Contents - Equity Bank Group

Notes to the Financial StatementsFor the year ended 31st December 2007CommitmentsCapital expenditure contracted for at the balance sheet date but not recognized in the financial statements is as follows:In millions of Kenya Shillings 2007 2006Capital commitments 97 326Loans approved but not disbursed 375 22631. Other contingenciesThe Bank is currently discussing with Kenya Revenue Authority on some open tax /issues. On the basis of appropriate professionaladvise, the directors are of the opinion that no loss will crystallise and therefore no provision has been made in these financialstatements.The Bank is defending some actions brought by borrowing consumers in relation to the loans advanced to them. While liabilityis not admitted, if defence against the actions is unsuccessful, fines and legal costs could amount to KShs 9million. Based on legaladvice, the directors do not expect the outcome of the actions to have a material effect on the Bank’s financial position.A review of the impact of the post-election violence on the bank’s loan portfolio after year end has been carried out. The directorsare of the opinion that no material loss is likely to crystallize therefrom.32. Related partiesa) Loans to key management personnel 2007 2006In millions of Kenya ShillingsBalance at 1 January 43 25Interest charged 3 3Loans disbursed 8 20Cash received (6) (5)Balance at 31 December 48 43b) Loans to employees 2007 2006In millions of Kenya ShillingsBalance at 1 January 188 132Interest charged 25 13Loans disbursed 317 191Cash received (135) (147)Balance at 31 December 395 189Interest rates charged on balances outstanding are two thirds of the rates that would be charged in an arm’s length transaction.No impairment losses have been recorded against balances outstanding during the year and no specific allowance has been madefor impairment losses on balances at the year end.642007 Annual Report and Financial Statements