Page 37 - Agib Bank Limited Annual Report 2021
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Where a modification does not lead to been recognised in OCI is recognised in profit
derecognition the Bank calculates the or loss. A cumulative gain/loss that had been
modification gain/loss comparing the gross recognised in OCI is allocated between the part
carrying amount before and after the that continues to be recognised and the part
modification (excluding the ECL allowance). that is no longer recognised on the basis of the
Then the Bank measures ECL for the modified relative fair values of those parts. This does not
asset. apply for equity investments designated as
measured at FVTOCI, as the cumulative
Where the expected cash flows arising from the gain/loss previously recognised in OCI is not
modified financial asset are included in subsequently reclassified to profit or loss.
calculating the expected cash shortfalls from
the original asset. The Bank derecognises a 4.12.8 Write-off
financial asset only when the contractual rights
to the asset’s cash flows expire (including Loans and debt securities are written off when
expiry arising from a modification with the Bank has no reasonable expectations of
substantially different terms), or when the recovering the financial asset (either in its
financial asset and substantially all the risks entirety or a portion of it). This is the case when
and rewards of ownership of the asset are the Bank determines that the borrower does
transferred to another entity. not have assets or sources of income that
could generate sufficient cash flows to repay
If the Bank neither transfers nor retains the amounts subject to the write-off. A write-off
substantially all the risks and rewards of constitutes a derecognition event. The Bank
ownership and continues to control the may apply enforcement activities to financial
transferred asset, the Bank recognises its assets written off. Recoveries resulting from
retained interest in the asset and an associated the Bank’s enforcement activities will result in
liability for amounts it may have to pay. If the impairment gains."
Bank retains substantially all the risks and
rewards of ownership of a transferred financial 4.12.9 Presentation of allowance for ECL
asset, the Bank continues to recognise the in the statement of financial
financial asset and also recognises a position
collateralised borrowing for the proceeds Loss allowances for ECL are presented in the
received. statement of financial position as follows:
On derecognition of a financial asset in its • for financial assets measured at amortised
entirety, the difference between the asset’s cost: as a deduction from the gross carrying
carrying amount and the sum of the amount of the assets;
consideration received and receivable and the
cumulative gain/loss that had been recognised • for debt instruments measured at FVTOCI: no
in OCI and accumulated in equity is recognised loss allowance is recognised in the statement
in profit or loss, with the exception of equity of financial position as the carrying amount is
investment designated as measured at at fair value. However, the loss allowance is
FVTOCI, where the cumulative gain/loss included as part of the revaluation amount in
previously recognised in OCI is not the investments revaluation reserve;
subsequently reclassified to profit or loss.
• for loan commitments and financial guarantee
On derecognition of a financial asset other than contracts: as a provision; and
in its entirety (e.g. when the Bank retains an
option to repurchase part of a transferred • where a financial instrument includes both a
asset), the Bank allocates the previous carrying drawn and an undrawn component, and the
amount of the financial asset between the part Bank cannot identify the ECL on the loan
it continues to recognise under continuing commitment component separately from those
involvement, and the part it no longer on the drawn component: The Bank presents a
recognises on the basis of the relative fair combined loss allowance for both components.
values of those parts on the date of the The combined amount is presented as a
transfer. The difference between the carrying deduction from the gross carrying amount of Annual Report and IFRS Financial Statements
amount allocated to the part that is no longer the drawn component.
recognised and the sum of the consideration Any excess of the loss allowance over the
received for the part no longer recognised and gross amount of the drawn component is
any cumulative gain/loss allocated to it that had presented as a provision.
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