Implementation of the Financial Accounting Standards Board’s current expected credit loss standard is well underway at major banks, according to a survey by Deloitte, though the new standard could show how risky many of the loans really are.

The new standard could expose a much greater extent of loan impairments than previously shown, the survey indicated. Most of the 31 U.S. banks surveyed by Deloitte last summer said that if the CECL standard were in place today, their impairment number would increase by more than 10 percent for consumer loans (75 percent of banks), mortgages (71 percent) and commercial loans (54 percent). As a result, most banks anticipate a decrease in their capital ratios. Over 80 percent of the banks surveyed also expect their profit and loss to become more volatile under CECL.

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