Annual REPORT

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ANNUAL <strong>REPORT</strong> 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 ======== ======= 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 ====== ====== 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. 98
ANNUAL <strong>REPORT</strong> AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 NOTES TO THE FINANCIAL STATEMENTS (Continued) 34 CONTINGENCIES AND COMMITMENTS INCLUDING OFF BALANCE SHEET ITEMS (Continued) 2015 2014 Sh’000 Sh’000 b) Commitments to extend credit Undrawn formal stand-by facilities, credit lines and other commitments to lend 6,504,694 2,932,581 ======= ======== Commitments to extend credit are agreements to lend to a customer in future subject to certain conditions. Such commitments are normally made for a fixed period. The group may withdraw from its contractual obligation to extend credit by giving reasonable notice to the customer. c) Capital commitments 2015 2014 Sh’000 Sh’000 Authorised and contracted for 654,399 168,472 ====== ======= Authorised but not contracted for 272,000 655,000 ====== ======= The authorised but not contracted for capital commitments relate to the branch set up costs amounting to Sh.167 million for 6 proposed branches and planned renovations/expansion of 6 already existing branches amounting to Sh.105 Million. 35 RELATED PARTY TRANSACTIONS Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Placings are made in the group by directors, their associates and companies associated to directors. Advances to customers at 31 December 2015 include advances and loans to companies associated with the directors. Contingent liabilities at 31 December 2015 include guarantees and letters of credit for companies associated with the directors. 2015 2014 Movement in related party balances was as follows: Sh’000 Sh’000 Loans and advances: At 1 January 2,306,912 1,775,987 Advanced during the year 1,046,205 782,455 Interest earned 338,461 224,482 Repaid during the year (574,237) (476,012) ________ ________ At 31 December 3,117,341 2,306,912 ======= ======== As at 31 December 2015 loans and advances to staff amounted to Ksh 1,849,722,000 (2014 – Sh 1,643,962,000. The loans and advances to related parties are performing and adequately secured. 2015 2014 Key management compensation Sh’000 Sh’000 The remuneration of directors and other members of key management during the year were as follows: Salaries and other benefits 104,350 80,002 Directors’ emoluments 229,652 191,490 ________ _______ 334,002 271,492 ======= ====== 99
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BOARD OF DIRECTORS ANNUAL REPORT AN
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CHAIRMAN’S STATEMENT (Continued)
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FAMILY BANK INSURANCE AGENCY LIMITE
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CORPORATE GOVERNANCE STATEMENT ANNU
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REPORT OF THE DIRECTORS ANNUAL REPO
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Annual REPORT

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