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BANQUE SAUDI FRANSI CONSOLIDATED BALANCE SHEET As at December 31, 2008 and 2007 - page 33 / 51

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BANQUE SAUDI FRANSI

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2008 and 2007 _______________________________________________________________________________________________

19 Commitments and contingencies a) Legal proceedings

As at December 31, 2008 there were 16 (2007: 14) legal proceedings outstanding against the Bank. No material provision has been made as the related professional legal advice indicates that it is unlikely that any significant loss will arise.

b) Capital commitments

As at December 31, 2008 the Bank had capital commitments of SAR 84 million (2007: SAR 67 million) in respect of buildings and equipment purchases.

c) Credit related commitments and contingencies The primary purpose of these instruments is to ensure that funds are available to a customer as required.

Guarantees and standby letters of credit, which represent irrecoverable assurances that the Bank will make payments in the event that a customer cannot meet its obligations to third parties, carry the same credit risk as loans and advances.

Documentary letters of credit which are written undertakings by the Bank on behalf of a customer authorizing a third party to draw drafts on the Bank up to a stipulated amount under specific terms and conditions, are generally collateralized by the underlying shipments of goods to which they relate and therefore have significantly less risk.

Cash requirements under guarantees and standby letters of credit are considerably less than the amount of the commitment because the Bank does not generally expect the third party to draw funds under the agreement.

Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most acceptances to be presented before being reimbursed by the customers.

Commitments to extend credit represent unused portion of authorizations to extend credit, principally in the form of loans and advances, guarantees and letters of credit. With respect to credit risk on commitments to extend credit, the Bank is potentially exposed to a loss in an amount equal to the total unused commitments. However, the likely amount of loss, which cannot readily be quantified, is expected to be considerably less than the total unused commitment as most commitments to extend credit are contingent upon customers maintaining specific credit standards. The total outstanding commitments to extend credit do not necessarily represent future cash requirements, as many of these commitments could expire or terminate without being funded.

Letters of credit

5,325,788

3,120,414

2,585,711

553,746

11,585,659

Letters of guarantee

7,882,130

10,047,506

13,173,080

166,199

31,268,915

Acceptances

1,627,724

952,633

90,043

-

2,670,400

Irrevocable commitments to extend credit

81,020

350,750

1,236,169

3,747,805

5,415,744

Other

-

-

-

-

-

i)

The contractual maturity structure for the Bank’s commitments and contingencies is as follows:

SAR’ 000 2008

Within 3

3-12

1-5

months

months

years

Over 5 years

Total

Letters of credit

,, 7 855 046

,, 2 535 628

,, 1 783 832

Letters of guarantee

7,326,983

13,304,117

8,814,176

Acceptances

1,740,047

1,018,644

78,110

Irrevocable commitments to extend credit

197,188

82,973

2,659,440

Other

6,750

-

-

Total

17,126,014

16,941,362

13,335,558

Total 2007

14,916,662

, 552 825

,, 12 727 331

342,010

29,787,286

31

2,836,832

4,200,452

7,140,053

14,471,303

17,085,003

4,467,750

50,940,718

-

6,750

5,095,318

52,498,252

The outstanding unused portion of non-firm as at December 31, 2008 is SAR 40,322 mil

commitments which can be revoked unilateral lion (2007: SAR 27,132 million).

ly at any time by the Bank

33

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