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BOB_2017_SMALL

NOTES TO THE FINANCIAL

NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued) The tables below summarise the effective interest rates calculated on a weighted average basis, by major currencies for monetary financial assets and liabilities: 2017 k Sh uSd gbP euro Government securities 11.99% - % - % - % Deposits and balances due from banking institutions 7.96% - % - % - % Loans and advances to customers 14.58% 9.09% 6.95% 8.14% Customer deposits 7.14% 1.37% 3.35% 0.24% Deposits and balances due to banking institutions 2.42% - % - % - % 2016 k Sh uSd gbP euro Government securities 12.47% - % - % - % Deposits and balances due from banking institutions 3.14% - % - % - % Loans and advances to customers 16.71% 8.24% 6.34% 5.17% Customer deposits 7.67% - % - % - % Deposits and balances due to banking institutions - % 1.99% - % - % interest rate risk sensitivity At 31 December 2016, if the weighted average interest had been 10% higher, with all other variables held constant, post-tax profit would have been as follows: 2017 2016 kshs `000 kshs `000 Effect on interest income - increase 731,189 671,133 Effect in interest expense - (increase) (326,901) (321,806) net effect on profit after tax - increase 404,288 349,327 40

NOTES TO THE FINANCIAL STATEMENTS ANNUAL REPORT AND FINANCIAL STATMENTS 2017 Currency risk The bank operates wholly within Kenya and its assets and liabilities are reported in the local currency. It conducts trade with correspondant banks and takes deposits and lends in other currencies. The bank’s currency position and exposure are managed within the exposure guideline of 10% of the core capital as stipulated by the Central Bank of Kenya. The position is reviewed on a daily basis by management. The significant currency positions are detailed below: at 31 december 2017 uSd gbP euro others total assets Cash and Bank balances 31,839 705 1,594 - 34,138 Balances with Central Bank of Kenya 45,468 5,713 4,298 1,431 56,910 Deposits due from other banking institutions 1,689,652 236,168 37,630 12,804 1,976,254 Loans and advances to customers 6,726,410 144,487 130,337 - 7,001,234 Total assets 8,493,369 387,073 173,859 14,235 9,068,536 liabilities and shareholders' equity Customer deposits 3,574,091 682,498 163,887 - 4,420,476 Deposits due to other banking institutions 4,650,164 - - 38,774 4,688,938 Total liabilities and equity 8,224,255 682,498 163,887 38,774 9,109,414 net statement of financial position gap 269,114 (295,425) 9,972 (24,539) (40,878) Off balance sheet net notional position (285,968) 312,194 - 30,911 57,137 at december 31, 2016 Total assets 5,679,460 235,848 179,858 159,703 6,254,869 Total liabilities and equity 5,317,844 497,300 247,562 142,124 6,204,830 net statement of financial position gap 361,616 (261,452) (67,704) 17,579 50,039 41