Page 48 - Ecobank Gambia Annual Report 2020
P. 48
Financial Statements & Annual Report
Notes to the Financial Statements
for the year ended 31 December 2020 (in Thousands of Gambian Dalasis)
competition for investment capital and help gain the application. The borrowing cost is benchmarked on the
trust of Investors. At the same time, there are likely to Central bank policy rate.
be a number of other effects. For example, there could The Bank also applied the available practical expedients
be greater volatility in financial results and equity due to wherein it:
the use of current market discount rates. Insurers may Used a single discount rate to a portfolio of leases
also need to revisit the design of their products and other with reasonably similar characteristics Relied on its
strategic decisions, such as investment allocation. assessment of whether leases are onerous immediately
A) IFRS 16 -Leases before the date of initial application Applied the short-
The new changes from IFRS 16 term leases exemptions to leases with lease term that
The standard sets out the principles for the recognition, ends within 12 months of the date of initial application
measurement, presentation and disclosure of leases and Excluded the initial direct costs from the measurement
requires lessees to recognise most leases on the balance of the right-of-use asset at the date of initial application
sheet. Used hindsight in determining the lease term where
Lessor accounting under IFRS 16 is substantially the contract contained options to extend or terminate
unchanged from IAS 17. Lessors will continue to classify the leases Exempt leases that have values of less than
leases as either operating or finance leases using similar US$5,000
principles as in IAS 17. Therefore, IFRS 16 did not have an 11.5 New and amended Standards adopted by the Bank
impact for leases where the Bank is the lessor. during in the financial year 2020:
The Bank elected to use the transition practical expedient A number of new standards and amendments to standards
to not reassess whether a contract is or contains a lease are effective for annual periods beginning after 1 January
at 1 January 2019. Instead, the Bank applied the standard 2020 and earlier application is permitted; however, the
only to contracts that were previously identified as Affiliate has not early adopted the new and amended
leases applying IAS 17 and IFRIC 4 at the date of initial standards in preparing these financial statements.
application. 11.6 Financial Assets and Liabilities
The Bank has lease contracts are on mainly properties All financial assets and liabilities have to be recognised
used as branches and off-site ATM locations. Before the in the statement of financial position and measured in
adoption of IFRS 16, the Bank classified each of its leases accordance with their assigned category.
(as lessee) at the inception date as either a finance lease i) Financial Assets
or an operating lease. Upon adoption of IFRS 16, the Bank Ecobank Gambia classifies its financial assets in
applied a single recognition and measurement approach accordance with the IFRS 9 standard. Financial assets
for all leases except for short-term leases and leases of are measured at initial recognition at fair value, and
low-value assets below a threshold of US$ 5,000. are classified and subsequently measured at fair value
Leases previously accounted for as operating leases through profit or loss (FVTPL), fair value through other
The Bank recognised right-of-use assets and lease comprehensive income (FVTOCI) or amortized cost
liabilities for those leases previously classified as based on our business model for managing the financial
operating leases, except for short-term leases and leases instruments and the contractual cash flow characteristics
of low-value assets. The right-of-use assets for most of the instrument. For non-revolving facilities, origination
leases were recognised based on the carrying amount date is the date the facility is disbursed while origination
as if the standard had always been applied, apart from date for revolving facilities is the date the line is availed.
the use of incremental borrowing rate at the date of Regular-way purchases and sales of financial assets are
initial application. In some leases, the right-of-use recognized on the settlement date. All other financial
assets were recognised based on the amount equal to assets and liabilities, including derivatives, are initially
the lease liabilities, adjusted for any related prepaid and recognized on the trade date at which the Bank becomes
accrued lease payments previously recognised. Lease a party to the contractual provisions of the instrument.
liabilities were recognised based on the present value Ecobank Gambia does not hold any derivatives as at
of the remaining lease payments, discounted using period ended December 2020.
the incremental borrowing rate at the date of initial
46 Ecobank Gambia Annual Report 2020 www.ecobank.com
