Page 88 - Annual Report 2023

19 BANKA KOMBËTARE TREGTARE
Notes to the Consolidated Financial Statements for the year ended 31 December 2023
(amounts in USD, unless otherwise stated)

and are subsequently remeasured and accounted for in accordance with the accounting policies for these categories of assets. The
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.

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
consolidation). Accounting policy for associates is applied to repossessed shares where the Group obtains significant influence, but
not control. The cost of the associate is the fair value of the loan settled by repossessing the pledged shares.

(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
determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A
cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets
and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are
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.

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
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
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
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.

(o) Investments in associates and joint ventures
Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of the investment in
associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive
income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of
the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for 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
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
subsequently measured at their amortised cost using the effective interest method.
(q) Provisions
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
reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the liability.
A provision for restructuring is recognised when the Bank has approved a detailed and formal restructuring plan, and the restructuring