This executive summary highlights concerns among financial institutions that an expected macroeconomic downturn will increase credit impairments, reducing earnings and weakening capital adequacy ratios. With interest rates high, capital has become more expensive and difficult to raise. Accounting rules require banks to use forward‑looking models to estimate future credit quality under multiple scenarios and hold appropriate impairment provisions. While necessary, this approach can introduce significant volatility in provisioning levels, earnings, and capital. The interaction between impairments, profitability, and capital strength adds complexity to financial management, increasing pressure on banks to carefully balance risk assessment, regulatory compliance, and capital planning during un

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