Page 47 - GTBANK GAMBIA ANNUAL REPORT 2021

expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money (a) Dividend on the Bank’s ordinary shares
and, where appropriate, the risks specific to the liability. Dividends on ordinary shares are recognized as a liability
A provision for restructuring is recognized when the Bank and deducted from equity in the year in which they are
has approved a detailed and formal restructuring plan, approved by the Bank’s shareholders. Dividends for the
and the restructuring either has commenced or has been year that are approved after the reporting date are
announced publicly. The Bank recognizes no provision for disclosed as an event after the reporting date.
future operating losses.

3.16 Interest income and expense
3.13 Financial guarantees
Interest income and expense for all interest bearing
Financial guarantees are contracts that require the Bank financial instruments are recognized in the income
to make specified payments to reimburse the holder for a statement within “interest income” and “interest expense”
loss it incurs because a specified debtor fails to make using the effective interest method.
payment when due in accordance with the terms of a debt The calculation of the effective interest rate includes
instrument. Financial guarantee liabilities are initially contractual fees and points paid or received transaction
recognized at their fair value, and the initial fair value is costs, and discounts or premiums that are an integral part
amortized over the life of the financial guarantee. The of the effective interest rate. Transaction costs are
guarantee liability is subsequently carried at the higher of incremental costs that are directly attributable to the
this amortized amount and the present value of any acquisition, issue or disposal of a financial asset or
expected payment (when a payment under the guarantee liability.
has become probable). Financial guarantees, principally
consisting of letters of credit are included within other Interest income and expense presented in the Income
liabilities. statement include:

✓ Interest on financial assets and liabilities
measured at amortized cost calculated on an
effective interest rate basis.
✓ Interest on financial assets measured at fair value
through OCI calculated on an effective interest
3.14. Employee benefits rate basis.

Defined contribution plans 3.17 Fees and commission income

A defined contribution plan is a pension plan under which Fees and Commission that are integral to the effective
the Bank pays fixed contributions to a separate entity. The interest rate on a financial asset are included in the
Bank has no legal or constructive obligations to pay measurement of the effective interest rate. Fees, such as
further contributions if the fund does not hold sufficient processing and management fees charged for assessing
assets to pay all employees the benefits relating to the financial position of the borrower, evaluating and
employee service in the current and prior years. reviewing guarantee, collateral and other security,
For defined contribution plans, the bank is registered with negotiation of instruments’ terms, preparing and
the Social Security and Housing Finance Corporation and processing documentation and finalizing the transaction
contributes 10% of employees’ basic salaries to the are an integral part of the effective interest rate on a
national provident fund. Employee contributions are 5% of financial asset or liability and are included in the
basic salaries which is deducted before arriving at net measurement of the effective interest rate of financial
salaries. assets or liabilities.
Under the Scheme, employees are entitled to a lump sum Other fees and commissions which relates mainly to
payment upon attaining the retirement age of 60 for men transaction and service fees, including loan account
and women respectively. structuring, management fees and legal fees are

recognized as the related services are provided /
3.15. Share capital and reserves performed.
Annual Report 2021

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