SFAS 24 Press Release “Employee Benefits”
38. FINANCIAL INSTRUMENTS (continued)
Valuation of financial instruments
Financial instruments measured at fair value
The f ollowing table sets out the carrying amounts and f air values of financial instruments of the Group, measured at f air values, and their analysis by the level in the f air value hierarchy.
2022
Carrying amount Fair value
Measured at fair value through
profit or loss
Measured at fair value through
other comprehensive
income Total Level 2
Financial assets
Financial assets at fair value
through profit or loss - net 2,233,129 - 2,233,129 2,233,129
Investment securities - 128,038,808 128,038,808 128,038,808
2,233,129 128,038,808 130,271,937 130,271,937
Financial liabilities
Financial liabilities at fair value
through profit or loss 383,273 - 383,273 383,273
383,273 - 383,273 383,273
2021
Carrying amount Fair value
Measured at fair value through
profit or loss
Measured at fair value through
other comprehensive
income Total Level 2
Financial assets
Placements with Bank Indonesia and
other banks - net - 28,908 28,908 28,908
Financial assets at fair value
through profit or loss - net 2,447,163 - 2,447,163 2,447,163
Investment securities - 172,389,022 172,389,022 172,389,022
2,447,163 172,417,930 174,865,093 174,865,093
Financial liabilities
Financial liabilities at fair value
through profit or loss 55,162 - 55,162 55,162
55,162 - 55,162 55,162
Fair value of placements with Bank Indonesia and other banks which measured at f air value through other comprehensive income were calculated using valuation techniques based on the Bank’s internal model, which is a discounted cash flow method. Input used in the valuation techniques is market interest rate f or money market instruments which have similar characteristics of credit, maturity, and yield.
As of 31 December 2022 and 2021, the f air value of marketable securities classif ied in the group measured at f air value through prof it or loss, and the f air value of securities classified in the group measured at f air value through other comprehensive income is based on market prices issued by the pricing provider (Penilai Harga Ef ek Indonesia/"PHEI", f ormerly Indonesia Bond Pricing Agency/“IBPA"). If this information is not available, fair value is estimated using quoted market prices f or securities that have similar characteristics of credit, maturity, and yield.
Valuation of financial instruments (continued)
As of 31 December 2022 and 2021, the f air value of investment securities which measured at f air value through other comprehensive income did not include the f air value of investments in shares amounting to Rp 440,617 and Rp 725,032, respectively, which were valued at cost, since the f air value cannot be measured reliably.
Financial instruments not measured at fair value
The f ollowing table sets out the carrying amounts and f air values of financial instruments of the Group, which are not measured at f air values and their analysis by the level in the f air value hierarchy.
2022
Carrying value Fair value
Amortised cost Total Level 2 Level 3 Total
Financial assets
Loans receivables - net 660,989,004 660,989,004 23,447,307 631,782,303 655,229,610
Consumer financing receivables - net 8,215,427 8,215,427 - 7,476,847 7,476,847
Finance lease receivables - net 121,716 121,716 - 123,618 123,618
Assets related to sharia transaction -
murabahah receivables - net 1,331,217 1,331,217 - 1,331,217 1,331,217
Investment securities - net 120,415,741 120,415,741 119,300,760 - 119,300,760
791,073,105 791,073,105 142,748,067 640,713,985 783,462,052
Financial liabilities
Deposits from customers 1,030,451,783 1,030,451,783 1,030,451,783 - 1,030,451,783
Sharia deposits 2,825,860 2,825,860 2,825,860 - 2,825,860
Finance lease liabilities 289,169 289,169 289,169 - 289,169
Deposits from other banks 7,936,206 7,936,206 7,936,206 - 7,936,206
Borrowings 1,316,951 1,316,951 1,282,414 - 1,282,414
Subordinated bonds 500,000 500,000 500,000 - 500,000
1,043,319,969 1,043,319,969 1,043,285,432 - 1,043,285,432
2021
Carrying value Fair value
Amortised cost Total Level 2 Level 3 Total
Financial assets
Loans receivables - net 589,813,578 589,813,578 21,534,333 566,542,398 588,076,731
Consumer financing receivables - net 7,855,976 7,855,976 - 6,729,172 6,729,172
Finance lease receivables - net 84,145 84,145 - 84,166 84,166
Assets related to sharia transaction -
murabahah receivables - net 1,234,433 1,234,433 - 1,234,433 1,234,433
Investment securities - net 51,118,362 51,118,362 51,831,984 - 51,831,984
650,106,494 650,106,494 73,366,317 574,590,169 647,956,486
Financial liabilities
Deposits from customers 968,606,744 968,606,744 968,606,744 - 968,606,744
Sharia deposits 1,620,039 1,620,039 1,620,039 - 1,620,039
Finance lease liabilities 331,426 331,426 331,426 - 331,426
Deposits from other banks 10,017,194 10,017,194 10,017,194 - 10,017,194
Debt securities issued 482,149 482,149 493,074 - 493,074
Borrowings 976,225 976,225 976,331 - 976,331
Subordinated bonds 500,000 500,000 500,000 - 500,000
982,533,777 982,533,777 982,544,808 - 982,544,808
38. FINANCIAL INSTRUMENTS (continued)
Financial instruments not measured at fair value (continued)
The f inancial instruments not measured at f air value are measured at amortised cost.
The f ollowing financial instruments are short-term f inancial instruments or f inancial instruments which are re-priced periodically to current market rates, theref ore, the f air values o f f inancial instruments are reasonable approximation of carrying value.
Financial assets:
- Cash
- Current accounts with Bank Indonesia - Current accounts with other banks
- Placements with Bank Indonesia and other banks - Acceptance receivables
- Bills receivables
- Securities purchased under agreements to resell - Other assets
Financial liabilities:
- Securities sold under agreements to repurchase - Acceptance payables
- Estimated losses from commitment and contingency - Other liabilities
As of 31 December 2022 and 2021, the f air values of loans receivable, consumer f inancing receivables, f inance lease receivables and borrowings were determined using discounted cash f lows based on internal interest rate.
As of 31 December 2022 and 2021, the f air values of investment securities issued at amortised cost) based on market prices issued by pricing provider (Penilai Harga Ef ek Indonesia/"PHEI", formerly Indonesia Bond Pricing Agency/ “IBPA”) If the information is not available, the fair values were estimated using quoted market prices of securities which have similar characteristics of credit, maturity, and yield.
As of 31 December 2022 and 2021, the f air values of deposits f rom customers and deposits f rom other banks are the same with the carrying amount since they are payables on demand in nature.
The f air values calculated are f or disclosure purposes only and do not have any impact on the Group’s reported financial performance or position. The fair values calculated by the Group may be dif ferent f rom the actual amount that will be received or paid on the settlement or maturity of the f inancial instrument. As certain categories of financial instruments are not traded, there is management judgment and estimation involved in calculating their f air values.
In accordance with Law of the Republic of Indonesia No. 11/2020 concerning Job Creation Act, the Bank is required to provide post-employment benef its to its employees when their employments are terminated or when they retire. These benef its are primarily based on years of services and the employees’ compensation at termination or retirement. These post- employment benef its are def ined benef its program.
The Bank also had a def ined contribution pension plan that covers all permanent employees who f ulf illed the criteria determined by the Bank. This def ined contribution pension plan is managed and administered by Dana Pensiun BCA which was established by the Bank to manage the assets, generate investment income and pay the post -employment benef its to the employees. The establishment of Dana Pensiun BCA had been ratif ied by the Minister of Finance of Republic of Ind onesia in its Decision Letter No. KEP-020/KM.17/1995 dated 25 January 1995. The contribution to the pension plan is computed based on certain percentage of employees’ basic salary, for which the contribution from employees and the Bank are 3% (three percent) and 5% (f ive percent), respectively. During the year ended 31 December 2022 and 2021, the accumulated contributions f rom the Bank are 2% (two percent) respectively, which are considered as a deduction against the post -employment benef its obligation in accordance with the Manpower Law.
During the years ended 31 December 2022 and 2021, the Bank has set aside f unds that will be used to support the f ulf ilment of employee post-employment benef it obligations amounting to Rp. 4,117 each which is placed in several insurance companies in the f orm of saving plan program, and Rp. 1,704,013 which is placed in several insurance companies in the f orm of savings plan program and the Financial Institution Pension Fund (“DPLK”) in the form of a Program f or Post-Employment Compensation Funds (“PDKP”) that meet the criteria to be recorded as plan assets.
The def ined benef it pension plan provides actuarial risk exposures to the Bank, e.g., investment risk, interest rate risk and inf lation risk.
Post-employment benef its provided by the Bank consist of pension, other long-term compensations in the f orm of long service benef its and post-employment healthcare benef its.
The post-employment benef its obligation as of 31 December 2022 and 2021 were calculated by Kantor Konsultan Aktuaria Steven & Mourits as the Bank’s independent actuary, using the projected-unit-credit method. The main assumptions used by independent actuary were as f ollows:
2022 2021
Economic assumptions:
Annual discount rate
Def ined benef it pension plan 7.15% 6.70%
Other long-term compensations 7.20% 6.80%
Post-employment healthcare benef its – Self Insured 6.90% 7.30%
Post-employment healthcare benef its – Insurance 7.40% N/A
Annual basic salary growth rate 9.00% 8.00%
Healthcare cost rate 10.00% 10.00%
The discount rate is used in determining the present value of the post -employment benefits obligation at valuation date. In general, the discount rate correlates with the yield on high quality government bonds that are traded in active capital markets at the reporting date.