The Implementation Of The New Financial Instrument Standards For SPD Bank Financial Impact Study

To meet the needs of economic development in the new age,Treasury Department PRC revised and issued new standards on financial instruments in May 2017,which always regulated the classification and measurement of monetary instruments.This standard change is affected greatly when the commercial banks with a large number of financial assets.Choosing SPD Bank as a case,this paper compares its financial situation before and after the implementation of the new standards,and explores what impact commercial Banks will have new standards after implementation.Firstly,the influence of the new standards on commercial banks is analyzed.The classification of financial assets is based on equity instruments of commercial banks are divided into financial assets measured at fair value.The newly implemented expected credit loss model can effectively promote commercial banks to make a scientific and standardized comprehensive evaluation of future credit losses.At the same time,the profits of commercial banks will be affected to some extent,and the net assets will also show a trend of varying degrees of decrease.Secondly,this paper takes Shanghai Pudong Development Bank as the case,and explores the impact of the implementation of the new criteria evaluated its financial and operational status conditions through comparative analysis of the standards conversion date and recent financial report data.The findings:First,the classification basis and measurement mode of financial Assets in the new monetary instrument in the standard was revised,which leads to significant changes in the financial asset structure of SPD Bank,especially the proportion of financial assets measured at fair value.To a certain extent,banks have achieved results in optimizing the allocation of assets.It can not only make asset classification more objective,but also restrict the space of earnings management of commercial banks to a large extent.At the same time,it can standardize the consistency of accounting treatment and ensure the authenticity and effectiveness of financial data.Second,the new standards for the impairment of financial instruments to make new provisions.On the one hand,expand the range of impairment of financial assets,and add credit guarantee and payment commitment items originally belonging to financial liabilities.On the other hand,a new expected credit calculation model is adopted.Cancel the original impairment method,new expected loss method.Through the calculation of expected losses brought by credit risks and subjective judgment and evaluation,it is beneficial for banks to draw impairment provisions more accurately and effectively,which also makes SPD Bank’s asset impairment provisions greatly increase on the day of standard switching.The elimination of the old model and the establishment of the new ECL model promoted SPD Bank’s consideration and judgment of future risks and improved its risk management ability.Third,with the gradual reduction of operating profit and the increase in the variation range of other comprehensive income items,resulting in a decline in profitability.Although the increase of the provision for assets has reduced the risk of production and operation to some extent,the capital adequacy ratio has decreased.Affected by operating profit and expected credit loss,the profitability of SPD Bank will decline for a period of time under the premise of improving risk control.In the end,this article proposes : Suggestions include building an interconnected data platform,improving risk control capabilities,changing investment and financing strategies,and strengthening professional team building.