Page 71 - 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)

relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued and the related gain or loss is held in the (h) Cash and cash equivalents
equity reserve until the forecast transaction occurs. Cash and cash equivalents include notes and coins on hand, unrestricted balances held with central banks and highly liquid financial
assets with original maturities of less than three months, which are subject to insignificant risk of changes in their fair value, and are
used by the Bank in the management of its short-term commitments. Cash and cash equivalents are carried at amortised cost in the
- Futures statement of financial position.
The Bank enters into derivatives for trading and risk management purposes. Derivatives held for risk management purposes include
hedges that either meet the hedge accounting requirements or hedges that are economic hedges, but do not meet the hedge (i) Derivatives held for risk management purposes
accounting requirements.
Derivatives held for risk management purposes include all derivative assets and liabilities that are not classified as trading assets or
liabilities. Derivatives held for risk management purposes are measured at fair value in the statement of financial position.
As part of its asset and liability management, the Bank uses derivatives for economic hedging purposes in order to reduce its exposure
to market risks. This is achieved by hedging specific financial instruments, portfolios of fixed rate financial instruments and forecast (j) Loans
transactions, as well as hedging of aggregate financial position exposures. Where possible, the Bank applies hedge accounting. Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and that the
The Bank has entered into financial derivatives through interest rate future contracts so as to hedge the price movement of its financial Bank does not intend to sell immediately or in the near term.
assets measured at fair value to help prevent losses from unfavorable price changes. Concretely, the Bank has opened (sold) short
positions of long-term US Treasury Eurobond Futures for hedging the interest risk component of the USD denominated Eurobonds. When the Bank purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a substantially similar
Similarly, the Bank has opened short positions of long-term European Sovereign Eurobond Futures (German, French, Italian and asset) at a fixed price on a future date (“reverse repo”), the arrangement is accounted for as a loan or advance, and the underlying
Spanish) for hedging the interest risk component of the EUR denominated Eurobonds. The futures positions are accounted for at fair asset is not recognised in the Bank’s financial statements.
value through profit and loss (FVTPL).

Loans are initially measured at fair value plus incremental direct transaction costs, and subsequently measured at their amortised cost
The table below shows the fair values of futures position together with their notional amounts. The notional amounts indicate the volume using the effective interest method, except when the Bank chooses to carry the loans at fair value through profit or loss as described
of transactions outstanding at the year end and are not indicative of either the market or credit risk.
in accounting policy 3(g)(iii).

The Futures position was closed in June 2023 and no further positions were opened during 2023 and 2024. The realized losses resulted (k) Property and equipment
from the closure of the total futures position (EUR and USD) during 2023 amounted at a net loss of USD 3,009,244.
(i) Recognition and measurement
Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost
- Interest rate swaps includes expenditures that are directly attributable to the acquisition of the asset.
During 2023 and 2024, the Bank has entered into interest rate swaps to manage its exposure to interest rate fluctuations between When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components)
deposit rates and securities portfolio measured at amortized cost. These swaps allow the Bank to mitigate the impact of changing of property and equipment.
interest rates on its financial position. The swaps pay a fixed interest rate and receive a floating interest rate based on the 6-month
EURIBOR and 6-month SOFR. (ii) Subsequent costs
The cost of replacing a part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that
The summarized information are given below:
the future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The carrying amount
of the replaced part is derecognised. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss
Notional
31 December 2024 Total interest income FY24 Total interest expense FY24 as incurred.
Amount
Interest rate swap (iii) Depreciation
- EUR 95,000,000 3,662,738 3,634,828 Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property
- USD - 479,867 539,584 and equipment. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
31 December 2023 Notional Amount Total interest income FY24 Total interest expense FY24
Interest rate swap • Buildings and leasehold improvements 20 years
- EUR 85,000,000 1,990,206 1,837,127 • Motor vehicles and other equipment 5 years
- USD 10,000,000 939,840 946,953 • Office equipment 5 years
Note: The above figures are reported in original currency. • Computers and electronic equipment 4 years

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

ANNUAL REPORT 2024 16