Other liabilities include provisions made on account of interest, fees and expenses, gratuity/pensions, leave encashment, and other provisions. These liabilities are recorded at amounts expected to be payable as at the reporting date.
|
|
GROUP |
BANK |
As at December 31, |
|
2018 |
2017 |
2018 |
2017 |
|
Note |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Accrued expenditure
|
|
2,724,062 |
2,895,090 |
2,658,304 |
2,865,751 |
Cheques sent on clearing
|
|
7,774,059 |
6,119,528 |
7,774,059 |
6,119,528 |
Provision for gratuity payable
|
50.1. (b) |
1,778,016 |
1,515,410 |
1,726,920 |
1,474,387 |
Provision for unfunded pension scheme
|
50.2. (b) |
242,819 |
285,095 |
242,819 |
285,095 |
Provision for leave encashment
|
50.3. (b) |
709,495 |
944,251 |
709,495 |
944,251 |
Payable on oil hedging transactions
|
|
1,135,326 |
952,929 |
1,135,326 |
952,929 |
Impairment provision in respect of off-balance sheet credit exposures |
59.4 |
726,640 |
– |
726,640 |
– |
Other payables
|
|
9,457,096 |
6,795,812 |
9,232,788 |
6,583,423 |
Total |
|
24,547,513 |
19,508,115 |
24,206,351 |
19,225,364 |
The maturity analysis of other liabilities is given in Note 62.
50.1 Provision for gratuity payable
An actuarial valuation of the retirement gratuity payable was carried out as at December 31, 2018 by Mr M Poopalanathan, AIA, of Messrs Actuarial & Management Consultants (Pvt) Ltd., a firm of professional Actuaries. The valuation method used by the actuaries to value the liability is the “Projected Unit Credit Method (PUC)”, the method recommended by the Sri Lanka Accounting Standard – LKAS 19 on “Employee Benefits”.
50.1 (a) |
Actuarial assumptions |
Type of assumption |
Criteria |
Description |
Demographic |
Mortality – in service |
A 67/70 Mortality table issued by the Institute of Actuaries, London |
Staff turnover |
The staff turnover rate at an age represents the probability of an employee leaving within one year of that age due to reasons other than death, ill health, and normal retirement. The same withdrawal rates which were used in the last valuation (as at December 31, 2017) to determine the liabilities of the active employees in the gratuity, were used in the actuarial valuation carried out as at December 31, 2018. |
Normal retirement age |
The employees who are aged over the specified retirement age have been assumed to retire on their respective next birthdays. |
Financial |
Rate of discount |
Sri Lankan operation
In the absence of a deep market in long-term bonds in Sri Lanka, a long-term interest rate of 11.50% p.a. (2017 – 11.00% p.a.) has been used to discount future liabilities considering anticipated long term
rate of inflation. |
|
|
Bangladesh operation
In the absence of long-term high quality corporate bonds or government bonds with the term that matches liabilities a long-term interest rate of 8.00% p.a. (2017 - 8.00% p.a.) has been used to discount future liabilities considering anticipated long-term rate of inflation. |
|
Salary increases |
Sri Lankan operation
A salary increment of 11.00% p.a. (2017 – 11.50% p.a.) has been used in respect of the active employees. |
|
|
Bangladesh operation
A salary increment of 10.00% p.a. (2017 – 10% p.a.) has been used in respect of the active employees. |
50.1 (b) Movement in the provision for gratuity payable
|
|
GROUP |
BANK |
|
|
2018 |
2017 |
2018 |
2017 |
|
Note |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Balance as at January 01,
|
|
1,515,410 |
1,010,095 |
1,474,387 |
983,180 |
Expense recognised in the Income Statement
|
50.1 (c) |
328,544 |
264,079 |
316,939 |
254,537 |
Exchange rate variance
|
|
52,568 |
(7,279) |
52,568 |
(7,279) |
Amount paid during the year
|
|
(51,231) |
(67,216) |
(45,817) |
(62,607) |
Actuarial (gains)/loss recognised in other comprehensive income |
|
(67,275) |
315,731 |
(71,157) |
306,556 |
Balance as at December 31, |
|
1,778,016 |
1,515,410 |
1,726,920 |
1,474,387 |
50.1 (c) Expense recognised in the income statement – Gratuity
|
GROUP |
BANK |
For the year ended December 31, |
2018 |
2017 |
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Interest cost
|
159,617 |
105,960 |
155,673 |
102,993 |
Current service cost
|
168,927 |
158,119 |
161,266 |
151,544 |
Total |
328,544 |
264,079 |
316,939 |
254,537 |
50.1 (d) Sensitivity analysis on actuarial valuation
The following table illustrates the impact arising from the possible changes in the discount rate and salary escalation rates on the gratuity valuation of the Group and the Bank as at December 31, 2018.
|
Group |
Bank |
Variable |
Sensitivity effect on statement of
financial position (Benefit obligation) |
Sensitivity effect on statement of
financial position (Benefit obligation) |
|
Rs. ’000 |
Rs. ’000 |
1% increase in discount rate
|
(253,450) |
(249,806) |
1% decrease in discount rate
|
313,475 |
309,315 |
1% increase in salary
|
319,562 |
315,346 |
1% decrease in salary
|
(262,110) |
(258,358) |
50.2 Provision for unfunded pension scheme
An actuarial valuation of the unfunded pension liability was carried out as at December 31, 2018 by Mr M Poopalanathan, AIA, of Messrs Actuarial & Management Consultants (Pvt) Ltd., a firm of professional actuaries. The valuation method used by the actuary to value the liability is the “Projected Unit Credit Method (PUC)”, the method recommended by the Sri Lanka Accounting Standard, LKAS 19 on “Employee Benefits”.
50.2 (a) Actuarial assumptions
Type of Assumption |
Criteria |
Description |
Demographic |
Mortality – in service |
A 67/70 Mortality table issued by the Institute of Actuaries, London |
After retirement |
A (90) Annuities table (Males and Females) issued by the Institute of Actuaries, London |
|
Staff turnover |
The withdrawal rate at an age represents the probability of an active employee leaving within one year of that age due to reasons other than death, ill health, and normal retirement. The same withdrawal rates which were used in the last valuation (as at December 31, 2017) to determine the liabilities of the active employees in the funded scheme, were used in the actuarial valuation carried out as at December 31, 2018. |
|
Disability |
Assumptions similar to those used in other comparable schemes for disability were used as the data required to do a “scheme specific” study was not available. |
|
Normal retirement age |
55 or 60 years as opted by the employees. |
Financial |
Rate of discount |
In the absence of a deep market in long-term bonds in Sri Lanka, a long-term interest rate of 11.50% p.a. (2017 – 11.00% p.a.) has been used to discount future liabilities considering anticipated long-term rate of inflation. |
|
Salary increases |
A salary increment of 11.00% p.a. (2017 – 11.50% p.a.) has been used in respect of the active employees. |
|
Post retirement pension increase rate |
There is no agreed rate of increase even though the pension payments are subject to periodic increases, and increases are granted solely at the discretion of the Bank. Therefore, no specific rate was assumed for this valuation. |
50.2 (b) Movement in the provision for unfunded pension scheme
|
|
GROUP |
BANK |
|
|
2018 |
2017 |
2018 |
2017 |
|
Note |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Balance as at January 01,
|
|
285,095 |
214,886 |
285,095 |
214,886 |
Expense recognised in the Income Statement
|
50.2 (c) |
32,728 |
24,712 |
32,728 |
24,712 |
Amount paid during the year
|
|
(47,283) |
(45,317) |
(47,283) |
(45,317) |
Transfers
|
|
12,435 |
– |
12,435 |
– |
Actuarial (gains)/losses recognised in other comprehensive income |
|
(40,156) |
90,814 |
(40,156) |
90,814 |
Balance as at December 31, |
|
242,819 |
285,095 |
242,819 |
285,095 |
50.2 (c) Expense recognised in the Income Statement – Unfunded pension scheme
|
GROUP |
BANK |
For the year ended December 31, |
2018 |
2017 |
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Interest cost
|
32,728 |
24,712 |
32,728 |
24,712 |
Current service cost
|
– |
– |
– |
– |
Total |
32,728 |
24,712 |
32,728 |
24,712 |
50.2 (d) Sensitivity analysis on actuarial valuation – Unfunded pension scheme
The following table illustrates the impact arising from the possible changes in the discount rate and salary escalation rates on the unfunded pension scheme of the Bank as at December 31, 2018.
|
Group |
Bank |
Variable |
Sensitivity effect on statement of
financial position (Benefit obligation) |
Sensitivity effect on statement of
financial position (Benefit obligation) |
|
Rs. ’000 |
Rs. ’000 |
1% increase in discount rate
|
(9,993) |
(9,993) |
1% decrease in discount rate
|
10,901 |
10,901 |
1% increase in salary
|
– |
– |
1% decrease in salary
|
– |
– |
50.3 Provision for leave encashment
An actuarial valuation of the leave encashment liability was carried out as at December 31, 2018 by Mr M Poopalanathan, AIA, of Messrs Actuarial & Management Consultants (Pvt) Ltd., a firm of professional actuaries. The valuation method used by the actuaries to value the liability is the “Projected Unit Credit Method (PUC)”, the method recommended by the Sri Lanka Accounting Standard, LKAS 19 on “Employee Benefits”.
50.3 (a) Actuarial assumptions
Type of assumption |
Criteria |
Description |
Demographic |
Mortality – in service |
A 1967/70 Mortality table issued by the Institute of Actuaries, London |
|
Staff turnover |
The probability of a member withdrawing from the scheme within a year of ages between 20 and 55 years. |
|
Disability |
The probability of a member becoming disable within a year of ages between 20 and 55 years. |
Financial |
Rate of discount |
In the absence of a deep market in long-term bonds in Sri Lanka, a long-term interest rate of 11.50% p.a.
(2017 – 11.00% p.a.) has been used to discount future liabilities considering anticipated long-term rate of inflation. |
|
Salary increases |
A salary increment of 11.00% p.a. (2017 – 11.50% p.a.) has been used in respect of the active employees. |
50.3 (b) Movement in the provision for leave encashment
|
|
GROUP |
BANK |
|
|
2018 |
2017 |
2018 |
2017 |
|
Note |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Balance as at January 1,
|
|
944,251 |
688,073 |
944,251 |
688,073 |
Expense recognised in the Income Statement
|
50.3 (c) |
103,868 |
79,128 |
103,868 |
79,128 |
Amount paid during the year
|
|
(283,895) |
(71,931) |
(283,895) |
(71,931) |
Actuarial (gains)/losses recognised in other comprehensive income |
|
(54,729) |
248,981 |
(54,729) |
248,981 |
Balance as at December 31, |
|
709,495 |
944,251 |
709,495 |
944,251 |
50.3 (c) Expense recognised in the income statement – Leave encashment
|
GROUP |
BANK |
For the year ended December 31, |
2018 |
2017 |
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Rs. ’000 |
Interest cost
|
103,868 |
79,128 |
103,868 |
79,128 |
Current service cost
|
– |
– |
– |
– |
Total |
103,868 |
79,128 |
103,868 |
79,128 |
50.3 (d) Sensitivity analysis on actuarial valuation – Leave encashment
The following table illustrates the impact arising from the possible changes in the discount rate and salary escalation rates on the leave encashment valuation of the Bank as at December 31, 2018.
|
Group |
Bank |
Variable |
Sensitivity effect on statement of
financial position (Benefit obligation) |
Sensitivity effect on statement of
financial position (Benefit obligation) |
|
Rs. ’000 |
Rs. ’000 |
1% increase in discount rate
|
(85,806) |
(85,806) |
1% decrease in discount rate
|
104,379 |
104,379 |
1% increase in salary
|
107,117 |
107,117 |
1% decrease in salary
|
(89,364) |
(89,364) |
50.4 Employee retirement benefit
50.4.1 Pension fund – Defined benefit plan
An actuarial valuation of the Retirement Pension Fund was carried out as at December 31, 2018 by Mr M Poopalanathan, AIA, of Messrs Actuarial and Management Consultants (Pvt) Ltd., a firm of professional actuaries. The valuation method used by the actuaries to value the fund is the “Projected Unit Credit Method (PUC)”, the method recommended by the Sri Lanka Accounting Standard – LKAS 19 on “Employee Benefits”.
The assets of the fund, which are independently administered by the Trustees as per the provisions of the Trust Deed are held separately from those of the Bank.
50.4.1 (a) Actuarial assumptions
Type of
assumption |
Criteria |
Description |
Demographic |
Mortality – in service |
A 67/70 Mortality table issued by the Institute of Actuaries, London |
|
After retirement |
A (90) Annuities table (Males and Females) issued by the Institute of Actuaries, London |
|
Staff Turnover |
The withdrawal rate at an age represents the probability of an active employee leaving within one year of that age due to reasons other than death, ill health and normal retirement. The same withdrawal rates which were used in the last valuation (as at December 31, 2017) to determine the liability on account of the active employees in the funded scheme, were used in the actuarial valuation carried out as at December 31, 2018. |
|
Disability |
Assumptions similar to those used in other comparable schemes for disability were used as the data required to do a “scheme specific” study was not available. |
|
Normal retirement age |
55 or 60 years as opted by the employees. |
Financial |
Rate of discount |
In the absence of a deep market in long-term bonds in Sri Lanka, a long-term interest rate of 11.50% p.a.
(2017 – 11.00% p.a.) has been used to discount future liabilities considering anticipated long-term rate of inflation. |
|
Salary increases |
A salary increment of 11.00% p.a. (2017 – 11.50% p.a.) has been used in respect of the active employees. |
|
Post-retirement pension increase rate |
There is no agreed rate of increase even though the pension payments are subject to periodic increases and increases are granted solely at the discretion of the Bank. Therefore, no specific rate was assumed for this valuation. |
50.4.1 (b) Movement in the present value of defined benefit obligation – Bank
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Balance as at January 1, |
204,441 |
160,833 |
Interest cost |
22,489 |
18,496 |
Current service cost |
3,823 |
3,518 |
Benefits paid during the year |
(17,619) |
(16,842) |
Actuarial (gain)/loss |
4,695 |
38,436 |
Balance as at December 31, |
217,829 |
204,441 |
50.4.1 (c) Movement in the fair value of plan assets
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Fair value as at January 1, |
160,530 |
160,752 |
Expected return on plan assets |
17,658 |
18,486 |
Contribution paid into plan |
46,001 |
1,710 |
Benefits paid by the plan |
(17,619) |
(16,842) |
Actuarial gain/(loss) on plan assets
|
(1,710) |
(3,576) |
Fair value as at December 31, |
204,860 |
160,530 |
50.4.1 (d) Liability recognised in the statement of financial position
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Present value of defined benefit obligations as at December 31, |
217,829 |
204,441 |
Fair value of plan assets |
(204,860) |
(160,530) |
Net liability recognised under other liabilities |
12,969 |
43,911 |
50.4.1 (e) Plan assets consist of the following:
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Deposits held with the Bank |
204,860 |
160,530 |
Total |
204,860 |
160,530 |
50.4.2W&OP Fund – Defined benefit plan
An actuarial valuation of the Retirement Pension W&OP Fund was carried out as at December 31, 2018 by Mr M Poopalanathan, AIA, of Messrs Actuarial & Management Consultants (Pvt) Ltd., a firm of professional actuaries. The valuation method used by the actuaries to value the fund is the “Projected Unit Credit Method (PUC)”, the method recommended by the Sri Lanka Accounting Standard – LKAS 19 on “Employee Benefits”.
The assets of the fund, which are independently administered by the Trustees as per the provisions of the Trust Deed are held separately from those of the Bank.
50.4.2 (a) Actuarial assumptions
Type of assumption |
Criteria |
Description |
Demographic |
Mortality – In service |
A 67/70 Mortality table issued by the Institute of Actuaries, London |
|
After retirement |
A (90) Annuities table (Males and Females) issued by the Institute of Actuaries, London |
|
Staff Turnover |
The withdrawal rate at an age represents the probability of an active employee leaving within one year of that age due to reasons other than death, ill health and normal retirement. The same withdrawal rates which were used in the last valuation (as at December 31, 2017) to determine the liability on account of the active employees in the funded scheme, were used in the actuarial valuation carried out as at December 31, 2018. |
|
Disability |
Assumptions similar to those used in other comparable schemes for disability were used as the data required to do a “scheme specific” study was not available. |
|
Normal retirement age |
55 or 60 years as opted by the employees. |
Financial |
Rate of discount |
In the absence of a deep market in long-term bonds in Sri Lanka, a long-term interest rate of 11.50% p.a.
(2017 – 11.00% p.a.) has been used to discount future liabilities considering anticipated long-term rate of inflation. |
|
Salary increases |
A salary increment of 11.00% p.a. (2017 – 11.50% p.a.) has been used in respect of the active employees. |
|
Post-retirement pension increase rate |
There is no agreed rate of increase even though the pension payments are subject to periodic increases
and increases are granted solely at the discretion of the Bank. Therefore, no specific rate was assumed
for this valuation. |
50.4.2 (b) Movement in the present value of defined benefit obligation – Bank
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Balance as at January 1, |
67,534 |
48,419 |
Interest cost |
6,061 |
5,568 |
Current service cost |
348 |
409 |
Transfers |
(12,435) |
– |
Benefits paid during the year |
(5,589) |
(5,003) |
Actuarial (gain)/loss
|
5,368 |
18,141 |
Balance as at December 31, |
61,287 |
67,534 |
50.4.2 (c) Movement in the fair value of plan assets
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Fair value as at January 1, |
48,270 |
50,182 |
Expected return on plan assets |
5,310 |
5,771 |
Contribution paid into plan |
19,524 |
212 |
Benefits paid by the plan |
(5,589) |
(5,003) |
Actuarial gain/(loss) on plan assets |
(667) |
(2,892) |
Fair value as at December 31, |
66,848 |
48,270 |
50.4.2 (d) Liability recognised in the Statement of Financial Position
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Present value of defined benefit obligations as at December 31, |
61,287 |
67,534 |
Fair value of plan assets |
(66,848) |
(48,270) |
Net liability recognised under other liabilities |
(5,561) |
19,264 |
50.4.2 (e) Plan assets consist of the following:
|
2018 |
2017 |
|
Rs. ’000 |
Rs. ’000 |
Deposits held with the Bank |
66,848 |
48,270 |
Total |
66,848 |
48,270 |
50.4.3 Pension fund – Defined contribution plan
During 2006, the Bank restructured its pension scheme which was a Defined Benefit Plan (DBP) to a Define Contribution Plan (DCP). This restructured plan was offered on a voluntary basis to the eligible employees of the Bank. The scheme provided for lump sum payments instead of commuted/monthly pension to the eligible employees at the point of their separation, in return for surrendering their pension rights. The lump sum offered consisted of a past service package and future service package. The cost to be incurred on account of the past service package in excess of the funds available in the pension fund was borne by the Bank in 2006.
The future service package includes monthly contributions to be made by the Bank for the employees who accepted the offer, to be made during their remaining period of service, at predetermined contribution rates to be applied on their salaries, estimated to increase for this purpose at 10% p.a. In addition, interest to be earned on the assets of the DCP is also allocated to the employees who joined the
restructured scheme.