Annual Report - VÃB banka
Annual Report - VÃB banka
Annual Report - VÃB banka
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(a) Issued guarantees<br />
Commitments from guarantees represent irrevocable<br />
assurances that the VUB Group will make payments<br />
in the event that a borrower cannot meet its<br />
obligations to third parties. These assurances carry<br />
the same credit risk as loans and therefore the VUB<br />
Group makes provisions against these instruments<br />
on a similar basis as is applicable to loans.<br />
(b) Commitments and undrawn credit facilities<br />
The primary purpose of commitments to extend<br />
credit is to ensure that funds are available to the<br />
customer as required. Commitments to extend<br />
credit issued by the VUB Group represent issued<br />
loan commitments, undrawn portions of and approved<br />
overdraft loans.<br />
(c) Lease obligations<br />
In the normal course of business, the VUB Group<br />
enters into operating lease agreements for branch<br />
facilities and cars. At 31 December 2007 and 2006,<br />
the total value of future payments arising from noncancellable<br />
operating leasing contracts was as follows:<br />
2007 2006<br />
Up to 1 year 53 60<br />
1 to 5 years 87 132<br />
Over 5 years - -<br />
140 192<br />
(d) Legal<br />
In the ordinary course of business the VUB Group<br />
is subject to a variety of legal actions. The VUB<br />
Group conducted a review of legal proceedings<br />
outstanding against it as of 31 December 2007.<br />
Pursuant to this review, management has recorded<br />
a provision of Sk 973 million as of 31 December<br />
2007 (2006: Sk 990 million) in respect of such legal<br />
proceedings (see also note 23). The VUB Group<br />
will continue to defend its position in respect of<br />
each of these legal proceedings.<br />
27. Net interest income<br />
47<br />
2007 2006<br />
Interest and similar income<br />
Loans and advances to banks 1,502 1,747<br />
Loans and advances to customers 8,924 7,223<br />
Bonds, treasury bills and other securities:<br />
Financial assets held for trading 383 38<br />
Available-for-sale fi nancial assets 128 68<br />
Held-to-maturity investments 3,851 3,252<br />
14,788 12,328<br />
Interest expense and similar charges<br />
Deposits from banks (734) (526)<br />
Deposits from customers (4,350) (3,503)<br />
Debt securities in issue (1,195) (762)<br />
(6,279) (4,791)<br />
8,509 7,537<br />
Interest income on individually impaired loans and advances to customers for 2007 amounted to Sk 156<br />
million (2006: Sk 119 million).<br />
VUB, a bank of Intesa Sanpaolo group
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