Page 42 - GTBank Annual Report 2020 eBook
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bond yields.
The rating agencies’ assessments of Probationary Year
creditworthiness.
The country’s ability to access the In line with IFRS 9 guidelines specifying
capital markets for new debt issuance. applicable probationary years before upgrading
The probability of debt being financial assets to a lower stage, The Bank shall
restructured, resulting in holders observe the following probationary year in
suffering losses through voluntary or transferring financial asset back to a lower stage
mandatory debt forgiveness. following a significant reduction in credit risk:
The international support mechanisms
in place to provide the necessary When there is evidence of a significant
support as ‘lender of last resort’ to that reduction in credit risk for a financial
country, as well as the intention, instrument in stage 2, a probationary
reflected in public statements, of year of 90 days will be applied to
governments and agencies to use confirm if the risk of default on such
those mechanisms. This includes an financial instrument has decreased
assessment of the depth of those sufficiently before upgrading such
mechanisms and, irrespective of the exposure to stage 1.
political intent, whether there is the
capacity to fulfil the required criteria. When there is evidence that a financial
asset in stage 3 (other than originated
Presentation of allowance for ECL in the or purchased credit impaired financial
statement of financial position asset) is no longer credit impaired and
also that there is a significant reduction
Loan allowances for ECL are in credit risk for a financial instrument
presented in the statement of financial in stage 3, a probationary year of 90
position as follows: days will be applied to confirm if the
risk of default on such financial
Financial assets measured at instrument has decreased sufficiently
amortised cost: as a deduction from before upgrading such exposure to
the gross carrying amount of the stage 2.
assets;
Loan commitments and financial When there is evidence that a financial
guarantee contracts: generally, as a asset in stage 3 (other than originated
provision; or purchased credit impaired financial
Where a financial instrument includes asset) is no longer credit impaired and
both a drawn and an undrawn also that there is a significant reduction
component, and the Bank cannot in credit risk for a financial instrument
identify the ECL on the loan in stage 3, a probationary year of 180
commitment component separately days will be applied to confirm if the
from those on the drawn component: risk of default on such financial
the Bank presents a combined loss instrument has decreased sufficiently
allowance for both components. The before upgrading such exposure to
combined amount is presented as a stage 1.
deduction from the gross carrying
amount of the drawn component. Any The regulator noted that the essence of the
excess of the loss allowance over the waiting year is to confirm that the risk of default
gross amount of the drawn component has decreased sufficiently before upgrading the
is presented as a provision; and
Debt instruments measured at FVOCI: financial asset to a lower stage
no loss allowance is recognised in the Governance
statement of financial position
because the carrying amount of these
assets is their fair value. However, the The Bank’s Board of Directors and Senior
loss allowance is disclosed and is Management are responsible for ensuring that
recognised in the fair value reserve. the bank has appropriate credit risk management Annual Report 2020
Guaranty Trust Bank Gambia Limited www.gtbankgambia.com 40
