Page 90 - Annual Report 2023

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

Entities’ financial statements.
Other Standards and amendments that are effective for the first time in 2023 and could be applicable to the entity are:
• IAS 1 — Presentation of Financial Statements
• IFRS 17 – Insurance Contracts
• IFRS for Small and Medium-sized Entities (IFRS for SMEs)
• IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
• IAS 12- Income Taxes
These amendments do not have a significant impact on these Financial Statements and therefore the disclosures have not been made.

(ii) Standards and interpretations issued but not yet adopted.
The International Board of Accounting Standards has issued several standards and interpretations that are effective in future accounting
periods, which the company has decided not to apply in advance. The company plans to apply these standards and interpretations
when they become effective.
The following standards and interpretations have been issued but are not mandatory for the current reporting period ended 31
December 2023:
• IAS 1 — Presentation of Financial Statements (Amendments regarding the classification of debt with covenants) - Effective January
1st, 2024
• IFRS 7 - Financial Instruments: Disclosures - Effective January 1st, 2024
• IFRS 16 - Leases - Effective from January 1st, 2024
• IAS 7- Statement of Cash Flows - Effective from January 1st, 2024
• IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information- Effective from January 1st, 2024
• IFRS S2 - Climate-related Disclosures- Effective from January 1st, 2024

4. USE OF ESTIMATES AND JUDGEMENTS
Management discusses with the Audit Committee the development, selection and disclosure of the Bank’s critical accounting policies
and estimates, and the application of these policies and estimates.
These disclosures supplement the commentary on financial risk management (see note 5).

The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the
management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the
amounts recognised in financial statements:
Business model assessment: Classification and measurement of financial assets depends on the results of the SPPI and the business
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
the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and
how these are managed and how the managers of the assets are compensated. The Group monitors financial assets measured at
amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason
for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is
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
classification of those assets.

ECL Determination

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
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
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
forward looking information. Refer to note 3 (g) (ix) and 5 (b) (ii), for more details.