This report presents the final version of the templates affected by the implementation of IFRS 18 in FINREP, which will be included in the final draft ITS on supervisory financial reporting. IFRS 18, which supersedes IAS 1, will be mandatory for public consolidated financial statements of institutions from reporting periods beginning on or after January 1, 2027. The proposed changes aim to align supervisory…
This final report, published in July 2026 by the European Banking Authority (EBA), concerns the draft Implementing Technical Standards (ITS) related to the implementation of IFRS 18 in the prudential financial reporting FINREP, pursuant to Article 430(7) of Regulation (EU) No 575/2013. The scope mainly covers amendments to FINREP templates impacted by IFRS 18, notably the income statement (template F 02.00) and templates F 16 and F 45, for banking institutions subject to IFRS in the European Union, for financial years starting on or after January 1, 2027. The document comprises 50 pages, approximately 47 of which are provided for this summary.
This report presents the final version of the modified FINREP templates to integrate IFRS 18, which replaces IAS 1 and imposes a new income statement structure in three categories: operating, investing, and financing. This harmonization aims to align prudential reporting with the public financial statements of IFRS institutions, thereby reducing duplicate requirements and improving comparability and transparency (p. 3-4). The main changes concern:
- The restructuring of template F 02.00 according to the model of a retail and investment bank, chosen as a reference to standardize the presentation (p. 6-7).
- Maintaining the current level of information in the operating category, where most revenues and expenses are expected (p. 6-7).
- Introducing a more aggregated representation of revenues and expenses outside main activities in the investing and financing categories (p. 6-7).
- Retaining the current detail in templates F 16 and F 45, with added columns for the three IFRS 18 categories, to preserve granularity regardless of the business model (p. 7-8).
Implementation is planned for financial years starting January 2027, with publication of DPM models and XBRL taxonomy before September 2026 (p. 3). The report also includes a qualitative cost-benefit analysis concluding that the supervisory and convergence benefits outweigh the costs (p. 14-19). Finally, the public consultation confirmed broad support while highlighting needs for adjustments to better reflect business model diversity and improve instruction clarity (p. 29-31).
FINREP is a prudential financial reporting framework aligned with IFRS standards adopted by the EU, intended for credit institutions and investment firms. The IASB published IFRS 18 in April 2024, replacing IAS 1, which imposes a new standardized income statement structure in three main categories (operating, investing, financing) to improve comparability and transparency of performance (p. 4-5). This standard will be mandatory for public consolidated financial statements from January 1, 2027, following its adoption by the European Commission (p. 3-4). Consequently, FINREP must be adapted to avoid divergent or duplicate requirements between public and prudential reporting, in line with the EBA’s initial intention to align these reportings (p. 4). The report aims to define amendments to FINREP templates and associated instructions, favoring rapid implementation to reduce operational risks and facilitate transition (p. 4-5). The scope covers templates mainly affected by IFRS 18, excluding the entirety of ITS which will be finalized after public consultation (p. 5).
Structure and classification according to IFRS 18:
- IFRS 18 imposes classification of income statement items into three categories: operating (main activities), investing (assets unrelated to main activities, participations, etc.), and financing (expenses related to non-operational liabilities) (p. 5-6).
- Banks must assess their main activities to correctly classify revenues and expenses (p. 5-6).
- Two new mandatory subtotals are introduced: 'operating result' and 'result before financing and taxes', the latter may be omitted if all financing items are within operating (p. 6).
FINREP template modifications:
- Template F 02.00 is restructured based on the model of a retail and investment bank, considered representative of most FINREP institutions (p. 6-7).
- The operating category retains most current lines, with clarified instructions to include only items related to main activities (p. 6-7).
- Investing and financing categories group items outside main activities, with new aggregated items for revenues and expenses on financial and non-financial assets (p. 7-8).
- Templates F 16 and F 45 keep their detail level, with added columns for operating, investing, and financing categories to ensure granularity and comparability regardless of business model (p. 7-8).
- NGAAP reporting is not impacted by these changes (p. 7).
Cost-benefit analysis and options:
- Two main options were evaluated: not integrating IFRS 18 into FINREP (risk of double reporting and increased costs) or integrating it (harmonization, cost reduction); integration was chosen (p. 14-16).
- For the structure of template F 02.00, three options considered: keep current structure with reference to the standard banking model (chosen), adapt according to business model, or duplicate lines by IFRS 18 categories (p. 16-17).
- Regarding subtotals, the chosen option includes the mandatory IFRS 18 subtotal and retains current subtotals for clarity (p. 17).
- For templates F 16 and F 45, adding columns for the three IFRS 18 categories was preferred to preserve granularity (p. 17-18).
Public consultation and adjustments:
- Broad support for proposals, with concerns about business model diversity and increased use of residual lines (p. 29-30).
- Requests for adjustments to maintain granularity of information on real estate investments, participations, and other non-financial assets in the operating category when these are main activities (p. 29-31).
- Clarifications and additional examples were added to facilitate consistency and reconciliation between templates (p. 30-46).
- Specific instructions for institutions with non-calendar year-ends to avoid temporary double reporting (p. 32-33).
- Some lines initially proposed were excluded from the IFRS 18 scope as they relate to other simplifications (p. 40).
Findings:
- IFRS 18 imposes a new income statement presentation in three categories, applicable from 2027 (p. 3-6).
- FINREP must be adapted to align prudential reporting with this standard and avoid duplicate requirements (p. 4-5).
- The chosen model for restructuring template F 02.00 is that of a retail and investment bank, covering most cases (p. 6-7).
- Templates F 16 and F 45 retain their granularity with added columns for IFRS 18 categories (p. 7-8).
Assumptions:
- Most FINREP institutions follow a business model close to retail and investment banking (p. 16).
- Classification of revenues and expenses outside main activities in investing and financing categories will be more aggregated (p. 6-7).
Interpretations:
- Standardization via a single model simplifies supervision and comparability, at the cost of less transparency for atypical models, compensated by details in F 16 and F 45 (p. 16-18).
- Integration of IFRS 18 into FINREP reduces costs and risks related to double reporting, in line with EFRAG recommendations (p. 14-16).
Uncertainties:
- The precise operational impact will depend on the specifics of divergent business models and institutions’ capacity to apply new instructions (p. 29-31).
- Managing non-calendar year-ends creates a transitional period of double reporting (p. 32-33).
- Use of residual lines in F 02.00 could limit transparency for some institutions (p. 29-30).
The EBA concludes that integrating IFRS 18 into FINREP is necessary and beneficial to harmonize prudential reporting with public financial statements, thus reducing costs and risks of double reporting (p. 18-19). The chosen options favor a standardized approach based on the retail and investment bank model, while maintaining granularity via templates F 16 and F 45 (p. 16-18). Instructions have been adjusted to reduce the use of residual lines and improve consistency between templates, notably for revenues and expenses related to real estate investments, participations, and other non-financial assets (p. 29-38). Clarifications are provided for institutions with non-calendar year-ends to manage the transitional period (p. 32-33). Publication of DPM models and XBRL taxonomy is planned before September 2026, with ITS application from September 2027 (p. 3). The EBA plans to merge this report with the final report of the amended ITS for adoption by the European Commission (p. 3, 5).
Synthesis note written from the full document by DataSAI Academy. This note comes from the scientific library of the DataSAI Academy, open to all.