Bahamas - FirstCaribbean International Bank

Notes to the Consolidated Financial Statements
October 31, 2007
(expressed in thousands of Bahamian dollars)
2. Summary of significant accounting policies (continued)
2.3 Change in accounting policies (continued)
As of November 1, 2005, loan origination fees relating to loans that have a high
probability of being drawn down, are to be deferred (together with related
direct costs) and recognised as an adjustment to the effective interest yield on
the loan in accordance with IAS 18 Revenue. This accounting treatment was
not applied in the past as previous estimations indicated the adjustment to be
immaterial. For the year ended October 31, 2006, management has estimated
the impact using the last four years’ historical data along with certain key
assumptions about the maturity profile of the loan portfolio prior to 2004 and
the level of fees booked prior to 2002.
2.4 Segment reporting
A business segment is a group of assets and operations engaged in providing
products and services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged
in providing products or services within a particular economic environment
that are subject to risks and returns that are different from those of segments
operating in other economic environments. Segments with a majority of
revenue earned from external customers, and whose revenue, results or assets
are 10% or more of all the segments, are reported separately.
2.5 Foreign currency translation
2.6 Financial instruments
Initial recognition and subsequent measurement
Date of recognition
Purchase or sale of financial assets that require delivery of assets within the time
frame generally established by regulation or convention in the marketplace
are recognised on the settlement date, i.e. the date that an asset is delivered
to or by the Bank. Derivatives are recognised on a settlement date basis.
Initial recognition of financial instruments
The classification of financial instruments at initial recognition depends on
the purpose for which the financial instruments were acquired and their
characteristics. All financial instruments are measured initially at their fair value
plus, in the case of financial assets and financial liabilities not at fair value
through profit or loss, any directly attributable incremental cost of acquisition
or issue.
The Bank classifies its financial assets into the following categories:
(i) Financial assets at fair value through profit or loss
(ii) Loans and advances to customers
(iii) Held-to-maturity investments
(iv) Available-for-sale financial assets
The consolidated financial statements are presented in Bahamian dollars,
which is the Bank’s functional and presentational currency.
Monetary assets and liabilities denominated in foreign currencies are translated
into the functional currency at rates prevailing at the date of the financial
statements and non-monetary assets and liabilities are translated at historic
rates. Revenue and expenses denominated in foreign currencies are translated
into the Bank’s functional currency using prevailing average monthly exchange
rates. Realised and unrealised gains and losses on foreign currency positions
are reported in income of the current year. Translation differences on nonmonetary
items, such as equities classified as available-for-sale financial assets,
are included in the available-for-sale reserve in equity.
(i)
Financial assets or financial liabilities designated at fair value through
profit or loss
Financial assets and financial liabilities classified in this category are
designated by management on initial recognition when the following
criteria are met:
• The designation eliminates or significantly reduces the inconsistent
treatment that would otherwise arise from measuring the assets or
liabilities or recognising gains or losses on them on a different basis; or
• The assets and liabilities are part of a group of financial assets, financial
liabilities or both which are managed and their performance revaluated
on a fair value basis, in accordance with a documented risk management
or investment strategy; or
See Auditors’ Report Page 56.
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