FirstCaribbean International Bank (Bahamas) Limited

Notes to Consolidated Financial Statements
For the year ended October 31, 2004
(expressed in thousands of Bahamian dollars)
2. Summary of significant accounting policies (continued)
Other post-retirement obligations
The Bank provides post-retirement healthcare benefits to its retirees. The entitlement to these benefits is
usually based on the employee remaining in service up to retirement age and the completion of a
minimum service period. The expected costs of these benefits are accrued over the period of employment,
using a methodology similar to that for defined benefit pension plans. Valuations of these obligations are
carried out by independent qualified actuaries.
Acceptances
The Bank’s potential liability under acceptances is reported as a liability in the consolidated balance sheet.
The recourse against the customer in the event of a call on any of these commitments is reported as a
corresponding asset of the same amount.
Share capital
Shares issued for cash are accounted for at the issue price less any transaction costs associated with the
issue. Shares issued as consideration for the purchase of assets or a business, are recorded at the market
price on the date of the issue.
Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the period in which they are declared.
Interest income and expense
Interest income and expense are recognised in the income statement for all interest-bearing instruments
on an accrual basis using the effective yield method based on the actual purchase price or estimated
recoverable amount. Interest income includes coupons earned on fixed income investment and trading
securities and accrued discount and premium on treasury bills and other discounted instruments. Interest
income on impaired loans is recognised, according to the terms of the loan contract, to the extent that it
is deemed recoverable.
Fee and commission income
Fees and commissions are generally recognised on an accrual basis when the service has been provided.
Loan origination fees for loans, which are probable of being drawn down are deferred (together with
related direct costs) and recognised as an adjustment to the effective yield on the loan. Commission and
fees arising from negotiating, or participating in the negotiation of a transaction for a third party, such as
the acquisition of loans, shares or other securities or the purchase or sale of business, are recognised on
completion of the underlying transaction. Portfolio and other management advisory and service fees are
recognised based on the applicable service contracts. Asset management fees related to investment funds
are recognised over the period the service is provided. The same principle is applied for wealth
management, financial planning and custody services that are continuously provided over an extended
period of time.
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