Page 47 - GTBank Annual Report 2020 eBook

method, except where the Bank chooses to carry to employee service in the current and prior
the liabilities at fair value through profit or loss. years.
For defined contribution plans, the bank is
3.12. Provisions registered with the Social Security and Housing
Finance Corporation and contributes 10% of
A provision is recognized if, as a result of a past employees’ basic salaries to the national
event, the Bank has a present legal or provident fund. Employee contributions are 5% of
constructive obligation that can be estimated basic salaries which is deducted before arriving
reliably, and it is probable that an outflow of at net salaries.
economic benefits will be required to settle the Under the Scheme, employees are entitled to a
obligation. Provisions are determined by lump sum payment upon attaining the retirement
discounting the expected future cash flows at a age of 60 for men and women respectively.
pre-tax rate that reflects current market
assessments of the time value of money and, 3.15. Share capital and reserves
where appropriate, the risks specific to the
liability. (a) Dividend on the Bank’s ordinary shares
A provision for restructuring is recognized when
the Bank has approved a detailed and formal Dividends on ordinary shares are recognized as
restructuring plan, and the restructuring either a liability and deducted from equity in the year in
has commenced or has been announced publicly. which they are approved by the Bank’s
The Bank recognizes no provision for future shareholders. Dividends for the year that are
operating losses. approved after the reporting date are disclosed as
an event after the reporting date.
3.13 Financial guarantees
(b) Share premium
Financial guarantees are contracts that require Premiums from the issue of shares are reported
the Bank to make specified payments to in share premium.
reimburse the holder for a loss it incurs because
a specified debtor fails to make payment when (c) Statutory reserves
due in accordance with the terms of a debt
instrument. Financial guarantee liabilities are Section 19 of the Banking Act 2009 requires the
initially recognized at their fair value, and the Bank to make an annual appropriation to a
initial fair value is amortized over the life of the statutory reserve.
financial guarantee. The guarantee liability is
subsequently carried at the higher of this (d) Credit risk reserve
amortized amount and the present value of any
expected payment (when a payment under the Central Bank of The Gambia requires all Banks
guarantee has become probable). Financial to create a reserve for the difference between
guarantees, principally consisting of letters of impairment charge determined in line with the
credit are included within other liabilities. principles of IFRS and impairment charge
determined in line with its prudential guidelines
3.14. Employee benefits issued. This reserve is not available for
distribution to shareholders.
Defined contribution plans
(e) Retained earnings
A defined contribution plan is a pension plan
under which the Bank pays fixed contributions to Retained earnings comprise the undistributed
a separate entity. The Bank has no legal or profits from previous years which have not been
constructive obligations to pay further reclassified to any specified reserves.
contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating
This comprises fair value movements on equity
instruments.
Annual Report 2020

Guaranty Trust Bank Gambia Limited www.gtbankgambia.com 45