Page 103 - 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)
u Revenue recognition (continued)

The EIR method
Interest income and expense is recorded using the EIR method for all financial instruments measured at amortised
cost. The EIR is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset.

The EIR (and therefore, the amortised cost of the asset) is calculated by taking into account any discount or premium
on acquisition, fees and costs that are an integral part of the EIR. The Bank recognises interest income using a rate
of return that represents the best estimate of a constant rate of return over the expected life of the loan. Hence, it
recognises the effect of potentially different interest rates charged at various stages, and other characteristics of the
product life cycle (including prepayments, penalty interest and charges).

Interest income and expense
The Bank calculates interest income and expense by applying the EIR to the gross carrying amount of financial assets
and liabilities other than credit-impaired assets. For purchased or originated credit-impaired financial assets a credit-
adjusted Effective interest rate is applied to the amortised cost of the financial asset.

Interest income on all trading assets and financial assets mandatorily required to be measured at FVPL is recognised
using the contractual interest rate in net trading income and net gains/(losses) on financial assets at Fair value
through profit or loss, respectively.

Fee and commission income
The Bank earns fee and commission income from a diverse range of financial services it provides to its customers. Fee
and commission income is recognised at an amount that reflects the consideration to which the Bank expects to be
entitled in exchange for providing the services. The performance obligations, as well as the timing of their satisfaction,
are identified, and determined, at the inception of the contract.

When the Bank provides a service to its customers, consideration is invoiced and generally due immediately upon
satisfaction of a service provided at a point in time or at the end of the contract period for a service provided over
time. The Bank has generally concluded that it is the principal in its revenue arrangements because it typically
controls the services before transferring them to the customer.

Credit card fees and commissions are recognised at an amount that reflects the consideration to which the Bank
expects to be entitled in exchange for providing the services. Credit card fees and commissions are therefore net of
amounts paid, the expenses for the direct cost of satisfying the performance obligation is netted against the revenues
received.

Dividends
Dividend income is recognised when the right to receive the payment is established.

v Fair value
The Bank measures financial instruments at fair value at each Statement of financial position date. Fair value related
disclosures for financial instruments and non-financial assets that are measured at fair value, where fair values are
disclosed, are shown in Note 21 to the Financial statements.