Page 35 - GTBANK GAMNBIA 2021 ANNUAL REPORT

✓ terms that limit the Bank’s claim to cash flows
from specified assets (e.g. non-recourse asset b) Financial assets measured at FVTPL
arrangements); and
✓ Features that modify consideration of the time
value of money – e.g. periodical test of interest Debt instruments measured at FVTPL include assets
rates. held for trading purposes, assets held as part of a
portfolio managed on a fair value basis and assets
whose cash flows do not represent payments that are
The Bank holds a portfolio of long-term fixed rate loans for solely payments of principal and interest. Financial
which it has the option to propose a revision of the interest assets may also be designated at FVTPL if by so doing
rate at periodical reset dates. These reset rights are eliminates or significantly reduces an accounting
limited to the market rate at the time of revision. The right mismatch which would otherwise arise. These
to reset the rates of the loans based on the revision in instruments are measured at fair value in the Statement
market rates are part of the contractually agreed terms on of Financial Position, with transaction costs recognized
inception of the loan agreement, therefore the borrowers immediately in the Statement of Income as part of
are obligated to comply with the reset rates without any Other Income. Realized and unrealized gains and
option of repayment of the loans at par at any reset date. losses are recognized as part of Other Income in the
The bank has determined that the contractual cash flows Statement of Income.
of these loans are solely payments of principal and
interest because the option varies with the interest rate in
a way that is considered a consideration for the time value c) Equity Instruments
of money, credit risk, other basic lending risks and costs
associated with the principal amount outstanding. Equity instruments are instruments that meet the
definition of equity from the issuer’s perspective; that is,
Financial assets with embedded derivatives are any contract that evidences a residual interest in the
considered in their entirety when determining whether issuer’s net assets.
their cash flows are solely payment of principal and
interest. Equity instruments are measured at FVTPL, unless an
election is made to designate them at FVOCI upon
a) Financial assets measured at FVOCI purchase. For equity instruments measured at FVTPL,
changes in fair value are recognized as part of Other
Financial assets are measured at FVOCI if they are Income in the Statement of Income. The Bank can elect
held within a business model whose objective is to hold to classify non-trading equity instruments at FVOCI.
for collection of contractual cash flows and for selling This election will be used for certain equity investments
financial assets, where the assets’ cash flows represent for strategic or longer term investment purposes. The
payments that are solely payments of principal and FVOCI election is made upon initial recognition, on an
interest. Subsequent to initial recognition, unrealized instrument-byinstrument basis and once made is
gains and losses on debt instruments measured at irrevocable. Gains and losses on these instruments
FVOCI are recorded in other comprehensive Income including when derecognized/sold are recorded in OCI
(OCI), unless the instrument is designated in a fair and are not subsequently reclassified to the Income
value hedge relationship. Upon derecognition, realized Statement. Dividends received are recorded in other
gains and losses are reclassified from OCI and income in the Income Statement. Any transaction costs
recorded in Other Income in the Statement of Income. incurred upon purchase of the security are added to the
Foreign exchange gains and losses that relate to the cost basis of the security and are not reclassified to the
amortized cost of the debt instrument are recognized in Income Statement of on sale of the security.
the Statement of Income. Premiums, discounts and Transaction cost on disposal of equity instruments is
related transaction costs are amortized over the recognised as an expense in the income statement.
expected life of the instrument to Interest income in the
Statement of Income using the effective interest rate Financial liabilities are classified into one of the following
method. Impairment on financial assets measured at measurement categories:
FVOCI is calculated using the expected credit loss
approach. ✓ Amortised cost;

Annual Report 2021

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