Page 101 - RB GRENADA ANNUAL REPORT 2025_ONLINE

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Notes to the Financial Statements

For the year ended September 30, 2025. Expressed in Thousands of Eastern Caribbean dollars ($’000), except where otherwise stated.

2 Material accounting policies (continued)
2.5 Summary of material accounting policies (continued)
o Employee benefits/obligations (continued)
i Pension assets (continued)

The defined benefit plan mainly exposes the Bank to risks such as investment risk, interest rate risk and longevity
risk.

The above accounting requirement in no way affects the pension plan which continues to be governed by the
approved Trust Deed and Rules and remain under the full control of the appointed Trustees.

The full results of the valuation exercise are disclosed in Note 9 to these Financial statements.

ii Other post-retirement obligations
The Bank provides post-retirement medical and group-life benefits to its retirees. The entitlement to these
benefits is usually based on the employee remaining in service up to retirement age and the completion of
a minimum service period. The expected costs of these benefits are accrued over the period of employment,
using a methodology similar to that for defined benefit pension plan. Independent qualified actuaries carry out
a valuation of these obligations.

iii Profit sharing scheme
The Bank operates an employee profit sharing scheme, and the profit share to be distributed to employees each
year is based on the terms outlined in the Union Agreement. Employees receive their profit share in cash. The
Bank accounts for the profit share as an expense through the Statement of income.

p Taxation
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the Financial statements. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the Statement of financial
position date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.

Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the
temporary differences can be utilised.

Income tax payable on profits, based on the applicable tax law, is recognised as an expense in the period in which
profits arise. The tax effects of income tax losses available for carry forward are recognised as an asset when it is
probable that future taxable profits will be available against which these losses can be utilised.

q Statutory reserve
The Banking Act of Grenada (No. 45 of 2015) requires every licensed financial institution to maintain a reserve fund
and shall, out of its net profits of each year transfer to that fund a sum equal to not less than twenty per cent of profits
whenever the amount of the reserve fund is less than a hundred per cent of the paid-up or, or as the case may be,
assigned capital of the licensed financial institution. This reserve is not available for distribution as dividends or for
any other form of appropriation. Statutory reserves amounted to $37.2 million (2024: $34.1 million) at year end.