IFRS 9 (as issued by IASB)

IFRS 9 ECL Calculator
UAE

IFRS 9 expected credit loss calculator with UAE-specific regulatory context, SCA / ADAA expectations, and local macroeconomic indicators for forward-looking adjustments.

Provision Matrix

Define aging buckets, enter gross carrying amounts and historical loss rates. Per IFRS 9.B5.5.35.

Forward-Looking Adjustment

Required by IFRS 9.5.5.17. Purely historical rates are not IFRS 9 compliant.

Advanced Features

Optional: probability-weighted scenarios, movement schedule, specific assessment, and entity details.

IFRS 9 ECL Audit Working Paper Template — free PDF

Practical audit guide covering the simplified approach provision matrix methodology, forward-looking adjustment documentation template, probability-weighted scenario framework, IFRS 7.35H movement schedule template, common ISA 540 findings on ECL estimates, and industry benchmark loss rates for 12 sectors.

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IFRS 9 ECL in UAE — IFRS 9 (as issued by IASB)

The United Arab Emirates applies IFRS 9 Financial Instruments as issued by the International Accounting Standards Board (IASB), without modification. IFRS has been mandatory for UAE-listed entities since 2015, and IFRS 9 became effective for annual periods beginning on or after 1 January 2018. The Securities and Commodities Authority (SCA) regulates financial markets and requires IFRS compliance for entities listed on the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX). The Abu Dhabi Accountability Authority (ADAA) provides oversight for government-related entities in Abu Dhabi. The UAE Central Bank (CBUAE) has issued specific guidance on IFRS 9 ECL implementation for banks and financial institutions operating in the UAE, including detailed expectations for model governance, provisioning levels, and the use of forward-looking macroeconomic information. The UAE economy is characterised by significant government-related entity (GRE) activity, a dominant real estate and construction sector, reliance on oil and gas revenues, and a large expatriate workforce. These structural features create unique ECL considerations that require adaptation of standard IFRS 9 methodologies to the UAE business environment.

Regulatory Context — SCA / ADAA

The UAE Central Bank has issued circular guidance on IFRS 9 ECL implementation for banks, including requirements for provisioning adequacy, model governance, and disclosure standards that supplement the IFRS 9 standard. Key CBUAE expectations include minimum provisioning levels for certain asset categories, requirements for forward-looking macro-economic scenario analysis using UAE-specific indicators, and expectations for independent model validation. The SCA requires IFRS compliance and monitors financial reporting quality for listed entities through its review processes. The DFM and ADX may request additional disclosures or clarifications from listed companies regarding ECL methodology and provisioning adequacy. ADAA provides oversight for Abu Dhabi government entities, many of which are significant commercial enterprises (such as Mubadala, ADNOC group entities, and Aldar). The UAE has no domestic accounting standard equivalent, so IFRS 9 applies without the dual-reporting complexities found in other jurisdictions. The Dubai Financial Services Authority (DFSA) regulates entities within the Dubai International Financial Centre (DIFC) and aligns its financial reporting requirements with IFRS.

Practical Guidance for UAE

UAE entities applying the simplified approach for trade receivables should construct provision matrices reflecting the unique structure of the UAE economy. Critical segmentation criteria include customer type (government-related entity versus private sector versus free zone entity), industry sector (real estate, construction, oil and gas, trading, hospitality, and services being the most significant), geographic emirate (economic conditions and counterparty profiles vary across Dubai, Abu Dhabi, and other emirates), payment terms, and ageing bracket. Government-related entity receivables may require special consideration: while GREs often benefit from implicit or explicit government support, payment delays can be significant. Forward-looking adjustments should reference UAE Central Bank economic data, Dubai and Abu Dhabi GDP forecasts, oil price projections (given the economy's hydrocarbon exposure), real estate price indices from REIDIN and Property Finder, and the Emirates NBD Purchasing Managers' Index. The AED's peg to the US dollar means that US Federal Reserve interest rate decisions directly affect UAE monetary conditions and credit availability.

Audit Expectations

Auditors of UAE entities must apply International Standards on Auditing and face expectations from the SCA and CBUAE regarding ECL audit quality. Common audit challenges in the UAE include the limited availability of historical default data for some entity types, the difficulty of obtaining reliable forward-looking macro-economic data for specific UAE sectors, the assessment of government support for GRE receivables, and the evaluation of ECL models in a jurisdiction without a long IFRS reporting history. The CBUAE has required external audit firms to report on the adequacy of ECL provisioning for banks, creating specific audit deliverables beyond the standard financial statement audit. UAE auditors should be prepared to address the unique credit risk characteristics of the local market.

UAE-Specific Considerations

UAE-specific ECL considerations are substantial and require significant adaptation of standard IFRS 9 approaches. The real estate cycle is a dominant credit risk factor: Dubai and Abu Dhabi property markets have experienced significant boom-and-bust cycles, and entities with receivable exposures to developers, contractors, and real estate agents should incorporate property price indices and transaction volume data as forward-looking ECL inputs. Government-related entities represent a significant portion of the UAE economy, and ECL assessment for GRE receivables requires judgement about the level of government support — implicit support may reduce probability of default, but payment delays remain common. The oil price is a structural driver of the UAE economy despite diversification efforts, and receivables from oil-dependent sectors should incorporate oil price scenario analysis. The UAE's large expatriate workforce means that consumer credit risk is influenced by visa status and employment contract security: a downturn leading to job losses may result in expatriates departing the country, complicating debt recovery. UAE insolvency law has been modernised through Federal Decree-Law No. 9 of 2016 (as amended), but the practical framework for corporate restructuring and bankruptcy is still developing, and loss given default assumptions should reflect the relatively limited track record of successful corporate reorganisation in the jurisdiction.

Forward-Looking Data Sources

UAE Central Bank Economic Report
Source: Central Bank of the UAE (CBUAE)
Annual and quarterly economic data including GDP growth, credit growth, and banking sector indicators for ECL scenario development
Emirates NBD Purchasing Managers' Index
Source: S&P Global / Emirates NBD
Monthly composite indicator of UAE non-oil private sector activity covering output, new orders, employment, and business expectations
REIDIN Property Price Index
Source: REIDIN Real Estate Information
Monthly residential and commercial property price indices for Dubai and Abu Dhabi, critical for assessing real estate sector credit risk
Brent Crude Oil Price Forecast
Source: OPEC / EIA / CBUAE
Oil price projections used for assessing the credit risk impact of hydrocarbon revenue fluctuations on the UAE economy
Al Etihad Credit Bureau Data
Source: Al Etihad Credit Bureau
UAE national credit bureau providing consumer and commercial credit scores and default data for ECL model calibration
US Federal Reserve Funds Rate
Source: US Federal Reserve
Key reference rate affecting UAE monetary conditions through the AED-USD peg, directly influencing credit availability and default rates

Common Inspection Findings

Government-related entity receivable ECL not adequately assessed — implicit government support assumed without documented basis for probability of default reduction

Real estate cycle risk not reflected in ECL estimates — no property price sensitivity analysis despite material receivable concentration in construction and development sectors

Forward-looking scenarios did not incorporate oil price projections despite the UAE economy's structural hydrocarbon exposure

Historical loss data insufficient for ECL calibration — less than five years of internal data used without supplementation from external sources

Expatriate workforce credit risk not considered — impact of potential visa cancellations and departures on consumer receivable recovery not assessed

Frequently Asked Questions — UAE

What specific ECL guidance has the UAE Central Bank issued for banks?
The CBUAE has issued circular guidance requiring banks to apply probability-weighted forward-looking scenarios for ECL estimation, maintain minimum provisioning levels for certain asset categories, implement robust model governance frameworks with independent validation, disclose detailed ECL methodology in financial statements, and report ECL provisioning adequacy to the CBUAE through regulatory returns. The CBUAE guidance supplements IFRS 9 requirements and may result in higher provisioning levels than the accounting standard alone would require.
How should UAE entities assess ECL on government-related entity (GRE) receivables?
GRE receivables require careful assessment of the level of government support, which may be explicit (government guarantee) or implicit (strategic importance, ownership structure). Where explicit guarantees exist, the GRE's probability of default may approach that of the sovereign. For implicit support, entities should exercise judgement about the likelihood and extent of government intervention in case of financial distress. Regardless of default probability, payment delay risk is common for GRE receivables, and the time value of money impact of extended collection timelines should be factored into ECL estimates.
How does the Dubai real estate cycle affect ECL estimates for UAE entities?
The Dubai real estate market has historically experienced significant price volatility, with boom-and-bust cycles affecting developers, contractors, brokers, and downstream service providers. Entities with receivable exposures to real estate-linked counterparties should incorporate property price indices (from REIDIN, DLD, or Property Finder), transaction volume data, and off-plan sales completion rates as forward-looking ECL inputs. During market downturns, ECL provisions for real estate sector receivables may need to increase substantially, reflecting elevated default probabilities and reduced recovery rates.
How does the AED-USD peg affect forward-looking ECL assumptions in the UAE?
The AED is pegged to the US dollar at a fixed rate of AED 3.6725 per USD. This means that US Federal Reserve interest rate decisions directly affect UAE monetary conditions: rising US rates tighten UAE credit conditions, potentially increasing default rates. The Fed funds rate and US economic indicators should be incorporated as forward-looking inputs alongside UAE-specific data. For receivables denominated in currencies other than AED or USD, the exchange rate outlook for those currencies against the dollar-pegged AED should be considered in ECL estimates.
What challenges do UAE entities face in obtaining historical loss data for ECL calibration?
The UAE's relatively short IFRS reporting history and the rapid growth of many UAE businesses mean that long time-series of historical default data may not be available. Entities should supplement internal data with external sources including CBUAE aggregate banking statistics on non-performing loans, credit bureau data from Al Etihad Credit Bureau, industry benchmark data from UAE banking association publications, and regional comparables where local data is insufficient. Where historical data is limited, entities should place greater reliance on forward-looking adjustments and qualitative overlays, with enhanced disclosure of the resulting estimation uncertainty.

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