Page 46 - Ecobank Gambia Annual Report 2020
P. 46
Financial Statements & Annual Report
Notes to the Financial Statements
for the year ended 31 December 2020 (in Thousands of Gambian Dalasis)
financial liability. The effective interest rate is established Current tax is the expected tax payable on the taxable
on initial recognition of the financial asset or liability and income for the year, using tax rates enacted or
is not revised subsequently when calculating the effective substantively enacted at the balance sheet date, and any
interest rate; the Bank estimates cash flows considering adjustment to tax payable in respect of previous years.
all contractual terms of the financial instrument but does 11.3.8 Deferred Taxation
not consider future credit losses. The calculation includes Deferred tax is provided using the balance sheet method,
all fees received or paid between parties to the contract providing for temporary differences between the carrying
that are an integral part of the effective interest rate, amounts of assets and liabilities for financial reporting
transaction costs and all other premiums or discounts. purposes and the amounts used for taxation purposes.
When a financial asset or a group of similar financial Deferred tax is not recognized for the following temporary
assets have been written down as a result of impairment, differences: the initial recognition of goodwill, the initial
interest income is recognised using the rate of interest recognition of assets or liabilities in a transaction that
used to discount the future cash flows for the purpose of is not a business combination and that affects neither
measuring the impairment loss. accounting nor taxable profit, and differences relating
Interest income and expense on financial assets and to investments in subsidiaries to the extent that they
liabilities held at fair value through profit or loss is probably will not reverse in the foreseeable future.
recognised in the income statement in the period they Deferred tax is measured at the tax rates that are
arise. expected to be applied to the temporary differences
11.3.4 Fees and Commissions when they reverse, based on the laws that have been
Fees and commission income and expenses that are an enacted or substantively enacted by the reporting date.
integral part of the effective interest rate on financial A deferred tax asset is recognized only to the extent that
instruments are included in the measurement of the it is probable that future taxable profits will be available
effective interest rate. against which the asset can be utilized. Deferred tax
Other fees and commission income, including account assets are reviewed at each reporting date and are
servicing fees, investment management fees, sales reduced to the extent that it is no longer probable that
commission, placement and arrangement fees and the related tax benefit will be realized.
syndication fees are recognised as the related services 11.3.9 Impairment
are performed. ECLs are a probability-weighted estimate of the present
Other fees and commission expense relates mainly to value of credit losses. These are measured as the present
transaction and service fees, which are expensed as the value of the difference between the cash flows due to
services are received. the Bank under the contract and the cash flows that the
11.3.5 Net trading Income Bank expects to receive arising from the weighting of
Net trading income comprises gains less losses related multiple future economic scenarios, discounted at the
to trading assets and liabilities, and includes all realized asset’s EIR.
and unrealized fair value changes, interest, dividends and For undrawn loan commitments, the ECL is the difference
foreign exchange differences. between the present value of the difference between the
11.3.6 Lease payments made Contractual cash flows that are due to the Bank if the
The new standard on Lease (IFRS 16) came into effect on holder of the commitment draws down the loan and the
January 1st, 2019. The new standard requires Lessees to cash flows that the Bank expects to receive if the loan is
recognise nearly all leases on balance sheet which will drawn down; and for financial guarantee contracts, the
reflect their right to use an asset for a period of time as ECL is the difference between the expected payments to
well as the associated liabilities for payments. Ecobank reimburse the holder of the guaranteed debt instrument
Gambia has fully implemented IFRS 16 in 2019 which less any amounts that the Bank expects to receive from
mainly affected our branch networks on lease contracts. the holder, the debtor or any other party.
11.3.7 Income tax expense The Bank measures ECL on an individual basis, or on a
collective basis for portfolios of loans that share similar
economic risk characteristics. The measurement of the
44 Ecobank Gambia Annual Report 2020 www.ecobank.com
