Page 33 - GTBank Annual Report 2020 eBook

loans which have experienced a significant the Bank becomes a party to the contractual
increase in credit risk since origination, but provisions of the instrument.
which are not credit impaired, does not exist
under IAS 39. The assessment of whether an Classification and Measurement
asset is in stage 1 or 2 considers the relative
change in the probability of default occurring Initial measurement of a financial asset or
liability is at fair value plus transaction costs
over the expected life of the instrument, not the that are directly attributable to its purchase or
change in the amount of expected credit issuance. For instruments measured at fair
losses. Reasonable and supportable forward- value through profit or loss, transaction costs
looking information will also be used in are recognized immediately in profit or loss.
determining the stage allocation. In general, Financial assets include both debt and equity
assets more than 30 days past due, but not instruments.
credit impaired, will be classed as stage 2.
Financial assets are classified into one of the
IFRS 9 requires the use of more forward- following measurement categories:
looking information including reasonable and
supportable forecasts of future economic • Amortised cost;
conditions. The Bank has developed the • Fair Value through Other Comprehensive
capability to model a number of economic Income (FVOCI);
scenarios and capture the impact on credit • Fair Value through Profit or Loss (FVTPL)
losses to ensure the overall ECL represents a for trading related assets.
reasonable distribution of economic outcomes.
Appropriate governance and oversight has The Bank classifies all of its financial assets
been established around the process. based on the business model for managing the
assets and the asset’s contractual cash flow
An assessment of the ECL in the Bank’s characteristics.
balance sheet reflects an increase in the
provisions for credit losses. However, this Business Model Assessment
increase will not have a significant impact on Business model assessment involves
regulatory capital and invariably the Capital determining whether financial assets are
adequacy due to the Bank’s strong earnings managed in order to generate cash flows from
and retention capacity over the years. collection of contractual cash flows, selling
financial assets or both. The Bank assesses
The Bank has not applied the following new or business model at a portfolio level reflective of
amended standards in preparing this financial how groups of assets are managed together to
statement as it plans to adopt these standards achieve a particular business objective. For the
at their respective effective dates. assessment of business model the Bank takes
Commentaries on these new into consideration the following factors:

standards/amendments are provided below. the stated policies and objectives for
the portfolio and the operation of those

Recognition policies in practice. In particular,
whether management’s strategy
The Bank on the date of origination or focuses on earning contractual interest
purchase recognizes loans, debt and equity revenue, maintaining a particular
securities, deposits and subordinated interest rate profile, matching the
debentures at the fair value of consideration duration of the financial assets to the
paid. For non-revolving facilities, origination duration of the liabilities that are
funding those assets or realizing cash
date is the date the facility is disbursed, flows through the sale of the assets
origination date for revolving facilities is the how the performance of assets in a
date the line is availed. All other financial portfolio is evaluated and reported to
assets and liabilities, including derivatives, are Group heads and other key decision
initially recognized on the trade date at which Annual Report 2020

Guaranty Trust Bank Gambia Limited www.gtbankgambia.com 31