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      Scope publishes updated bank financials forecast methodology
      WEDNESDAY, 18/03/2015 - Scope Ratings AG
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      Scope publishes updated bank financials forecast methodology

      Updated methodology reflects new accounting and regulatory developments: no impact on current ratings and no change in the way Scope forecasts a bank’s financials.

      Scope Ratings has today published its updated “Forecasting Bank Financials” methodology, initially released in February 2014. The changes in the methodology are not material, reflecting mostly updated accounting rules and new regulatory developments.

      The updated methodology does not lead to any action on current bank ratings or rating outlooks, nor to any shift in the approach underpinning the forecasting process.

      Among the updates, Scope’s revised forecasting methodology highlights the impact of the forthcoming introduction of IFRS 9 on its forecasting process. In addition, the upcoming introduction of MREL and TLAC as new prudential indicators is likely to influence the way the market looks at the loss absorption ability of banks. The updated methodology reflects the impact of these forthcoming prudential metrics on Scope’s forecasting process.

      “Forecasting is first and foremost a fundamental analytical process that does not materially change with time”, noted Jacques-Henri Gaulard, who authored the methodology report. “While the tools used in that process evolve, accounting and regulatory rules in particular, the way these rules are processed and applied in the forecasting task does not ultimately change”, he added.

      In light of the immaterial amount and scale of the changes in the new methodology, Scope said that it does not consider it necessary to publish it with a call for comments.

      This methodology should be consulted by rating users in conjunction with related methodologies published by Scope:

      “Bank rating methodology” (first final methodology from February 2014; updated methodology published as call for comments in March 2015)

      “Bank capital securities rating methodology” (September 2014)

      “Covered bonds rating methodology” (call for comments – February 2015)

      Download methodology


       

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