Page 62 - 2021 ANNUAL REPORT draft

Deposits are initially measured at fair value plus transaction costs, and subsequently measured at their
amortized cost using the effective interest method, except where the Bank chooses to carry the liabilities at
fair value through profit or loss.

3.12. Provisions

A provision is recognized if, as a result of a past event, the Bank has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
A provision for restructuring is recognized when the Bank has approved a detailed and formal restructuring
plan, and the restructuring either has commenced or has been announced publicly. The Bank recognizes
no provision for future operating losses.

3.13 Financial guarantees

Financial guarantees are contracts that require the Bank to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with
the terms of a debt instrument. Financial guarantee liabilities are initially recognized at their fair value, and
the initial fair value is amortized over the life of the financial guarantee. The guarantee liability is
subsequently carried at the higher of this amortized amount and the present value of any expected payment
(when a payment under the guarantee has become probable). Financial guarantees, principally consisting
of letters of credit are included within other liabilities.

3.14. Employee benefits

Defined contribution plans

A defined contribution plan is a pension plan under which the Bank pays fixed contributions to a separate
entity. The Bank has no legal or constructive obligations to pay further contributions if the fund does not
hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior
years.
For defined contribution plans, the bank is registered with the Social Security and Housing Finance
Corporation and contributes 10% of employees’ basic salaries to the national provident fund. Employee
contributions are 5% of basic salaries which is deducted before arriving at net salaries.
Under the Scheme, employees are entitled to a lump sum payment upon attaining the retirement age of 60
for men and women respectively.

3.15. Share capital and reserves

(a) Dividend on the Bank’s ordinary shares
Dividends on ordinary shares are recognized as a liability and deducted from equity in the year in which
they are approved by the Bank’s shareholders. Dividends for the year that are approved after the reporting
date are disclosed as an event after the reporting date.

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Guaranty Trust Bank (Gambia) Limited Financial Statements December 2021