Annual REPORT

ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE FINANCIAL STATEMENTS (Continued)
33 OPERATING LEASE ARRANGEMENTS
At the end of the reporting period, the Group had contracted with tenants for the following future lease payables.
2015 2014
Sh’000
Sh’000
Year 1 516,777 437,775
Year 2 -3 1,107,064 933,382
Year 4-5 1,249,588 1,048,301
Above 5 year 1,265,903 1,147,831
_________
________
4,139,332 3,567,289
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Operating leases relate to the leased property. The lease terms range between 1 to 10 years, with an option to extend for a further period between 1 to
10 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have
an option to purchase the property at the expiry of the lease period. The operating lease contracts are cancellable
34 CONTINGENCIES AND COMMITMENTS INCLUDING OFF BALANCE SHEET ITEMS
a) Contingent liabilities
In common with other financial institutions, the group conducts business involving acceptances, letters of credit, guarantees, performance bonds and
indemnities. The majority of these facilities are offset by corresponding obligations of third parties.
2015 2014
Sh’000
Sh’000
Guarantees 2,191,037 2,611,409
Letters of credit 133,065 126,242
_________
________
2,324,102 2,737,651
======== =======
Litigations against the group 181,300 230,398
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Nature of contingent liabilities:
An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The group expects most acceptances to be presented, but
reimbursement by the customer is normally immediate.
Letters of credit commit the group to make payments to third parties on production of documents, which are subsequently reimbursed by customers.
Guarantees are generally written by a bank to support performance by customers to third parties. The group will only be required to meet these
obligations in the event of the customer’s default.
Concentrations of contingent liabilities are covered under note 4.
Litigations against the bank relate to civil suits lodged against the group by customers and employees in the normal course of business. The likely
outcome of these suits cannot be determined as at the date of signing these financial statements. The directors, however, do not anticipate that any
liability will accrue from the pending suits.
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