Page 73 - 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)

(l) Intangible assets (o) Investments in associates and joint ventures
Intangible assets comprise software acquired by the Bank. Software acquired by the Bank is stated at cost less accumulated amortisation Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of the investment in
and accumulated impairment losses. associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive
Expenditure on internally developed software is recognised as an asset when the Bank is able to demonstrate its intention and ability income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group.
to complete the development and use the software in a manner that will generate future economic benefits, and can reliably measure Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of
the costs to complete the development. The capitalised costs of internally developed software include all costs directly attributable the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.
to developing the software, and are amortised over its useful life. Internally developed software is stated at capitalised cost less
accumulated amortisation and impairment. (p) Deposits, borrowings and subordinated liabilities
Deposits, borrowings and subordinated liabilities are part of the Bank’s sources of debt funding.
When the Bank sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed
Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure is expensed as incurred. price on a future date (“repo” or “stock lending”), the arrangement is accounted for as a deposit, and the underlying asset continues
to be recognised in the Bank’s financial statements.
Deposits, borrowings and subordinated liabilities are initially measured at fair value plus directly attributable transaction costs, and
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of the software, from the date that it is
available for use. The estimated useful life of software is four years. subsequently measured at their amortised cost using the effective interest method.
(q) Provisions
(m) Assets acquired through legal process (repossessed collateral) A provision is recognised if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated
Repossessed collateral represents financial and non-financial assets acquired by the Group in settlement of overdue loans. The reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
assets are initially recognised at fair value when acquired and included in premises and equipment, other financial assets, investment
properties or inventories within other assets depending on their nature and the Group’s intention in respect of recovery of these assets, Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
and are subsequently remeasured and accounted for in accordance with the accounting policies for these categories of assets. The the time value of money and, where appropriate, the risks specific to the liability.
Group applies its accounting policy for non-current assets held for sale or disposal groups to repossessed collateral where the relevant
conditions for such classification are met at the end of the reporting period. A provision for restructuring is recognised when the Bank has approved a detailed and formal restructuring plan, and the restructuring
either has commenced or has been announced publicly. Future operating costs are not provided for.
Where repossessed collateral results in acquiring control over a business, the business combination is accounted for using the
purchase method of accounting with fair value of the settled loan representing the cost of acquisition (refer to the accounting policy for A provision for onerous contracts is recognised when the expected benefits to be derived by the Bank from a contract are lower than
consolidation). Accounting policy for associates is applied to repossessed shares where the Group obtains significant influence, but the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the
not control. The cost of the associate is the fair value of the loan settled by repossessing the pledged shares. expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established,
the Bank recognises any impairment loss on the assets associated with that contract.
(n) Impairment of non-financial assets
The carrying amounts of the Bank’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to (r) Employee benefits
determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. (i) Defined contribution plans
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A Obligations for contributions to defined contribution pension plans are recognised as an expense in profit or loss when they are due. The
cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets Bank makes compulsory social security contributions that provide pension benefits for employees upon retirement. The local authorities
and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are are responsible for providing the legally set minimum threshold for pensions in Albania under a defined contribution pension plan.
allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis. (ii) Defined benefit plans
The Bank created a fully employer sponsored pension plan fund-Staff Support Program (See note 21), during 2002. The amount
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In charged to this fund (SSP) was decided as 5% of yearly budgeted personnel salary expenses.
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. Impairment losses recognised in prior The amount due to employees based on the above plan would be grossed up by the interest that will accrue from the date the
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. employees leave the Bank until their retirement. It would be paid to employees only when they reach the Albanian statutory retirement
age, in monthly instalments equal to a minimum of 75% of their state monthly pension until the accumulated fund for the employee
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment is consumed.
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized. Based on the Board of Directors resolution effective on 30 September 2010, the Bank stopped the investment in this fund (SSP), by

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