Loan commitments inside or outside scope

Learning objectives

• Distinguish loan commitments excluded from the scope from those that remain within it (designation at fair value through profit or loss, net settlement, below-market interest rate).L2, L3
• Support in writing, from the facts of the case, the judgement made on whether loan commitments are within or outside the scope.L2, L3

Normative references

• IFRS 9 §2.1Scope: exclusions include interests in subsidiaries, associates and joint ventures accounted for in accordance with IFRS 10, IAS 27 or IAS 28; rights and obligations under leases to which IFRS 16 applies, subject to three exceptions (lessor's lease receivables subject to derecognition and impairment, lessee's lease liabilities subject to paras. 3.3.1 and 3.3.3, embedded derivatives subject to the embedded derivative requirements); rights and obligations arising under insurance contracts within IFRS 17, with exceptions (including some embedded derivatives, separated investment components and the election in para. 8A of IFRS 17); loan commitments other than those in para. 2.3 (the issuer nevertheless applies the impairment requirements to them, and all remain subject to the derecognition requirements). The list is not exhaustive. The reference to para. 3.3.3 for lease liabilities comes from Annual Improvements Volume 11 (annual periods beginning on or after 1 January 2026, earlier application permitted).
• IFRS 9 §2.3Loan commitments that remain within the scope despite the general exclusion: (a) commitments designated at FVTPL, a past practice of selling the assets resulting from the commitments shortly after origination bringing the whole class within the Standard; (b) commitments that can be settled net in cash or by delivering or issuing another financial instrument, which are derivatives (paying out a loan in instalments is not net settlement); (c) commitments to provide a loan at a below-market interest rate.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• Delta SA has granted several loan commitments. Which one remains within the scope of IFRS 9 despite the general exclusion of loan commitments?L2
• A colleague presents four statements about loan commitments under IFRS 9. Which one is wrong?L3