Page 75 - 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)

transforming it into the Staff Retention Credit Program (SRCP). The demographic changes in labour force during the last ten years These disclosures supplement the commentary on financial risk management (see note 5).
and the employees’ average age at 31, where 80% of employees are below the age of 40, has resulted in SSP not being attractive for
most employees of the Bank, as it can only be enjoyed at retirement. In contrast, SRCP will be more readily beneficial for all the Bank’s The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the
staff, as it will provide consumer and home loans with preferential terms. The entire due amount calculated for eligible employees in management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the
Staff Support Program has been frozen on the same date. The frozen amount due to change of SSP into SRCP on 30 September amounts recognised in financial statements:
2010 and the corresponding annual interest that will be gained by the investment in AAA sovereign bonds in the future until retirement Business model assessment: Classification and measurement of financial assets depends on the results of the SPPI and the business
age, is recorded as a liability by the Bank. model test (note 3, (g), (iii)). The Group determines the business model at a level that reflects how groups of financial assets are managed
together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how
(iii) Short-term benefits the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. how these are managed and how the managers of the assets are compensated. The Group monitors financial assets measured at
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Bank has a amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason
present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is
be estimated reliably. part of the Group’s continuous assessment of whether the business model for which the remaining financial assets are held continues
to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the
(s) Segment reporting classification of those assets.
An operating segment is a component of the Bank that engages in business activities from which may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Bank’s other Components, whose operating ECL Determination
results are reviewed regularly by the management to make decisions about resources allocated to each segment and assess its
Significant increase of credit risk: As explained in note 3 (g) (ix) and 5 (b) (ii), ECL are measured as an allowance equal to 12-month ECL
performance, and for which discrete financial information is available (see Note 6). The Bank’s format for segment reporting is based
for stage 1 assets, or lifetime ECL assets for stage 2 or stage 3 assets. An asset moves to stage 2 when its credit risk has increased
on geographical segments.
significantly since initial recognition. IFRS 9 does not define what constitutes a significant increase in credit risk. In assessing whether the
credit risk of an asset has significantly increased the Group takes into account qualitative and quantitative reasonable and supportable
(t) Application of new and revised international financial reporting standards.
forward looking information. Refer to note 3 (g) (ix) and 5 (b) (ii), for more details.
(i) Standards and Interpretations effective in the current period
There are no accounting announcements which have become effective from 1 January 2024 that have a significant impact on the
Establishing groups of assets with similar credit risk characteristics: When ECLs are measured on a collective basis, the financial
Entities’ financial statements.
instruments are grouped on the basis of shared risk characteristics. Refer to note 3 (g) (ix) and 5 (b) (ii), for details of the characteristics
considered in this judgement. The Group monitors the appropriateness of the credit risk characteristics on an ongoing basis to assess
Other Standards and amendments that are effective for the first time in 2024 and could be applicable to the entity are:
whether they continue to be similar. This is required in order to ensure that should credit risk characteristics change there is appropriate
• IAS 1 — Classification of Liabilities as Current or Non-current
re-segmentation of the assets. This may result in new portfolios being created or assets moving to an existing portfolio that better
• IAS 1 — Non-current Liabilities with Covenants
reflects the similar credit risk characteristics of that group of assets. Re-segmentation of portfolios and movement between portfolios
• IFRS 16 — Lease Liability in a Sale and Leaseback
is more common when there is a significant increase in credit risk (or when that significant increase reverses) and so assets move from
• IAS 7 and IFRS 7- Supplier Finance Arrangements
12-month to lifetime ECLs, or vice versa but it can also occur within portfolios that continue to be measured on the same basis of
These amendments do not have a significant impact on these Financial Statements and therefore the disclosures have not been made.
12-month or lifetime ECLs but the amount of ECL changes because the credit risk of the portfolios differ.
(ii) Standards and interpretations issued but not yet adopted.
Models and assumptions used: The Group uses various models and assumptions in measuring fair value of financial assets as well as
The International Board of Accounting Standards has issued several standards and interpretations that are effective in future accounting
in estimating ECL. Judgement is applied in identifying the most appropriate model for each type of asset, as well as for determining
periods, which the company has decided not to apply in advance. The company plans to apply these standards and interpretations
the assumptions used in these models, including assumptions that relate to key drivers of credit risk. See note 3 (g) (ix) and 5 (b) (ii),
when they become effective.
for more details on ECL and note 3 (g) (viii) for more details on fair value measurement.
The following standards and interpretations have been issued but are not mandatory for the current reporting period ended 31
December 2024:
Input in data model of application of IFRS 16 requirements
• IAS 21 — Lack of Exchangeability (effective for annual periods beginning on or after 1 January 2025)
Initial direct costs
• IFRS 9 and IFRS 7- Amendments to the Classification and Measurement of Financial Instruments (effective for annual periods
An entity may exclude initial direct costs from the measurement of the Right of Use asset at the date of initial application. Based on
beginning on or after 1 January 2026)
IFRS 16, if a lessee elects to apply the standard with the modified retrospective application, the lessee shall choose, on a lease-by-
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures (effective for annual periods beginning on or after 1 January 2027) lease basis, to measure the right-of-use asset at either:
• IFRS 18- Presentation and Disclosure in Financial Statements (effective for annual periods beginning on or after 1 January 2027)
Option 1 – its carrying amount as if IFRS 16 had been applied since the commencement date, but discounted using the lessee’s
4. USE OF ESTIMATES AND JUDGEMENTS incremental borrowing rate at the date of initial application. The practical expedient to exclude initial direct costs from the measurement
Management discusses with the Audit Committee the development, selection and disclosure of the Bank’s critical accounting policies of the Right of Use asset at the date of initial application is applicable under Option 1 or;
and estimates, and the application of these policies and estimates.

ANNUAL REPORT 2024 20