new FINREP forms aligned with IFRS 18 during this interim period.
The solution aims to avoid the costs and difficulties generated by maintaining two different formats for profit or loss information.
Technical package 4.4, phase 1, with the data point model, validation rules, and XBRL taxonomy, is planned for July 2026 or at the latest September 2026.
IFRS 18, the new international accounting standard for the presentation and description of financial statements, replaces IAS 1 and introduces a new structure for the profit and loss account. The standard was approved in the European Union by Regulation (EU) 2026/338 of February 13, 2026, and will be used by institutions applying IFRS in public financial statements for periods starting on or after January 1, 2027.
The issue arises from the difference in timing. Banks must use IFRS 18 in public financial statements from the beginning of 2027, but the supervisory FINREP forms that include the IFRS 18 changes are expected to become mandatory only at the end of September 2027. Without an interim solution, institutions may be forced to report the same profit and loss information in two different formats.
FINREP is the framework through which banks and certain investment firms transmit standardized financial information to supervisory authorities. This data is used to assess profitability, the sustainability of business models, and risks in the banking sector. EBA has chosen from the beginning to align FINREP with IFRS accounting standards to avoid parallel requirements and hard-to-compare information.
EBA's opinion is addressed to the competent authorities in the member states. The authority recommends that they allow institutions wishing to do so to submit profit or loss information using the new revised forms instead of the current forms in Regulation (EU) 2024/3117. The rest of the reporting requirements remain unchanged.
The new forms cover several FINREP tables affected by IFRS 18: F 02.00, F 16.01, F 16.02, F 16.03, F 16.04, F 16.04.1, F 16.05, F 16.06, F 16.07, F 45.02, F 45.03, and F 20.03. In technical package 4.4, phase 1, these will have intermediate labels, such as F 02.01, F 16.01.1, F 45.02.1, and F 20.03.1, to distinguish them from the technical tables still in force in version 4.2.
EBA specifies that the option is voluntary. Institutions can continue to report according to the current accounting framework, IAS 1, or they can use the new IFRS 18 standard for the relevant forms. National authorities can discuss with institutions, within the supervisory dialogue, to ensure that the transition is coherent and timely.
Institutions using the option must adhere to the same frequencies, reference dates, and submission deadlines provided by Regulation (EU) 2024/3117. Data will continue to be submitted to EBA via EUCLID, the European system used for collecting supervisory reports.
EBA also calls for technical coordination. National authorities should receive notifications from institutions in their jurisdiction and inform EBA by the end of 2026 regarding the chosen option. The goal is for the data reported during the interim period to remain complete, comparable, and of high quality.
The final report also explains how the structure of the profit and loss account in FINREP changes. IFRS 18 introduces new categories for the presentation of revenues and expenses: operating, investing, and financing. For banks, the difference is significant as many revenues and expenses are directly related to the core customer financing activity or investments in financial assets.
EBA has chosen a retail and investment bank as a reference model, which provides financing to customers and invests in financial assets as core activities. On this basis, form F 02.00, the profit and loss account, is remodeled to retain as much of the current structure as possible and to ensure standardized presentation. EBA thus avoids a situation where each type of bank would use a very different structure.
The operating category will include revenues and expenses related to the institution's core activities. In FINREP reporting, EBA requires that revenues and expenses related to cash, balances at central banks, demand deposits, and liabilities arising solely from attracting financing be reported in the operating category. The accounting choice allowed by IFRS 18 for these items is not available in FINREP, to maintain a uniform presentation among banks.
The investing category will group revenues and expenses from assets that are not considered part of the core activity. This includes, for example, revenues and expenses from financial investments of a bank that only provides financing to customers but does not treat investments in financial assets as a core activity. It may also include investments in subsidiaries, associated entities, investment properties, or other non-financial assets that are not part of the core activity.
The financing category will include a new item, "Income or expenses on non-operating liabilities," for revenues and expenses from debts that are not related to the bank's core activities and do not solely involve attracting financing. Examples given by EBA include interest on commercial debts, changes in the carrying amount of provisions over time, the effect of changes in the discount rate on provisions, net interest on obligations related to defined benefits, and tenant interest for lease liabilities.
IFRS 18 also introduces the mandatory subtotal "operating profit or loss." EBA adds this to form F 02.00. At the same time, it retains the current subtotal "total operating income, net" and introduces a new subtotal "operating and investing profit or loss," to provide a structured view of performance from operational and investment activities.
The report shows that EBA preferred a standardized solution instead of different forms for different business models. Variants with multiple structures or duplicating all rows in all IFRS 18 categories would have allowed a more individualized reflection of each bank but would have made the supervisory framework more complex and comparisons between institutions more difficult.
To maintain the necessary details for supervision, EBA also modifies forms F 16 and F 45. These will have columns for operating, investing, and financing, allowing banks to continue reporting the current level of granularity, even though in F 02.00 certain information is aggregated into new categories.
The report also includes concrete examples. For a bank that provides financing to customers and invests in financial assets as core activities, interest and gains from a debt securities portfolio can be reported in the operating category. For a bank that only provides financing to customers and does not consider investments in financial assets as a core activity, the same revenues and gains are reported in the investing category.
EBA has also taken into account industry reactions. The public consultation for the forms affected by IFRS 18 ended on May 10, 2026. The authority received 16 responses, six of which were published. Respondents generally supported the remodeling of form F 02.00 based on the retail and investment bank model but pointed out issues for institutions with different business models.
One industry concern was that some non-financial assets may be directly related to a bank's core activity. The report mentions guarantees taken in the course of recovering loans and closed branches or subsidiaries held until sale. In such cases, revenues and expenses may remain in the operating category if they are related to the institution's core activity.
For institutions reporting according to national accounting standards, the changes brought by IFRS 18 do not have a major impact. They will continue to present information on revenues and expenses as they have until now, according to the applicable banking accounting directive.
EBA states that the benefits of the changes, including better supervision, convergence among authorities, and greater transparency, should outweigh the costs. For banks, the immediate stake is to reduce the operational burden in 2027. For supervisors, the stake is that data on the profitability of institutions remains comparable at the time of transitioning to a new accounting standard.
Latest News
23:17
23:03
22:38
22:13
22:01
See more news
NEWS ON THE SAME TOPICS
