Page 335 - ACCESS BANK ANNUAL REPORTS_eBook

39 Contingencies
Claims and litigation
The Group is a party to numerous legal actions arising out of its normal business operations. The Directors
believe that, based on currently available information and advice of counsel, none of the outcomes that result
from such proceedings will have a material adverse effect on the financial position of the Group, either
individually or in the aggregate. No provision has been made for the year ended 31 December 2017.

Contingent liability and commitments
In common with other banks, Group conducts business involving acceptances, performance bonds and
indemnities. The majority of these facilities are offset by corresponding obligations of third parties. Contingent
liabilities and commitments comprise acceptances, endorsements, guarantees and letters of credit.

Nature of instruments
An acceptance is undertaken 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. Endorsements are
residual liabilities of the Group in respect of bills of exchange, which have been paid and subsequently
rediscounted.

Guarantees and letters of credit are given as security to support the performance of a customer to third parties.
As the Group will only be required to meet these obligations in the event of the customer’s default, the cash
requirements of these instruments are expected to be considerably below their nominal amounts.

Other contingent liabilities include transaction related custom and performance bonds and are generally short
term commitments to third parties which are not directly dependent on the customer’s credit worthiness.
Commitments to lend are agreements to lend to a customer in the future, subject to certain conditions. Such
commitments are either made for a fixed year, or have no specific maturity dates but are cancellable by the
lender subject to notice requirements. Documentary credits commit the Group to make payments to third
parties, on production of documents, which are usually reimbursed immediately by customers.

The table below summarises the fair value amount of contingent liabilities and commitments off-financial
position risk:
Acceptances, bonds, guarantees and other obligations for the account of customers:

a. These comprise:

Bank Bank Bank Bank
In thousands of Naira December 2017 December 2016 December 2017 December 2016
Contingent liabilities:
Transaction related bonds and guarantees 370,892,995 186,251,718 225,158,636 136,163,848
Financial guarantees 171,002,109 99,582,709 81,335,619 85,513,821
Commitments:
Clean line facilities for letters of credit,
unconfirmed letters of credit and other
commitments 293,267,039 261,208,242 200,918,665 158,994,793
Future, swap and forward contracts 662,935,746 933,073,893 624,709,693 900,436,358
1,498,097,889 1,480,116,562 1,132,122,613 1,281,108,820

The Bank granted clean line facilities for letters of credit during the year to guarantee the performance of customers to third
parties. Contractual capital commitments undertaken by the Bank during the year amounted to N322.2Mn (31 Dec 2016:
N365.4Mn)

40 Cash and cash equivalent
(a) Cash and cash equivalents include the following for the purposes of the statement of cash flows:

Access BAnk Plc 335
Annual Report & Accounts 2017