Page 80 - 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)

(a) Introduction and overview
The Bank has exposure to the following risks from financial instruments: Financial Instruments 31 December 2024 31 December 2023
Credit Risk
• credit risk
• liquidity risk Exposure Exposure
Net exposure
• market risks before Impairment Net exposure before Impairment for credit risk
for credit risk
• operational risks impairment impairment

This note presents information about the Bank’s exposure to each of the above risks, the Bank’s objectives, policies and processes A. Credit risk exposure relating to balance sheet items
for measuring and managing risk, and the Bank’s management of capital. Cash and Balances with
A financial instrument is any contract that gives rise to the right to receive cash or another financial asset from another party (financial Central Bank 677,670,397 - 677,670,397 676,805,203 - 676,805,203
asset) or the obligation to deliver cash or another financial asset to another party (financial liability). Placements and Balances
Financial instruments result in certain risks to the Bank. The most significant risks facing the Bank are credit risk, liquidity risk and market with banks 337,792,699 (15,598) 337,777,101 342,476,395 (14,075) 342,462,320
risk. Market risk includes foreign currency risk, interest rate risk and other price risks.
Investment securities - 37,964,615 - 37,964,615 11,759,570 - 11,759,570
measured at FVTPL
Risk management framework Investment securities -
The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s risk management framework. The measured at FVOCI 1,364,977,373 - 1,364,977,373 1,103,640,557 - 1,103,640,557
Board has established the Bank Risk Committee, Asset and Liability Committee (ALCO), Investment Committee, Risk Management Investment securities -
Group and Credit Committees, which are responsible for developing and monitoring Bank risk management policies in their specified measured at amortised cost 2,261,652,165 (9,344,022) 2,252,308,143 2,320,318,180 (19,470,943) 2,300,847,237
areas. All these bodies report regularly to the Board of Directors on their activities.
Loans to banks 139,349,673 (537,627) 138,812,046 136,349,523 (1,518,985) 134,830,538

The Bank’s risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes Loans to customers 1,959,808,659 (50,762,177) 1,909,046,482 1,748,606,735 (54,577,751) 1,694,028,984
in market conditions, products and services offered. The Bank, through its training and management standards and procedures, aims
to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations. Other assets 13,868,224 (365,259) 13,502,965 10,598,516 (896,549) 9,701,967

Total Assets 6,793,083,805 (61,024,683) 6,732,059,122 6,350,554,679 (76,478,303) 6,274,076,376
The Bank Audit Committee is responsible for monitoring compliance with the Bank’s risk management policies and procedures, and
for reviewing the adequacy of the risk management framework in relation to the risks faced by the Bank. The Bank Audit Committee is Off balance sheet items
assisted in these functions by Internal Audit. Internal Audit undertakes both regular and ad-hoc reviews of risk management controls
and procedures, the results of which are reported to the Audit Committee. Undrawn credit
commitments 272,805,545 - 272,805,545 290,078,945 - 290,078,945
(b) Credit Risk Outstanding cheques of 307,628 - 307,628 326,566 - 326,566
Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its contractual non-resident banks
obligations, and arises principally from the Bank’s Loans to customers and other banks and investment securities. For risk management Spot foreign currency 94,943,828 - 94,943,828 128,493,054 - 128,493,054
reporting purposes, the Bank considers all elements of credit risk exposure (such as individual obligor default risk, country and sector contract
risk). The Bank has formed a Credit Committee to oversee the approval of requests for credits. Credit requests with amounts over EUR Collaterals for loan portfolio 5,193,270,708 - 5,193,270,708 4,654,093,419 - 4,654,093,419
2,000,000 are approved only upon decision of the Board of Directors of the Bank. There is a continuous focus on the quality of credits
extended both at the time of approval and throughout lifetimes. Securities pledged as 227,990,707 - 227,990,707 145,749,308 - 145,749,308
collateral
Each business unit is required to comply with Bank credit policies and procedures. Regular audits of business units and Bank Credit Interest rate swaps 98,920,539 - 98,920,539 103,994,039 - 103,994,039
Risk Management Department processes are undertaken by Internal Audit.
Total off balance sheet 5,888,238,955 - 5,888,238,955 5,322,735,331 - 5,322,735,331
i. Maximum credit exposure
The gross carrying amount of financial assets below also represents the Group’s maximum exposure to credit risk on these assets. Total credit risk exposure 12,681,322,760 (61,024,683) 12,620,298,077 11,673,290,010 (76,478,303) 11,596,811,707
Maximum exposures to credit risk before collateral and other credit enhancements as at 31 December 2024 and 31 December 2023
are as follows:

25 BANKA KOMBËTARE TREGTARE