IFRS to hit Northern Rock profits
Newcastle-based bank Northern Rock will face up to a 10% hit on profits when it adopts international financial reporting standards next year, according to new research.
A report by Credit Suisse First Boston said that IFRS will force the company to amortise all origination fees, incentives and costs over the expected lifetime of a product, which could hit profits by up to £20m, while a change in how application fees are recorded could mean in initial hit on income of £30m.
CSFB downgraded its outlook on the company, which saw its shares fall 20p yesterday.
However, the same report said that the introduction of IFRS could benefit some banks, with HSBC and Alliance & Leicester set to see an increase in profits by as much as 10%.