Page 98 - Ecobank Gambia Annual Report 2020

Financial Statements & Annual Report

Notes to the Financial Statements

for the year ended 31 December 2020 (in Thousands of Gambian Dalasis)

Provision for impairment on loans and advances: 2020 2019
D’000 D’000
18,112 4,921
Provision determined as per IFRS 9 20,181 21,430
Provision determined as per Local Prudential Guidelines 2,069 16,509
Transfer to Credit Risk Reserve

Dividends hundred and thirty dalasi, one butut). This represents
The Board of Directors have declared a dividend payment a dividend pay-out of 70% which is in line with the
amounting to GMD 206,655,130.01 million (Two hundred Bank’s dividend policy and strategic goal of consistently
and six million, six hundred and fifty-five thousand , one returning shareholder values through dividend payments.

11.41 Contingencies and commitments

In the ordinary course of business, the bank conducts business involving guarantees, acceptances and performance
bonds. These facilities are offset by corresponding obligations of third parties. At the year end, the contingencies were
as follows:

2020 2019
D’000 D’000

Performance bonds and Guarantees 734,362 1,316,407

Letters of credit, acceptances and other documentary credits 911,254 542,192

Loan commitments 88,472 77,627

1,734,088 1,936,226

Gross impairment on Contingents Liabilities (450) (556)

Net contingent Liabilities 1,733,637 1,935,670

Nature of contingent liabilities 11.42 Litigation
Guarantees are generally written by a bank to support There is a litigation pending proceeding against the Bank
performance by a customer to third parties. The Bank will involving the shares of the parent company-Ecobank
only be required to meet these obligations in the event Transnational Incorporated (ETI) with a potential liability
of the customer’s default. of GMD 5 million. The amount was provided for in 2017
Letters of credit commit the Bank to make payment to and treated as a receivable from ETI as they will bear any
third parties, on production of documents, which are potential liability.
subsequently reimbursed by customers. The bank is in on-going litigation with one of our
An acceptance is an undertaking by a bank to pay a bill of Customers-MFH Group relating to claims made by the
exchange drawn on a customer. The Bank expects most customers for funds allegedly collected by our collections
acceptances to be presented and reimbursement by the Teller but not posted into their account. The amount
customer is almost immediate. involved is GMD4million. Based on the independent
Forward foreign exchange contracts are commitments to Legal opinion, the Bank is not likely to suffer any financial
either purchase or sell a designated financial instrument losses from the litigation as there is strong evidence that
at a specified future date for a specified price and may be the Bank is not liable.
settled in cash or another financial asset. The fair values
of the respective currency forwards are carried under www.ecobank.com
other assets and other liabilities as appropriate.

96 Ecobank Gambia Annual Report 2020