Page 62 - BKT Annual Report 2024 EN

Notes to the Consolidated Financial Statements for the year ended 31 December 2024 Notes to the Consolidated Financial Statements for the year ended 31 December 2024
(amounts in USD, unless otherwise stated) (amounts in USD, unless otherwise stated)

2. BASIS OF PREPARATION On 3 September 2007 BKT opened its first branch outside of the territory of the Republic of Albania. The Administrative Office of
(a) Statement of compliance and going concern assumption this branch was opened in Prishtina, Kosovo. Pursuant to the request of “Banka Kombetare Tregtare” Kosovo dated 14.02.2018, in
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). reference to the change of the transformation from a branch to a subsidiary, the Central Bank of Kosovo has approved on 30 April 2018
They have been prepared under the assumption that the Bank operates on a going concern basis. the transformation into subsidiary of Banka Kombetare Tregtare – Kosovo Branch. Under this decision, all the rights and obligations
deriving from BKT – Kosovo Branch shall remain rights and obligations of BKT Kosovo Sh.A as a subsidiary. The Spin Off date of BKT
(b) Basis of measurement Kosovo is effective as at 1 January 2019. The functional currency is the EURO. The effect of translating foreign operations into the
The consolidated financial statements have been prepared on the historical cost basis except for trading and available-for-sale financial Bank’s functional currency is explained in note 3.(b).(ii) below.
assets, which are measured at fair value. BKT has established in 2022 the electronic money company “BKT Pay” investing EUR 2,300,000 and Lek 140,001 thousand Lek into
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which its share capital at a participation rate of 100%. BKT Pay was legally registered on 26 September 2022 and obtained the license from
the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, the Bank of Albania on 3 November 2023. The company started its activity during 2024.
which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the (ii) Transactions eliminated on consolidation
measurement date; All intragroup assets and liabilities, equity, income, expenses and cash flows (except for foreign currency transaction gains or losses)
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly relating to transactions between members of the Group are eliminated in full on consolidation. Unrealised losses are eliminated in the
or indirectly; and same way as unrealised gains, but only to the extent that there is no evidence of impairment.
• Level 3 inputs are unobservable inputs for the asset or liability.
(iii) Business combinations
(c) Functional and presentation currency The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to
These consolidated financial statements are presented in USD. Albanian Lek (“Lek”) is the Bank’s functional currency. obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and
The Bank has chosen to present its financial statements in USD, as its equity is wholly owned by international investors, who have the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration
issued the start-up capital in USD and view the performance of the investment in terms of USD. arrangement. Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are generally measured at their
acquisition-date fair values.
(d) Use of estimates and judgements
The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that (b) Foreign currency
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may (i) Foreign currency transactions
differ from these estimates. Transactions in foreign currencies are translated into the respective functional currency of the operation at the spot exchange rate at
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into
period in which the estimate is revised and in any future periods affected. the functional currency at the spot exchange rate at that date. The foreign currency gain or loss on monetary items is the difference
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during
significant effect on the amounts recognised in the consolidated financial statements are described in notes 4 and 5. the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets
and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the spot
exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in
3. SIGNIFICANT ACCOUNTING POLICIES profit or loss. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historic cost, are translated at
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, the foreign exchange rate ruling at the date of the transaction, with the exception of the share capital, which is issued and maintained
and have been applied consistently by Bank entities. in USD as per the legislation in Albania as well as per Special Law No. 8634, dated 6 July 2000, between the Bank’s shareholders and
the Republic of Albania on the Bank’s privatisation. Furthermore, the Operating Policy Guidelines of the Bank require that the share
(a) Basis of consolidation capital be hedged by USD assets, and it is therefore treated as a monetary item, with the revaluation difference being taken to profit or
(i) Subsidiaries loss together with the revaluation difference of the corresponding USD asset, which offset each other in a natural hedge.
Subsidiaries are entities controlled by the Bank. Control exists when the Bank has power over the investee; is exposed, or has rights,
to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. The Company (ii) Foreign operations
reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the The assets and liabilities of foreign operations are translated into Lek at spot exchange rates at the reporting date. The income and
three elements of control listed above. expenses of foreign operations are translated into Lek at spot exchange rates at the dates of the transactions. Foreign currency
differences on the translation of foreign operations are recognised directly in other comprehensive income. Such differences have been
Consolidation of a subsidiary begins when the Bank obtains control over the subsidiary and ceases when the Bank loses control of the recognised in the foreign currency translation reserve.
subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated
statement of profit or loss and other comprehensive income from the date the Bank gains control until the date when the Bank ceases
to control the subsidiary.
The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in
similar circumstances.

07 BANKA KOMBËTARE TREGTARE