Page 32 - GTBANK GAMNBIA 2021 ANNUAL REPORT

flow hedging instruments or qualifying net investment comprehensive income); and all derivatives are
hedging instruments. measured at fair value through profit or loss.
All foreign exchange gains and losses recognized in the
Income statement are presented net in the Income An entity may, at initial recognition, designate a financial
statement within the corresponding item. Foreign asset as measured at fair value through profit or loss if
exchange gains and losses on other comprehensive doing so eliminates or significantly reduces an
income items are presented in other comprehensive accounting mismatch.
income within the corresponding item.
In the case of changes in the fair value of monetary assets
denominated in foreign currency, a distinction is made The Bank has undertaken an assessment to determine
the potential impact of changes in classification and
between translation differences resulting from changes in measurement of financial assets. The adoption of IFRS 9
amortized cost of the security and other changes in the did not result in significant changes to existing asset
carrying amount of the security. Translation differences measurement bases.
related to changes in the amortized cost are recognized
in profit or loss, and other changes in the carrying amount,
except impairment, are recognized in equity.

Impairment Methodology
3.4 Cash and cash equivalents

The IFRS 9 impairment model is applicable to all financial
Cash and cash equivalents include notes and coins on assets at amortized cost, debt instruments measured at
hand, unrestricted balances held with central bank of fair value through other comprehensive income, lease
The Gambia, balances held with other banks and receivables, loan commitments and financial guarantees
Money market placements. Cash and cash equivalents not measured at fair value through profit or loss.
are carried at amortised cost in the Statement of
financial position.
IFRS 9 replaces the ‘incurred loss’ impairment approach
with an Expected Credit Loss (‘ECL’) model, resulting in
3.5 Financial instruments earlier recognition of credit losses.

Expected credit losses are the unbiased probability
Classification and Measurement
weighted average credit losses determined by evaluating
a range of possible outcomes and future economic
IFRS 9 requires financial assets to be classified into one conditions.
of three measurement categories: fair value through profit
or loss, fair value through other comprehensive income
and amortised cost. The ECL model has three stages. Entities are required
to recognise a 12 month expected loss allowance on
initial recognition (stage 1) and a lifetime expected loss
Financial assets will be measured at amortised cost if allowance when there has been a significant increase
they are held within a business model with the objective in credit risk since initial recognition (stage 2). Stage 3
of which is to hold financial assets in order to collect requires objective evidence that an asset is credit-
contractual cash flows, and their contractual cash flows impaired, which is similar to the guidance on incurred
represent solely payments of principal and interest. losses in IAS 39.
Financial assets will be measured at fair value through
other comprehensive income if they are held within a The requirement to recognise lifetime ECL for loans
business model the objective of which is achieved by which have experienced a significant increase in credit
both collecting contractual cash flows and selling risk since origination, but which are not credit impaired,
financial assets and their contractual cash flows does not exist under IAS 39. The assessment of
represent solely payments of principal and interest. whether an asset is in stage 1 or 2 considers the
relative change in the probability of default occurring
Financial assets not meeting either of these two over the expected life of the instrument, not the change
business models; and all equity instruments (unless in the amount of expected credit losses. Reasonable
designated at inception to fair value through other and supportable forward looking information will also be
Annual Report 2021

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