CERTYNEX IFRS ACADEMY

Banque Sud holds a loan portfolio within a collection business model. During the year it sold a few loans whose credit risk had deteriorated. Do these sales call the collection model into question?

Yes: as soon as a loan is sold, the portfolio stops being held to collect the cash flows.

No: sales due to the deterioration of credit risk are consistent with a collection model.

No, but the portfolio must then be reclassified to FVOCI from the date of the sale.

No, because the collection model is assessed at the acquisition of each loan, without taking later sales into account.