Page 41 - GTBANK GAMNBIA 2021 ANNUAL REPORT

is a reasonable and supportable evidence available ✓ The country’s ability to access the capital markets
without undue cost to rebut the presumption. for new debt issuance.
✓ The probability of debt being restructured,
Definition of Default and Credit Impaired Financial resulting in holders suffering losses through
Assets voluntary or mandatory debt forgiveness.
✓ The international support mechanisms in place to
At each reporting date, the Bank assesses whether provide the necessary support as ‘lender of last
financial assets carried at amortised cost and debt resort’ to that country, as well as the intention,
financial assets carried at FVOCI are credit-impaired. A reflected in public statements, of governments
financial asset is ‘credit-impaired’ when one or more and agencies to use those mechanisms. This
events that have a detrimental impact on the estimated includes an assessment of the depth of those
future cash flows of the financial asset have occurred. mechanisms and, irrespective of the political
intent, whether there is the capacity to fulfil the
Evidence that a financial asset is credit-impaired includes required criteria.
the following observable data:

✓ Significant financial difficulty of the borrower or
issuer; Presentation of allowance for ECL in the statement
✓ A breach of contract such as a default or past due of financial position
event;
✓ The lender(s) of the borrower, for economic or ✓ Loan allowances for ECL are presented in the
statement of financial position as follows:
contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower ✓ Financial assets measured at amortised cost: as
a concession(s) that the lender(s) would not a deduction from the gross carrying amount of the
otherwise consider; assets;
✓ It is becoming probable that the borrower will ✓ Loan commitments and financial guarantee
enter bankruptcy or other financial contracts: generally, as a provision;
reorganisation; or ✓ Where a financial instrument includes both a
✓ The disappearance of an active market for a drawn and an undrawn component, and the Bank
security because of financial difficulties. cannot identify the ECL on the loan commitment
✓ The purchase or origination of a financial asset at component separately from those on the drawn
a deep discount that reflects the incurred credit component: the Bank presents a combined loss
losses. allowance for both components. The combined
✓ Others include death, insolvency, breach of amount is presented as a deduction from the
covenants, etc. gross carrying amount of the drawn component.

Any excess of the loss allowance over the gross
A loan that has been renegotiated due to deterioration amount of the drawn component is presented as
in the borrower’s condition is usually considered to be a provision; and
credit-impaired unless there is evidence that the risk of ✓ Debt instruments measured at FVOCI: no loss
not receiving contractual cash flows has reduced allowance is recognised in the statement of
significantly and there are no other indicators of financial position because the carrying amount of
impairment. In addition, loans that are more than 90 these assets is their fair value. However, the loss
days past due are considered impaired. allowance is disclosed and is recognised in the
fair value reserve.
In making an assessment of whether an investment in
sovereign debt is credit-impaired, the Bank considers the Probationary Year
following factors:
In line with IFRS 9 guidelines specifying applicable
✓ The market’s assessment of creditworthiness as probationary years before upgrading financial assets to a
reflected in the bond yields. lower stage, The Bank shall observe the following
✓ The rating agencies’ assessments of
creditworthiness.
Annual Report 2021

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