Page 89 - Annual Report 2023

ANNUAL REPORT 2023 20
Notes to the Consolidated Financial Statements for the year ended 31 December 2023
(amounts in USD, unless otherwise stated)

either has commenced or has been announced publicly. Future operating costs are not provided for.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Bank from a contract are lower than
the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the
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.

(r) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in profit or loss when they are due. The
Bank makes compulsory social security contributions that provide pension benefits for employees upon retirement. The local authorities
are responsible for providing the legally set minimum threshold for pensions in Albania under a defined contribution pension plan.

(ii) Defined benefit plans
The Bank created a fully employer sponsored pension plan fund-Staff Support Program (See note 21), during 2002. The amount
charged to this fund (SSP) was decided as 5% of yearly budgeted personnel salary expenses.
The amount due to employees based on the above plan would be grossed up by the interest that will accrue from the date the
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
is consumed.

Based on the Board of Directors resolution effective on 30 September 2010, the Bank stopped the investment in this fund (SSP), by
transforming it into the Staff Retention Credit Program (SRCP). The demographic changes in labour force during the last ten years
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
staff, as it will provide consumer and home loans with preferential terms. The entire due amount calculated for eligible employees in
Staff Support Program has been frozen on the same date. The frozen amount due to change of SSP into SRCP on 30 September
2010 and the corresponding annual interest that will be gained by the investment in AAA sovereign bonds in the future until retirement
age, is recorded as a liability by the Bank.

(iii) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
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
present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can
be estimated reliably.

(s) Segment reporting
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
results are reviewed regularly by the management to make decisions about resources allocated to each segment and assess its
performance, and for which discrete financial information is available (see Note 6). The Bank’s format for segment reporting is based
on geographical segments.

(t) Application of new and revised international financial reporting standards.
(i) Standards and Interpretations effective in the current period
There are no accounting announcements which have become effective from 1 January 2023 that have a significant impact on the