Notes to and forming part of the Unconsolidated Financial Statements

For the year ended December 31, 2018

5.7 Non-banking assets acquired in satisfaction of claims

Non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation.
These assets are revalued by professionally qualified valuers with sufficient regularity to ensure that their net carrying value
does not differ materially from their fair value. A surplus arising on revaluation of property is credited to the 'surplus on
revaluation of non-banking assets' account and any deficit arising on revaluation is taken to profit and loss account directly.
Legal fees, transfer costs and direct costs of acquiring title to property are charged to the profit and loss account and not
capitalised.

5.8 Impairment

Impairment of available for sale equity investments

Available for sale equity investments are impaired when there has been a significant or prolonged decline in their fair value
below their cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the Bank
evaluates, among other factors, the normal volatility in share price.

Impairment of investments in subsidiaries and associates

The Bank considers that a decline in the recoverable value of the investment in a subsidiary or an associate below its cost
may be evidence of impairment. Recoverable value is calculated as the higher of fair value less costs to sell and value in
use. An impairment loss is recognized when the recoverable value falls below the carrying value and is charged to the profit
and loss account. A subsequent reversal of an impairment loss, upto the cost of the investment in the subsidiary or the
associate, is credited to the profit and loss account.

Impairment in non-financial assets (excluding deferred tax)

The carrying amounts of non-financial assets are reviewed at each reporting date for impairment whenever events or
changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. The recoverable
amount of an asset is the higher of its fair value less costs of disposal and its value in use. If such indication exists, and
where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amount.
The resulting impairment loss is charged to the profit and loss account except for an impairment loss on revalued assets,
which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the
revaluation surplus.

5.9 Taxation

5.9.1 Current

Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing laws
and at the prevailing rates for taxation on income earned by the Bank. The amount of current tax payable is the best
estimate of the tax amount expected to be paid that reflects uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset only if certain criteria are met.

5.9.2 Deferred

Deferred tax is recognized using the balance sheet method on all major temporary differences between the amounts
attributed to assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is calculated at the rates that are expected to apply to the period when the differences are expected to reverse, based on
tax rates that have been enacted or substantively enacted at the statement of financial position date.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against
which the assets can be utilized.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset
to be utilized.

Annual Report 2018 85