Notes to the Financial Statements 34

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Contents Overview About Us 6 Our Branch Network 7 Our Corporate Social Responsibility 8 Corporate Information 11

Governance Chairman’s Statement 12 Managing Director/CEO’s Statement 14 Board of Directors’ Profiles 18 Executive Committee 20 Directors’ Report 21 Statement of Directors’ Responsibilities 23 Report of the Independent Auditors 24

Orient Bank Limited Annual Report and Consolidated 04 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTSFINANCIAL

Financial Statements Consolidated Statement of Comprehensive Income 26 Bank Statement of Comprehensive Income 27 Consolidated Statement of Financial Position 28 Bank Statement of Financial Position 29 Consolidated Statement of Changes in Equity 30 Bank Statement of Changes in Equity 31 Consolidated Statement of Cash flows 32 Bank Statement of Cash flows 33 Notes to the Financial Statements 34

Orient Bank Limited Annual Report and Consolidated Financial Statements For the year ended 31 December 2016 05 ...Think Possibilities About Us

Orient Bank is a leading private sector commercial Bank in Uganda. We began operations in 1993 and have grown steadily since then due to our professional management and prudent lending and investment policies.

Our Vision Our Mission To be the pace setter and To deliver service that preferred financial partner for our provides superior value to our stakeholders customers

Our Values We summarise our core values as SPIRIT

Service Resilience We provide service that is We are strong and determined timely, helpful, friendly and and adapt to the world around convenient us

Integrity Passion We are honest, open and We are enthusiastic and self straightforward with our motivated to excel in all that colleagues, customers, we do investors, regulators and community

Innovation Teamwork We are open-minded and We are collaborative and constantly striving to improve combine our collective our processes, platforms and knowledge and skills to offerings outperform our competitors

Orient Bank Limited Annual Report and Consolidated 06 Financial Statements For the year ended 31 December 2016 OVERVIEW

Our Branch Network GOVERNANCE Branches

Head Office/ Main Branch Orient Plaza, No. 14 Kampala Road P.O. Box 3072, Kampala FINANCIAL STATEMENTSFINANCIAL

Acacia Branch Katwe Branch Acacia Mall - Kisementi Muganzilwaza Plaza - Kibuye Kampala Kampala

Arua Branch Kawempe Branch Plot 12 Avenue Road Plot 78 Bombo Road Arua Municipality Kampala

Ben Kiwanuka Branch Kikuubo Branch Haider Plaza - Ben Kiwanuka Street Grand Corner House Kampala Kampala

Bweyogerere Branch Kisekka Branch Mamerito House, Jinja Road, Lohana Arcade, Nakivubo Road Bweyogerere Kampala

Entebbe Town Branch Kololo Branch Plot 29 Kampala Road Nyonyi Gardens, Wampewo Avenue Entebbe Kampala

Entebbe Airport Branch Makerere Branch Entebbe International Airport Ham Shopping Mall, Makerere Hill Road Entebbe Kampala

Garden City Branch Mbale Branch Garden City Mall - Yusuf Lule Road Plot 23 Naboa Road Kampala Mbale Municipality

Gulu Branch Nkrumah Road Branch Plot 15 Awere Road Mirembe Arcade, Nasser Road Gulu Kampala

Jinja Branch Ntinda Branch Plot 8 Lady Alice Muloki Road Capitla Shoppers’ Mall Ntinda Jinja Kampala

Kabalagala Branch William Street Branch Plot 1900 Ggaba Road, William Street Kampala Kampala

www.orient-bank.com

Orient Bank Limited Annual Report and Consolidated Financial Statements For the year ended 31 December 2016 07 ...Think Possibilities The Academy was developed by Orient Bank to address two twin challenges facing the Ugandan economy i.e. unemployment and high business failure rates. By helping small businesses to survive and grow, we believe we are contributing to wealth creation and job creation.

The Orient Business Academy is an annual programme to provide small businesses that have been in operation for at least 18 months and have a turnover of less than UGX 120 million with financial literacy and business management training so that they can survive and thrive.

The Academy is run in partnership with Makerere University Business School (MUBS) and was developed by Orient Bank to address two twin challenges facing the Ugandan economy i.e. high unemployment and high business failure rates. By helping small businesses to survive and grow, we believe we are contributing to wealth creation and job creation.

The Academy was launched in August 2016 and over 120 small business owners applied to join the academy.

30 were selected to be part of the pioneer class and were over a six month period trained in different aspects of business management including Market Analysis, Sales & Marketing, Human Resource

(Above) Overall Winner 2ambale.com received 20m (Below) 1st Runner-Up Elma Foods Ltd received 10m Handed to them by Dr. Louis Kasekende - Deputy Governor Bank of Uganda (left) and Prof. Wasswa Balunywa - Principal Makerere University Business School (right)

Orient Bank Limited Annual Report and Consolidated 08 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTSFINANCIAL

Members of the Orient Bank Board of Directors and representatives from Bank of Uganda & Makerere University Business School in a group photo with the Pioneer Granduands of the Orient Business Academy.

Management, Operations Planning, Book-keeping, Financial Planning and Financial Reporting. As part of the training, the small business owners were tasked to come up with Business Growth Plans and the best 5 business plans were to receive funding of up to UGX 30 million to grow their business.

2ambale, an e-commerce business, emerged the best in this exercise and was awarded UGX 20 million shillings.

Elma Foods, who produce yoghurt for the lower segment of the market emerged second and were awarded UGX 10 million.

Happy Bee Honey, Mutundwe Chalk Solutions & African Culture Leather Factory each received UGX 5 million.

The next edition of the Academy will run from August 2017 – February 2018.

(Above) 2nd Runner-Up Happy Bee Honey received 5m (Below) One of the participants Adong Jane, flanked by Mr Michael Cook - Chairman Orient Bank Board of Directors (left), and Prof. Wasswa Balunywa - Principal Makerere University Business School (right)

Orient Bank Limited Annual Report and Consolidated Financial Statements For the year ended 31 December 2016 09 ...Think Possibilities Our Product Portfolio

We are a customer focused bank and have developed tailor-made products to efficiently and effectively meet our customers needs.

CURRENT ACCOUNTS SAVINGS ACCOUNTS

Current Account (Personal & Business) Classic Saving Accounts SME Daily Account Dollar Savings Account (DOSA) Foreign Currency Account Future Children’s Savings Account (Personal & Business) CHAMA Investment Club Account Kyakala Account (Personal & Business) Savings Account Plus Premium Account Diaspora Account Sapphire Account Target Savings Account

RETAIL CREDIT TRADE FINANCE CORPORATE CREDIT

Kwik Cash Salary Loans Letters of Credit Commercial Loans SME Loans Guarantees/Bid Bonds Overdrafts Guarantees/Perfomance/Bid Bonds

OTHER SERVICES We have considerable experience in the provision of customer payments and cash management services for big organizations both local and foreign which includes; INTERNATIONAL Salary Processing CURRENCY SERVICES Internal transfers Foreign Currency Accounts Safe custody Telegraphic Transfer Collections - (Bill Payments (URA taxes, UMEME, NWSC bills, KCCA Forex charges, NSSF )

Orient Bank Limited Annual Report and Consolidated 10 Financial Statements For the year ended 31 December 2016 OVERVIEW

Corporate Information GOVERNANCE

DIRECTORS

Mr. Michael Cook Chairman Mr. Ketan Morjaria Vice Chairman Mr. Julius Kakeeto Managing Director/CEO

Ms. Darshana Bhatia Executive Director (Appointed on 1 July 2016) STATEMENTSFINANCIAL Mr. Hemen Shashikant Shah Director Mr. Francis M. Byaruhanga Director Mr. Joram Kahenano Director Mr. Zhong Shuang Quan (Alternative: Mr. Jay Karia) Director

COMPANY SECRETARY COMPANY LAWYERS

Nicholas Ecimu Shonubi Musoke & Company Advocates c/o Sebalu & Lule Advocates SM Chambers Certified Public Secretaries (Uganda) Plot 14, Hannington Road P. O. Box 2255, Kampala P. O. Box 3213, Kampala

AUDITOR

Ernst & Young Certified Public Accountants 18 Clement Hill Road Shimoni Office Village P. O. Box 7215 Kampala

REGISTERED OFFICE Orient Plaza No. 14 Kampala Road P. O. Box 3072 Kampala

Orient Bank Limited Annual Report and Consolidated Financial Statements For the year ended 31 December 2016 11 ...Think Possibilities Chairman’s Statement

2016 was the second full year of Orient Bank’s operation under the ownership of the Founders’ Consortium and 8 Miles LLC. It was a challenging year for the Ugandan economy and the banking sector.

Orient Bank was however able to overcome these challenges to build on the progress made in 2015 resulting into significant improvements in its performance.

Operating Environment The Ugandan economy experienced a slowdown with GDP growth falling from 5% in 2015 to 4.6% in 2016. This was lower than the projected growth of 5% and was attributable to a fall in agricultural output and exports, and reduced growth in the services sector. The elections early in the year also had an unsettling effect on the domestic economy. The steep fall in global oil prices delayed even further the prospect of local oil production and revenue to offset the growing domestic and international debt burden.

...it was a challenging year for the Ugandan economy and the banking sector. Orient Bank was however able to overcome these Michael Cook challenges and Chairman, Board of Directors made significant improvements in its performance

Orient Bank Limited Annual Report and Consolidated 12 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 13 loan book. Following the change Following growth in profitability profitability in growth ago, the bank revised revised ago, the bank Performance, Service,Performance, in ownership two years two years in ownership its business strategy to strategy its business focus on four key pillars; pillars; key on four focus and improvement in the and improvement performance, significant significant performance, can be seen in the Bank’s can be seen in the Bank’s People and Controls. This and Controls. People quality of the and spread greatly improved financial financial improved greatly strategy is bearing fruit as is bearing fruit strategy Michael Cook of Directors Chairman Board I should like to thank Orient Bank’s management and management Bank’s Orient thank to like should I staff for their effortsand achievements in delivering the business strategy, improving profitability and for growth. building a firm foundation for future I should also like to thank our Auditors, Legal Advisers input and for their professional Secretary and Board advice. And as always I am grateful to my fellow Board members for their support, expertise and wisdom. I should like thank our customers for their Finally, are and support. You patronage, continued loyalty, we exist and we pledge continuously to the reason to and services our improve and maintain to work you with modernprovide banking with a tradition of trust and reliability. Annual Report and Consolidated

Loans & advances grew from 177 billion to 250 from Loans & advances grew billion billion 65.5 billion to 74.4 from income grew Total and, 3.1% from Non-Performing Loans ratio reduced to 1.5% Total assets grew from 538 billion to 554 billion from assets grew Total Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Conclusion performance improved greatly a bank has delivered The on our however rest shall not We over the last year. shall continue to drive our strategy to We laurels. in further consolidation and improvement ensure performance. Strategy into the Future Following the change in ownership two years ago, strategy to focus on its business the bank revised and People Service, Performance, pillars; key four This strategy is bearing fruit as can be seen Controls. greatly improved financialin performance, the Bank’s significantgrowth profitabilityin of the loan book. One of in the quality and spread improvement and the key means to deliver this strategy is the Bank’s pioneering application of IT technology to provide e-banking, point of sale and secure faster and more facilities to our customers. and debit card credit Financial Performance In spite of the difficult operating environment, Orient profit before significantly with grew profitability Bank’s in the year ending 472 million shillings tax rising from in the year December 2015 to 7.9 billion shillings ending December 2016. in particularly registered performance was Improved the following areas; More positively there was an overall downward downward was an overall there positively More fell inflation headline Annual 2016. in trend inflationary in December 2015 to 5.5% in December 8.4% from 2016 with core inflationreducing from 7.6% to 5.9% to was in part due The drop over the same period. and food lower rate, exchange the of stabilising the subdued and year the of part larger the for prices fuel domestic demand. The dampened inflationary with Bank of Uganda policy, easing in monetary pressures allowed an 17% at end of from the Central Bank Rate reducing 2015 to 12% by close of 2016. Managing Director/CEO’s Statement

It is with great pleasure that I present Orient Bank’s annual financial report for the year 2016.

2016 was remarkable as the Bank registered significant improvements in performance across several indicators despite the tough environment. The Bank grew its profit before tax to 7.9 billion up from 472 million shillings in the previous year.

Customer Service is the foundation of our performance and as such we are continuously devising means of ensuring customer satisfaction. During the year, the bank launched a Customer Contact Centre, a unit with Julius Kakeeto multiple channels Managing Director/CEO for customers to effortlessly reach the bank.

Orient Bank Limited Annual Report and Consolidated 14 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 15 billion

billion

Julius Kakeeto Managing Director/CEO loans and advances grew by 41% by advancesloans and grew non-performing reduced to assets to Income grew Total Number of enterprenuers trained Number of enterprenuers Business Academy in the Orient pioneer class 250 177 billionup from 3.1% from down 65.5 billionup from 22 1.5% 74.4 Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited CONCLUSION I am grateful to all our customers. The Bank remains committed to delivering superior value and look to serving your needs in 2017 and beyond. forward I would like to thank all my colleagues who Finally, the bank back to to restore have worked tirelessly and growth. profitability FOCUS FOR 2017 In 2017, the Bank will improving & relationships customer strengthening continue with its efforts of on our service delivery channels. The Bank will also including Agency Banking launch new products & integration of customers’ accounts with mobile money. Corporate Social Responsibility to supporting the committed As a bank, we are our through communities in which we operate programs. annual Corporate Social Responsibility Academy, The Bank launched the Orient Business and small enterprises micro to provide a program with financial literacy is being run in partnership skills. The programme and business management University Business School - with the Makerere and has passed out its Centre Entrepreneurship pioneer class of 22 entrepreneurs. Technology of forefront Orient Bank has continued to be at the customer self adapting new technologies to facilitate service whilst expanding our service channels. its Internet the Bank revamped At the start of the year, In addition, functionality. Banking system to improve Visa Infinite Card was POS & launched at all its ATMs began accepting Master Card & theBank also machines. Customer Service the foundation of our performance Customer Service is of means devising continuously are we such as and the the year, ensuring customer satisfaction. During a unit Centre, bank launched a Customer Contact with multiple channels for customers to our or queries through the bank for any inquires effortlessly reach and social media. line, whatsapp, email toll free FOR FY 2016 ACHIEVEMENTS IEW OF THE OVERV Management Credit to 177billion by 41% from grew Loans and advances has continued to uphold prudent 250billion. The Bank kept close to its customers to lending practices & our high quality loan book. This has seen a ensure and to to 3.1% in 2015 reduce non-performing assets December 2016. 1.5% in the year ending Board of Directors

SITTING (L -R) Julius Kakeeto - MD/CEO Ketan Morjaria - Vice Chairman Michael Cook - Chairman Hemen Shashikant Shah - Director

STANDING (L - R) Zhong Shuang Quan - Director Joram Kahenano - Director Darshana Bhatia - Executive Director Nicholas Ecimu - Secretary Francis M. Byaruhanga - Director

Orient Bank Limited Annual Report and Consolidated 16 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTSFINANCIAL

Orient Bank Limited Annual Report and Consolidated Financial Statements For the year ended 31 December 2016 17 ...Think Possibilities Board of Directors

Cr Ri Co Al Cr Al Ri MICHAEL COOK KETAN MORJARIA JULIUS KAKEETO Chairman Vice Chairman Managing Director/CEO Michael Cook was a senior career Mr. Morjaria is a founder and Mr. Kakeeto is a Fellow of the diplomat and a former British Board Member of both Orient Association of Chartered Certified High Commissioner to Uganda, Bank and Credit Bank in Kenya, Accountants (FCCA) and holds an with a wide range of political and a strategic shareholder in MBA from Manchester Business and commercial experience in both institutions. He has wide School, United Kingdom. He has Scandinavia, the Caribbean, experience in commerce and served in several management Turkey and Africa. After retiring property development in Africa, capacities, among others, in from the Diplomatic Service he the United Kingdom, and the Citigroup London as a Vice was a member of a commission Middle East. He is a member President in Global Markets, established by David Cameron of the Institute of Chartered in Citibank Uganda as Chief before he became British Prime Accountants of England and Financial Officer, and in Equity Minister, to advice on future aid Wales and the Institute of Bank Uganda as Finance policy. Certified Public Accountants of Director. He started his career Uganda. with Ernst & Young.

Co Cr Au Au Ri Al FRANCIS MAGEMBE JORAM KAHENANO ZHONG SHUANG QUAN Non Executive Director BYARUHANGA Non Executive Director Non Executive Director Mr. Kahenano is a Fellow of the Mr. Zhong Shuang Quan holds Uganda Institute of Bankers and Mr. Byaruhanga holds a a Bachelors of Arts in Business a Fellow of Chartered Institute Management from the Sichuan Masters Degree in Business of Bankers. He has held various Administration. He has over 25 Normal University. He is a director positions in Bank of prominent Businessman with years experience in the areas Uganda where he worked for 36 of Management, Finance, diversified interests in East years. He has in addition served Africa, Asia and other parts Accounting, Procurement and on various Boards including Logistics Management. He has of the world specializing in Uganda Institute of Bankers, the fields of Manufacturing worked with rural water and Makerere University, Mengo sanitation project on an executive household plastics, Large Scale Hospital, Church of Uganda and Rice farming, Import Trade in level and was a Director Road Uganda Christian University. Agency Formation Unit. household goods and Road Joram is currently a trustee of Transport. He has Managerial Uganda Small Scale Industries. experience in Trade and Manufacturing Enterprise.

Orient Bank Limited Annual Report and Consolidated 18 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 19

Cr Co Al Ri Member of Risk/Compliance Committee Member of Audit Committee Member of Compensation Committee Committee Chairman Member of Asset and Liability Committee Committee Member of Credit Ri Cr AL Co Au KEY HEMEN SHASHIKANT SHAH Non Executive Director Hemen Shah is a graduate Mr. and University of Harvard with banker a professional over 23 years of cognitive Shah has held experience. Mr. memberships several Board the on Directorships including of; SCB Sierra Leone, Boards Ghana and Cameroon, Gambia, for of Directors Chairman, Board Bank Cote Chartered Standard Shah is a founding Mr. d’Ivoire. of 8 member partner and Board miles LLP. Ri Al Cr Annual Report and Consolidated

NICHOLAS ECIMU Company Secretary Ecimu practices law with Mr. Sebalu & Lule Advocates, corporate and a premier law commercial firm, he where is a Partner. served with He has previously the Privatisation & Utility Sector (PUSRP) in Project Reform Ministry of Finance, Uganda’s Planning and Economic Development and was Nathans attached to Edward Sonnenbergs, one of South Africa’s premier law visiting Attorney in 2006. firms, as DARSHANA BHATIA Executive Director Ms. Bhatia is a member of the Institute of Chartered Accountants of India. She of worked as Head previously Finance at Exim Bank. Prior to that, Darshana worked as Head of 2006 Bank from Orient Finance at to 2013. She holds a Bachelor’s – Financial in Commerce Degree the Accounting & Auditing from University of Mumbai. She is also a member of the Institute of Cost of India & Accountants & Works the Institute of CertifiedAccountants of Uganda. Public Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Executive Committee

JULIUS KAKEETO DARSHANA BHATIA Managing Director/CEO Executive Director

PANKAJ SHARMA MILLIE NKAJA Head of Operations Head of Credit

Orient Bank Limited Annual Report and Consolidated 20 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Ü ...Think Possibilities 21

i) Non-Executive Director ii) Non-Executive Director / CEO iii) Managing Director iv) Executive Director i) Non-Executive Director ii) Non-Executive Director i) Non-Executive Director ii) Non-Executive Director iii) Non-Executive Director i) Non-Executive Director ii) Non-Executive Director iii) Executive Director / CEO iv) Managing Director i) Non-Executive Director ii) Non-Executive Director iii) Executive Director b) Asset and Liability Committee b) Asset and Liability and a Non Executive Director ALCO is headed by It also comprises the following: meets quarterly. c) Compensation and General Purpose Committee at senior This committee decides on recruitment of and remuneration levels based on responsibilities Management staff anddirectors. The committee is and comprises headed by a Non-Executive Director of: d) Audit Committee Non-Executive a by chaired is Committee This It meets every quarter and also comprises Director. of: Committee e) Credit by the Non- Committee is chaired Credit The Board It meets quarterly and comprises Executive Director. of: f) IT Committee by a Non- Committee is chaired IT The Board meets quarterly and comprises: It Executive Director. / CEO iv) Managing Director are In addition to the above committees, there committees on a management level comprised of of meetings is senior management whose frequency monthly and quaterly. weekly, daily, DIRECTORS AND THEIR BENEFITS During the financial year and up to the the to in Note 38 disclosed as other than report, date of this financial statements, directorno receivedhas or

eport ’ R Annual Report and Consolidated

tors irec The directors present their report together with the with together report their present directors The Orient the of statements financial consolidated audited and its subsidiary (together Bank Limited (the “Bank”) the year ended 31 December 2016. for Group’’) ‘’the ACTIVITIES provision the are Group the of principal activities The and related stock brokering banking, of commercial financial services. AND DIVIDEND RESULTS The Group and Bank profit6,036 for million the (2015: year profitand of Ushs of Ushs 5,819 million Ushs (2015: profit 1,538 of Ushs million) 1,517 to retained transferred has been million) respectively payment earnings. do not recommend The directors of dividend for the year (2015: Nil). GOVERNANCE CORPORATE of best Orient Bank Limited has established a tradition practices in corporate governance. The corporate governance framework is of the board’s the separation independent board, based on an the executive management from supervisory role effective generally committees of board constitution the and and directors comprising a majority of non-executive to oversee critical by a non-executive director chaired areas. BOARD OF DIRECTORS of Board Orient Bank Limited has a broad-based functions either as a full board The board Directors. various committees constituted to oversee or through constituted has Board The areas. operational specific the Risk/Compliance six committees. These are Committee, Asset & Liability Management Committee, Compensation and General Purpose Committee, IT Committee, Board Audit Committee, Credit Committees are Committee. All of these Board directors. non executive by constituted and chaired of Directors As at 31 December 2016, the Board consisted of 8 members. a) Risk/Compliance committee This committee is headed by a Non-Executive It is comprised of the and meets quarterly. Director following members: i) Non-Executive Director ii) Non-Executive Director iii) Managing Director/CEO iv) Executive Director Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited D Directors’ Report (continued)

Û become entitled to receive any benefit other than AUDITOR directors’ fees, and amounts receivable by executive Ernst & Young were appointed during the year and directors under employment contracts and the senior served as auditors for the year ended 31 December staff incentive scheme. The aggregate amount of 2016. emoluments for directors for services rendered in the financial year is disclosed in Note 37 to the financial statements. BY ORDER OF THE BOARD Neither at the end of the financial year nor at any time during the year did there exist any arrangement to which the Bank is a party whereby directors might acquire benefits by means of acquisition of shares in or debentures of the Bank or any other body corporate. Nicholas Ecimu DIRECTORS C/O Sebalu & Lule Advocates The directors who held office during the year and up Kampala to the date of this report are indicated on page 3. 27 April 2017

Orient Bank Limited Annual Report and Consolidated 22 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities Nicholas Ecimu 23 Company Secretary Julius Kakeeto and cash flows for the with International Financial 2016 in accordance year ended 31 December the of and with the requirements Reporting Standards Uganda, 2012 and the Financial Companies Act of Institutions Act 2004 as amended by Act, 2016. institutions (Amendment) the financial for the responsibility further accept The directors that may be relied maintenance of accounting records upon in the preparation of financial statements, and determine as the directors internalsuch for control is necessary to enable the misstatement, material preparation from free are that statements of financial whether due to fraud or error. the directors Nothing has come to the attention of a going will not remain to indicate that the Group of date the concernfrom twelve months least at for this statement. Board the by approved were statements financial The behalf and signed on its April 2017 21 on of Directors by; Managing Director/ CEO Managing Director/ esposibilities ’ R tors irec Vice Chairman Vice Ketan Morjaria D of

Annual Report and Consolidated

tement Chairman ta Michael Cook Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited S The Companies Act of Uganda, 2012 requires the of Uganda, 2012 requires The Companies Act directors to prepare financial state the of view fair and true a statements give that year financial for each of affairs of the Group as at the end ofthe requires also It financial year. that for results its of and year keeps proper that the Group to ensure the directors with reasonable that disclose, accounting records are They Group. the of position financial the accuracy, the assets of the for safeguarding also responsible Group. for these accept responsibility The directors financial statements, which policies supported by accounting using appropriate have prepared been with International in conformity estimates, reasonable the requirements Financial Reporting Standards, 2012 and the of the Companies Act of Uganda, the by amended 2004 as Act, Institutions Financial 2016. financial institutions (Amendment) Act, The directors are of the of the state statements give a true and fair view opinion that the financial of the financial affairs of the Bank and its profit of Report of the independent auditor to the members of orient bank limited

REPORT ON THE FINANCIAL STATEMENTS Our opinion on the financial statements does not Opinion cover the other information and we do not express We have audited the financial statements of Orient an audit opinion or any form of assurance conclusion Bank Uganda Limited set out on pages 11 to thereon. 103. These financial statements comprise the consolidated and bank statement of financial position In connection with our audit of the financial statements, as at 31 December 2016, and the consolidated our responsibility is to read the other information and, and bank statement of comprehensive income, in doing so, consider whether the other information the consolidated and bank statement of changes is materially inconsistent with the financial statements in equity and the consolidated and bank statement or our knowledge obtained in the audit, or otherwise of cash flows for the year then ended and notes to appears to be materially misstated. If, based on the the financial statements, including a summary of work we have performed, we conclude that there is significant accounting policies. a material misstatement of this other information; we are required to report that fact. We have nothing to In our opinion, the financial statements present fairly, report in this regard. in all material respects, the financial position of the Group and Bank as at 31 December 2016, and of the Responsibilities of the directors for the financial Group and Bank’s financial performance and cash statements flows for the year then ended in accordance with The directors are responsible for the preparation International Financial Reporting Standards and the and fair presentation of the financial statements in requirements of the Companies Act of Uganda, 2012 accordance with International Financial Reporting and the Financial Institutions Act, 2004 as amended Standards and the requirements of the Companies by the Financial Institutions (Amendment) Act, 2016. Act of Uganda, 2012 and the Financial Institutions Act, 2004 as amended by the Financial Institutions Basis of the Opinion (Amendment) Act, 2016, and for such internal control We conducted our audit in accordance with as the directors determine is necessary to enable the International Standards on Auditing (ISAs). Our preparation of financial statements that are free from responsibilities under those standards are further material misstatement, whether due to fraud or error. described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. In preparing the financial statements, the directors We are independent of the Bank in accordance with are responsible for assessing the Bank’s and it’s the International Federation of Accountants’ Code subsidiary’s ability to continue as a going concern, of Ethics for Professional Accountants (IFAC code) disclosing, as applicable, matters related to going and other independence requirements applicable to concern and using the going concern basis of performing audits of Orient Bank Uganda Limited. accounting unless the directors either intend to We have fulfilled our other ethical responsibilities in liquidate the Bank and its subsidiary or to cease accordance with the IFAC Code, and in accordance operations, or have no realistic alternative but to do with other ethical requirements applicable to so. performing the audit of Orient Bank Limited. We believe that the audit evidence we have obtained is Auditor’s Responsibilities for the audit of the sufficient and appropriate to provide a basis for our financial statements opinion. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole Other information are free from material misstatement, whether due to The directors are responsible for the other information. fraud or error, and to issue an auditor’s report that The other information comprises the Directors’ Report includes our opinion. Reasonable assurance is a as required by the Companies Act of Uganda, 2012. high level of assurance, but is not a guarantee that The other information does not include the financial an audit conducted in accordance with ISAs will statements and our auditor’s report thereon. always detect a material misstatement when it exists.

Orient Bank Limited Annual Report and Consolidated 24 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 25 disclosures, disclosures, and whether the financial statements and events the underlying transactions represent presentation. that achieves fair in a manner regarding, with the directors communicate We the planned scope and among other matters, timing of the audit and significant audit findings, including any significant deficiencies we identify during our audit. that control in internal and i) we have obtained all the information knowledge explanations which, to the best of our the purposes of our necessary for and belief, were audit; books of account have ii) in our opinion, proper and Bank, so far as been kept by the Group of those books; and our examination appears from iii) the Group and Bank’s statement of income position and statement of comprehensive financial with the books of in agreement account are account. In preparing the financial statements, it’s and theBank’s the assessing for responsible are directors ability to continue as a going concern, subsidiary’s going to matters related disclosing, as applicable, concern concern and using the going basis of either intend to accounting unless the directors or to cease liquidate the Bank and its subsidiary alternative do to but realistic no have or operations, so. 9 Report on other legal requirements 2012, Uganda, of Act Companies the by required As audit that: to you based on our we report is The Engagement partner on the audit resulting this independent auditor’s report is Byamugisha - P0231. CPA Geoffrey Ernst & Young Certified Public Accountants Uganda of Uganda Kampala, Annual Report and Consolidated

• Identify and financial statements, whether misstatement of the assess the and perform audit design due to fraud or error, risks of obtain and risks, those to responsive procedures material audit evidence that is sufficient andappropriate a basis for our opinion. The risk of not to provide from detecting a material misstatement resulting error, from fraud is higher than for one resulting intentional forgery, involve collusion, may fraud as or the override of omissions, misrepresentations, internal control. • Obtain an understanding to design order to the audit in relevant of internal control in the appropriate that are audit procedures for the purpose of but not circumstances, expressing an opinion on the effectiveness of the internal control. or Bank’s Group • Evaluate the appropriateness of policies used and the reasonableness of accounting disclosures and related estimates accounting made by the directors. directors’ the of appropriateness the on Conclude • use of the going concern basis of accounting and whether based on the audit evidence obtained, to events or a material uncertainty exists related conditions that may cast significant doubt on the as a going concern. ability to continue If Bank’s we conclude that a material uncertainty exists, to draw attention in our auditor’s required we are report to the related disclosures in inadequate, are if such disclosures the statements or, financial based to modify our opinion. Our conclusions are on the audit evidence obtained up to the date events future However, report. of our auditor’s or conditions may cause the Bank to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Misstatements can arise from fraud or error and are are and error fraud or can arise from Misstatements aggregate, individually or in the material if, considered they could reasonably be expected to influence the of users taken on the basis of economic decisions these financial statements. As part professional with ISAs, we exercise accordance of an audit in scepticism professional maintain and judgement also: the audit. We throughout Consolidated statement of comprehensive income

2015 2016 Restated* Note Ushs’000 Ushs’000 Interest and similar income 5 50,311,082 40,412,654 Interest and similar expenses 5 (17,851,254) (17,418,399) Net interest income 32,459,828 22,994,255 Loan impairment charges 6 (2,830,954) (5,668,591) Net interest income after loan impairment charges 29,628,874 17,325,664 Net fee and commission income 7 20,095,460 29,686,886 Net operating income 49,724,334 47,012,550 Net foreign exchange gains/losses 8 4,021,648 (4,529,013) Employee benefits expenses 9 (15,699,891) (14,213,247) General and administrative expenses 10 (11,459,543) (9,899,087) Depreciation and amortisation 11 (5,169,185) (5,247,965) Reversal of charges 12 (1,036,776) (1,139,542) Other operating expenses 13 (12,443,023) (11,510,986) Profit before income tax 7,937,564 472,710 Income (expense)/tax credit 14 (1,902,053) 1,065,371 Profit for the year 6,035,511 1,538,081 Other comprehensive income Other comprehensive income that will not be reclassified to profit or loss in subsequent periods. Revaluation surplus on buildings 25,26 1,065,718 - Deferred income tax on revaluation gain 27 (319,715) - 746,003 - Total comprehensive income for the year 6,781,514 1,538,081 Profit attributable to: Owners of the company 5,992,210 1,533,776 Non-controlling interests 43,301 4,305 6,035,511 1,538,081 Total comprehensive income for the year attributable to: Owners of the company 6,738,213 1,533,776 Non-controlling interests 43,301 4,305 6,781,514 1,538,081

Orient Bank Limited Annual Report and Consolidated 26 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - - - 2015 ...Think Possibilities 441,309 Ushs’000 Restated* 1,075,249 1,516,558 1,516,558 (5,668,591) (4,529,013) (9,889,088) (5,246,155) (1,139,542) 40,412,654 22,994,255 17,325,664 29,508,959 46,834,623 (17,418,399) (14,114,279) (11,475,237) 27 2016 746,003 (319,715) Ushs’000 4,021,648 7,626,061 5,819,007 1,065,718 6,565,010 (2,830,954) (5,166,529) (1,036,776) (1,807,054) 50,311,082 32,459,828 29,628,874 19,593,996 49,222,870 ome (17,851,254) (15,577,028) (11,454,853) (12,383,271) inc

5 5 6 7 8 9 10 11 12 13 14 27 Note 25,26 omprehensive c

tement Annual Report and Consolidated

sta

nk a Interest and similar income Interest and similar expenses Interest Net interest income Net interest Loan impairment charges Net interest income after loan impairment charges income after loan Net interest Net fee and commission income Net operating income Net foreign exchange gains/losses Net foreign Employee benefits expenses General and administrative expenses Depreciation and amortisation Depreciation Reversal of charges Other operating expenses Profit before income tax income before Profit Income (expense)/tax credit for the year Profit to the income statement that will not be reclassified income Other comprehensive Revaluation surplus on buildings gain income tax on revaluation Deferred Other comprehensive income for the year, net of tax income for the year, Other comprehensive Total comprehensive income for the year comprehensive Total Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited B Consolidated statement of financial position

2015 2016 Restated* Note Ushs’000 Ushs’000 Assets Cash and balances with Central Bank 16 68,282,059 77,516,687 Deposits and balances due from banking institutions 18 90,078,616 141,003,197 Derivative financial instruments 19 376,700 - Government securities – Held-to-maturity 20 99,870,917 98,362,345 Loans and advances to customers 22 250,755,828 177,020,954 Other assets 23 6,405,163 7,804,643 Current income tax recoverable 24 196,846 349,942 Property and equipment 25 11,541,193 11,629,949 Intangible assets 26 3,918,290 3,051,650 Deferred income tax asset 27 22,791,061 21,944,698 Total assets 554,216,673 538,684,065 Liabilities Deposits due to other banks 28 3,613,008 4,002,164 Derivative financial instruments 19 40,476 - Customer deposits 29 423,248,243 440,372,643 Refinance loans 30 120,870 104,167 Other liabilities 31 19,221,187 13,330,117 Deferred income tax liability 27 879 - Total liabilities 446,244,663 457,809,091 Capital and reserves Issued capital 32 96,750,000 76,500,000 Revaluation reserve 33 3,116,160 2,601,106 Credit risk reserve 34 2,982,438 225,099 Retained earnings 5,029,239 1,497,897 Non controlling interests 94,173 50,872 Total equity 107,972,010 80,874,974 Total equity and liabilities 554,216,673 538,684,065 * Certain amounts shown here do not correspond to the 2015 financial statements and reflect adjustments made. Refer to note 38. The financial statements were authorised for issue by the Board of Directors on 21 April 2017 and signed on its behalf by:

Michael Cook Ketan Morjaria Julius Kakeeto Nicholas Ecimu Chairman Vice Chairman Managing Director/ CEO Company Secretary

Orient Bank Limited Annual Report and Consolidated 28 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - - ...Think Possibilities 2015 80,000 225,099 104,167 354,615 Ushs’000 Restated* 4,002,164 2,601,106 1,369,366 7,693,964 3,051,650 77,516,687 76,500,000 80,695,571 98,362,345 13,278,670 11,624,362 21,945,634 140,957,123 440,526,762 538,607,334 457,911,763 177,020,954 538,607,334 Nicholas Ecimu 29 Company Secretary 2016 40,476 80,000 376,700 120,870 204,305 Ushs’000 3,613,008 3,116,160 2,982,438 4,727,505 6,269,439 3,918,290 68,282,059 96,750,000 90,035,159 99,870,917 19,147,023 11,538,262 22,791,061 107,576,103 423,624,540 554,122,020 446,545,917 250,755,828 554,122,020 32 16 28 18 19 33 19 34 29 20 30 21 31 22 23 24 25 26 27 Note Julius Kakeeto position

Managing Director/ CEO Managing Director/ l ia nc fina

Vice Chairman Vice Ketan Morjaria tement Annual Report and Consolidated

sta

Chairman nk Michael Cook a Assets Capital and reserves Issued capital Deposits due to other banks Liabilities Cash and balances with Central Bank Cash and balances Deposits and balances due from banking institutions due from Deposits and balances Derivative financial instruments Revaluation reserve Derivative financial instruments Derivative financial Credit risk reserve Credit Customer deposits Government securities – Held-to-maturity Retained earnings equity Total Refinance loans equity and liabilities Total reflect adjustments statements and to the 2015 financial do not correspond * Certain amounts shown here made. Refer to note 38. 21 April 2017 and signed on of Directors authorised for issue by the Board The financial statements were its behalf by: Investment in subsidiary Other liabilities Loans and advances to customers Total liabilities Total Other assets Current income tax recoverable Current Property and equipment Property Intangible assets Deferred income tax asset Deferred Total assets Total Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited B ------65,522 746,003 Ushs’000 1,538,081 1,538,081 6,035,511 6,781,514 80,874,974 79,336,893 80,874,974 20,250,000 87,722,010 80,874,974 Total equity Total 107,972,010 - - - - Non- 4,305 4,305 46,567 50,872 94,173 43,301 43,301 94,173 50,872 50,872 interest Ushs’000 controlling controlling - - - - - Total Total 65,522 746,003 to equity Ushs’000 1,533,776 1,533,776 5,992,210 6,738,213 holders of the parent 79,290,326 80,824,102 87,627,837 20,250,000 80,824,102 80,824,102 107,877,837 attributable - 6,357 (39,033) 296,471 earnings Retained Ushs’000 (2,757,339) 1,533,776 1,533,776 1,497,897 5,029,239 5,992,210 5,992,210 7,786,578 4,780,535 1,497,897 (3,282,638) (4,783,738) ------reserve 225,099 225,099 225,099 (Note 34) Ushs’000 (4,780,535) 5,005,634 2,982,438 5,005,634 2,757,339 Credit risk Credit ------6,357 (6,357) reserve for sale Available Available fair value Ushs’000 - - - - - equity serve

39,033 Revalu - (230,949) 746,003 746,003 Note 33) - ation re ( in Ushs’000 2,562,073 2,601,106 3,116,160 2,601,106 3,116,160 2,601,106

------nges Issued capital (Note 32) Ushs’000 h a 76,500,000 76,500,000 20,250,000 96,750,000 76,500,000 76,500,000 76,500,000 c

*2 of

tement *1 st a

ted onsolid a Transfer of excess depreciation (net of deferred tax) (net of deferred of excess depreciation Transfer Profit for the year Profit surplus on land in revaluation Increase earnings to retained Transfer for the year Profit Total comprehensive income for the year comprehensive Total At start of year ended 31 December 2016 Year At start of year with owners Transactions Year ended 31 December 2015 Year Increase in issued capital Increase At end of year Note: earnings:entry was passed to to retained During the year ended 31 December 2015, following disposal of available for sale equity investments, an erroneous *1 Transfer income and entry should have been a debit to other comprehensive earnings and retained of Ushs 6.3 million as seen above. The correct available for sale fair value reserve entry. the erroneous or loss. Since this amount is not material, no adjustment has been made to correct to profit credit amounting to Ushs 39 million was a transfer of excess depreciation tax: During the year ended 31 December 2015, there (net of deferred of excess depreciation *2 Transfer earnings.in 2016 the transfer to retained account and debited to retained This has been subsequently corrected reserve to the revaluation credited which was erroneously of Ushs 78 million. earnings, and retained respectively, reserve to the revaluation earnings a debit and credit line through reflect adjustments made. Refer to note 38. to the 2015 financial statements and do not correspond * Certain amounts shown here Total Increase in revaluation surplus in revaluation Increase Total comprehensive income for the year comprehensive Total risk reserve to credit Transfer Transfer to retained earnings to retained Transfer Total Transfer to credit risk reserve (Note 35) risk reserve to credit Transfer At end of year (Restated*) C

Orient Bank Limited Annual Report and Consolidated 30 Financial Statements For the year ended 31 December 2016

OVERVIEW GOVERNANCE FINANCIAL STATEMENTS

* Certain amounts shown here do not correspond to the 2015 financial statements and reflect adjustments made. Refer to note 38. note to Refer made. adjustments reflect and statements financial 2015 the to correspond not do here shown amounts Certain *

to retained earnings line through the debit and credit to the revaluation reserve and retained earnings respectively with Ushs 78 million. 78 Ushs with respectively earnings retained and reserve revaluation the to credit and debit the through line earnings retained to

million which was erroneously credited to the revaluation reserve account and debited to retained earnings. This has been subsequently corrected in 2016 in the transfer transfer the in 2016 in corrected subsequently been has This earnings. retained to debited and account reserve revaluation the to credited erroneously was which million

*3 Transfer of excess depreciation (net of deferred tax: During the year ended 31 December 2015, there was a transfer of excess depreciation amounting to Ushs 39 39 Ushs to amounting depreciation excess of transfer a was there 2015, December 31 ended year the During tax: deferred of (net depreciation excess of Transfer *3

...Think Possibilities

Note:

At end of year of end At 107,576,103 107,576,103 4,727,505 2,982,438 3,116,160 96,750,000

Increase in issued capital issued in Increase 20,250,000 20,250,000 - - - 20,250,000

Transactions with owners: with Transactions

Transfer to credit risk reserve risk credit to Transfer - - (2,757,339) 2,757,339 - -

Total 87,326,103 87,326,103 7,484,844 225,099 3,116,160 76,500,000

Transfer to retained earnings retained to Transfer 65,522 65,522 296,471 (230,949)

Total comprehensive income for the year the for income comprehensive Total 6,565,010 6,565,010 5,819,007 - 746,003 -

Increase in revaluation surplus revaluation in Increase 746,003 746,003 - 746,003 746,003

Profit for the year the for Profit 5,819,007 5,819,007 5,819,007 - - -

At start of year of start At 80,695,572 80,695,572 1,369,366 225,099 2,601,106 76,500,000

Year ended 31 December 2016 December 31 ended Year

At end of year (Restated*) year of end At 80,695,571 80,695,571 1,369,366 225,099 2,601,106 76,500,000

Transfer to credit risk reserve risk credit to Transfer - - 4,780,535 (4,780,535) - -

Total 76,500,000 76,500,000 80,695,571 80,695,571 (3,411,169) 5,005,634 2,601,106

39,033 39,033 - (39,033) - - - Transfer of excess depreciation (net of deferred tax) deferred of (net depreciation excess of Transfer

Total comprehensive income for the year the for income comprehensive Total 1,516,558 1,516,558 1,516,558 - - -

Increase in revaluation surplus on land on surplus revaluation in Increase ------

Profit for the year the for Profit 1,516,558 1,516,558 1,516,558 - - -

At start of year of start At 76,500,000 76,500,000 79,179,013 79,179,013 (4,888,694) 5,005,634 2,562,073

Year ended 31 December 2015 December 31 ended Year Annual Report and Consolidated

(Note 33) (Note 32) (Note Ushs’000 34) (Note Ushs’000

Ushs’000 Ushs’000 Ushs’000 earnings Total equity Total

capital reserve reserve Retained Retained

Issued Issued Revaluation Revaluation Credit risk risk Credit

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited

nk a a st tement a h c of nges in equity Consolidated statement of cash flows

2015 2016 Restated* Note Ushs’000 Ushs’000 Operating activities Profit before income tax 7,937,564 472,710 Adjustments: Depreciation 25 2,507,727 2,812,105 Amortisation of intangible assets 26 2,661,458 2,435,860 Unrealised foreign exchange gain (336,224) - Profit on disposal of property and equipment (9,059) (100,835) Impairment charge on loans and advances 2,830,954 5,668,591 Provision on litigation 1,797,819 803,111 Loss on disposal of shares - 1,576 Profit/ (loss) before changes in operating assets and liablities 17,390,239 12,093,118 Decrease/(increase in cash reserve requirement 1,956,000 (3,350,000) Decrease in deposits due to banking institutions (389,156) (998,110) Increase in loans and advances (76,717,028) (28,586,117) (Increase)/decrease in investment in government securities (9,399,219) 24,074,205 Increase in other assets 1,305,189 (3,132,612) (Decrease)/increase in customer deposits (17,124,400) 52,271,042 Increase/(decrease) in BOU refinance loan 16,703 (62,500) Increase in other liabilities 4,093,251 2,169,034 Income taxes paid 24 (2,847,699) (2,803,233) (99,106,359) 39,581,709 Net cash flows used in/generated from operating activities (81,716,120) 51,674,827 Investing activities Purchase of property and equipment 25 (4,710,717) (3,212,524) Proceeds from sale of shares - 26,147 Proceeds from sale of property and equipment 54,038 129,980 Purchase of intangible assets 26 (216,377) (1,056,275) Net cash flows used in investing activities (4,873,056) (4,112,672) Financing activities Increase in share capital 32 20,250,000 - Net cash flows generated from financing activities 20,250,000 - Cash and cash equivalents at start of year 212,371,231 164,506,629 Net (decrease)/increase in cash and cash equivalents (66,339,176) 47,562,155 Net foreign exchange differences 245,320 302,447 Cash and cash equivalents at the end of the year 17 146,277,375 212,371,231

Orient Bank Limited Annual Report and Consolidated 32 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - - - ...Think Possibilities 2015 (62,500) 803,111 302,447 441,309 129,980 (998,110) (100,835) Ushs’000 Restated* 2,220,658 5,668,591 2,810,295 2,435,860 (3,136,172) (2,790,221) (3,350,000) (3,207,134) (1,056,275) (4,133,429) 51,656,542 39,598,211 52,226,468 24,074,205 12,058,331 47,523,113 (28,586,117) 212,325,157 164,499,597 33 2016 (9,059) 16,703 54,038 151,200 (389,156) (336,224) (216,377) Ushs’000 4,070,534 1,425,290 1,956,000 1,797,819 2,830,954 7,626,061 2,505,071 2,661,458 (2,756,366) (9,399,219) (4,710,717) (4,873,056) 17,076,080 20,250,000 20,250,000 (98,695,464) (16,902,222) (76,717,028) (66,242,440) (81,619,384) 146,233,917 212,325,157 Note 24 17 25 26 25 32 26 flows

cash

tement Annual Report and Consolidated

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nk a Net cash flow used in/generated from operating activities Net cash flow used in/generated from Increase/(decrease) in BOU refinance loan in BOU refinance Increase/(decrease) in other liabilities Increase Income taxes paid Decrease/(increase) in other assets Decrease/(increase) (Decrease)/(increase) in customer deposits (Decrease)/(increase) (Increase)/decrease in investment in government securities (Increase)/decrease Decrease/(increase in cash reserve requirement in cash reserve Decrease/(increase banking institutions in deposits due to Decrease in loans and advances Increase Provision on litigation Provision Impairment charge on loans and advances and equipment on disposal of property Profit in operating assets and liablities changes before Profit Net foreign exchange differences Net foreign Cash and cash equivalents at end of year Adjustments: Depreciation Amortisation of intangible assets exchange gain foreign Unrealised Profit before income tax before Profit Cash and cash equivalents at start of year in cash and cash equivalents Net (decrease)/increase Financing activities capital in share Increase Purchase of property and equipment of property Purchase financing activities Net cash flows generated from Investing activities Operating activities Proceeds from sale of property and equipment sale of property from Proceeds of intangible assets Purchase Net cash flows used in investing activities Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited B NOTES TO THE FINANCIAL STATEMENTS

1. General information Orient Bank Limited (the ‘Bank’) is incorporated in Generally, there is a presumption that a majority Uganda under the Companies Act as a limited liability of voting rights results in control. However, under company, and is domiciled in Uganda. The address of individual circumstances, the Bank may still exercise its registered office is: control with less than 50% shareholding or may not be able to exercise control even with ownership over Plot 6 & 6A, Kampala Road P O Box 3072 50% of an entity’s shares. When assessing whether it Kampala has power over an investee and therefore controls the variability of its returns, the Bank considers all relevant For the Companies Act of Uganda, 2012 reporting facts and circumstances, including: purposes, the balance sheet is represented by the statement of financial position and the profit and loss The purpose and design of the investee account by the statement of comprehensive income The relevant activities and how decisions about in these financial statements. those activities are made and whether the Bank can direct those activities The financial statements for the year ended 31 December 2016 have been approved for issue by Contractual arrangements such as call rights, the Board of Directors on 21 April 2017. Neither the put rights and liquidation rights Group’s owners nor others have the power to amend Whether the Bank is exposed, or has rights, the financial statements after issue. to variable returns from its involvement with the investee, and has the power to affect the 2. Summary of significant accounting policies variability of such returns The principal accounting policies applied in the preparation of these financial statements are set out Profit or loss and each component of OCI are below. These policies have been consistently applied attributed to the equity holders of the parent of the to all the years presented, unless otherwise stated. Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit 2.1 Basis of preparation balance. The consolidated financial statements have been prepared on a historical cost basis, except buildings When necessary, adjustments are made to the financial which are measured at fair value. statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. The preparation of financial statements in conformity All intra-group assets, liabilities, equity, income, with IFRS requires the use of certain critical accounting expenses and cash flows relating to transactions estimates. It also requires the directors to exercise between members of the Group are eliminated in full judgement in the process of applying the Bank’s on consolidation. accounting policies. Changes in assumptions may have a significant impact on the financial statements A change in the ownership interest of a subsidiary, in the period the assumptions changed. The areas without loss of control, is accounted for as an involving a higher degree of judgement or complexity, equity transaction. If the Group loses control over or areas where assumptions and estimates are a subsidiary, it derecognises the related assets significant to the financial statements, are disclosed (including goodwill), liabilities, non-controlling interest in Note 4. (NCI) and other components of equity, while any resultant gain or loss is recognised in profit or loss. 2.2 Basis of consolidation Any investment retained is recognised at fair value at The consolidated and bank financial statements the date of loss of control. comprise the financial statements of the Bank and its subsidiary as at 31 December 2016. Orient Bank Given the level of judgement required regarding consolidates a subsidiary when it controls it. Control is consolidation of structured entities, these achieved when the Bank is exposed, or has rights, to considerations are described further in the Critical variable returns from its involvement with the investee accounting estimates and judgements in Note 4. and has the ability to affect those returns through its Disclosures for investment in subsidiaries are provided power over the investee. in Note 20.

Orient Bank Limited Annual Report and Consolidated 34 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Ü ...Think Possibilities 35 Assets (or disposal groups) are generally disposed are Assets (or disposal groups) sale or distribution to the owners. of either through The amendment clarifies thatof these disposal methods to the other would not changing from one a new plan of disposal, rather it is a be considered Amendments to IAS 27 Equity Method in Separate Financial Statements The amendments allow entities to use the equity subsidiaries, in investments for account to method and associates in their separate joint ventures financial statements. Entities already applying IFRS and electing to change to the equity method in their separate financial statements These amendments do not havechange retrospectively. to apply financial statements. that have any impact on the group’s 2012-2014 Cycle Annual Improvements Assets Held for Sale and IFRS 5 Non-current Discontinued Operations Amendments to IAS 16 and IAS 38:Clarification 38:Clarification IAS and 16 IAS to Amendments and of Depreciation Methods of Acceptable Amortisation clarify the principle in IAS 16 The amendments and IAS 38 Intangible Plant and Equipment Property, Assets that revenue reflects a pattern business a operating from generated are that of economic benefits is a part) rather than the economic (of which the asset benefits use consumed that of through are the asset. cannot be method a revenue-based As a result, equipment and plant property, depreciate to used very limited circumstances in and may only be used are amendments The assets. intangible amortise to on and do not have any impact applied prospectively used a revenue-based given that it has not the group, assets. its non-current method to depreciate Amendments to IAS 16 and IAS 41 Agriculture: Plants Bearer requirements change the accounting amendments The for biological assets that meet the definition of bearer that assets biological amendments, the Under plants. meet the definition of bearer plants will no longer be Instead, IAS within the scope of IAS 41 Agriculture. plants bearer After initial recognition, 16 will apply. 16 at accumulated cost under IAS will be measured either the cost model or maturity) and using (before model (after maturity). revaluation that that produce The amendments also require in the scope of plants will remain on bearer grows sell. For costs to less at fair value 41 measured IAS plants, IAS 20 government to bearer grants related of Governmentfor Accounting Disclosure and Grants amendments The Governmentapply. Assistance will and do not have any applied retrospectively are as it does not have any bearer impact on the group plants. Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Amendment to IFRS 11 Joint Accounting for Acquisitions of Interests Arrangements: that a joint The amendments to IFRS 11 require of an interest operator accounting for the acquisition in a joint operation, in which the activity of the joint operation constitutes a business, must apply the IFRS 3 Business Combinations principles for relevant business combination accounting. held The amendments also clarify that a previously on in a joint operation is not remeasured interest in the same of an additional interest the acquisition In addition, is retained. joint operation if joint control a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the including the reporting parties sharing joint control, of the same ultimate control under common are entity, party. controlling the acquisition of the The amendments apply to both in a joint operation and the acquisition initial interest in the same joint operation of any additional interests These amendments applied prospectively. and are has as there do not have any impact on the group in a joint operation during acquired been no interest the period. This is an optional standard that allows an entity, that allows an entity, This is an optional standard to to rate regulation, subject whose activities are accounting continue applying most of its existing account balances upon deferral policies for regulatory IFRS adopt that Entities IFRS. of adoption first-time its deferral accounts the regulatory 14 must present as separate line items on the statement of financial in these account movements position and present statement of balances as separate line items in the or loss and OCI. profit of, of the nature disclosure requires The standard rate- regulation and risk associated with, the entity’s and the effectsof that rate-regulation on its financial is an existing IFRS statements. Since the group any rate-regulated in involved is not and preparer does not apply. activities, this standard IFRS 14 Regulatory Deferral Accounts IFRS 14 Regulatory The standards and interpretations that were issued were that and interpretations The standards and which are effective for annual periods beginning described below. 2016 are on or after 1 January amendments and standards new these Although applied for the first time in 2016, they did not the annual financial statements. a material impact on have 2.2.1 Changes in accounting policy and in accounting 2.2.1 Changes disclosures and interpretations amended standards New and issued and were and amendments Standards December 2016 year-end effective for 31 NOTES TO THE FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued) 2.2.1 Changes in accounting policy and disclosures (continued) Annual Improvements 2012-2014 Cycle (continued)

Û continuation of the original plan. There is, therefore, Amendments to IAS 1 Disclosure Initiative no interruption of the application of the requirements The amendments to IAS 1 clarify, rather than in IFRS 5. This amendment is applied prospectively. significantly change, existing IAS 1 requirements. The These amendments do not have any impact on the amendments clarify: group’s financial statements. The materiality requirements in IAS 1 IFRS 7 Financial Instruments: Disclosures That specific line items in the statement(s) of profit or loss and OCI and the statement of (i) Servicing contracts financial position may be disaggregated The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement That entities have flexibility as to the order in a financial asset. An entity must assess the nature in which they present the notes to financial of the fee and the arrangement against the guidance statements for continuing involvement in IFRS 7 in order to assess That the share of OCI of associates and joint whether the disclosures are required. The assessment ventures accounted for using the equity method of which servicing contracts constitute continuing must be involvement must be done retrospectively. However, the required disclosures need not be provided for any presented in aggregate as a single line item, and period beginning before the annual period in which classified between those items that will or will not be the entity first applies the amendments. subsequently reclassified to profit or loss (ii) Applicability of the amendments to IFRS 7 to Furthermore, the amendments clarify the requirements condensed interim financial statements that apply when additional subtotals are presented in The amendment clarifies that the offsetting disclosure the statement of financial position and the statement(s) requirements do not apply to condensed interim of profit or loss and OCI. These amendments do not financial statements, unless such disclosures provide have any impact on the group. a significant update to the information reported in the most recent annual report. This amendment is applied Amendments to IFRS 10 and IAS 28 Sale or retrospectively. These amendments do not have any Contribution of Assets between an Investor impact on the group’s financial statements. and its Associate or Joint Venture The amendments address the conflict between IFRS IAS 19 Employee Benefits 10 and IAS 28 in dealing with the loss of control of a The amendment clarifies that market depth of high subsidiary that is sold or contributed to an associate quality corporate bonds is assessed based on the or joint venture. The amendments clarify that the gain currency in which the obligation is denominated, or loss resulting from the sale or contribution of assets rather than the country where the obligation is that constitute a business, as defined in IFRS 3, located. When there is no deep market for high between an investor and its associate or joint venture, quality corporate bonds in that currency, government is recognised in full. bond rates must be used. This amendment is applied prospectively. These amendments do not have any Any gain or loss resulting from the sale or contribution impact on the group’s financial statements. of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ IAS 34 Interim Financial Reporting interests in the associate or joint venture. The IASB The amendment clarifies that the required interim has deferred the effective date of these amendments disclosures must either be in the interim financial indefinitely, but an entity that early adopts the statements or incorporated by cross-reference amendments must apply them prospectively. This between the interim financial statements and wherever is not expected to have any impact on the group’s they are included within the interim financial report financial statements. (e.g., in the management commentary or risk report). Standards issued but not yet effective The other information within the interim financial report The standards and interpretations that are issued, but must be available to users on the same terms as the not yet effective, up to the date of issuance ofthe interim financial statements and at the same time. Bank’s financial statements are disclosed below. The This amendment is applied retrospectively. These group intends to adopt these standards, if applicable, amendments do not have any impact on the Group. when they become effective.

Orient Bank Limited Annual Report and Consolidated 36 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Ü ...Think Possibilities 37 (b) Impairment expected credit to record the Bank IFRS 9 requires trade loans and all of its debt securities, losses on basis. or lifetime 12-month a either on receivables, The Bank expects to apply the simplified approach on all trade lifetime expected losses and record receivables. The Bank expects a significant impact of its loans nature to unsecured on its equity due more but it will need to perform a and receivables, and considers all reasonable detailed analysis which including forward-looking supportable information, the extent of the impact. elements to determine IFRS 16 Leases for accounting for The IASB issued the new standard leases - IFRS 16 Leases in January 2016. The new accounting the change significantly not does standard for leases for lessors. most lessees to recognise it does require However, as lease liabilities, balance sheets their on leases rightof- use assets. Lessees with the corresponding leases, must apply a single model for all recognised ‘short-term’ but will have the option not to recognise the leases and leases of ‘low-value’ assets. Generally, leases recognised for pattern recognition loss or profit will be similar to today’s finance recognised expense and depreciation leasewith interest accounting, or loss. separately in the statement of profit IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted IFRS 15 Revenue from Contracts with from IFRS 15 Revenue Customers 15 Revenue In May 2014, the IASB issued IFRS from Contracts with Customers, effective for periods early adoption beginning on 1 January 2018 with permitted. IFRS 15 defines principles for recognising customers. and will be applicable to all contracts with revenue interest and fee However, income integral to financial to fall outside instruments and leases will continue by the the scope of IFRS 15 and will be regulated 16 IFRS and 9, IFRS (e.g., standards applicable other Leases). be recognised Revenue under IFRS 15 will need to to the transferred, as goods and services are entitlement to anticipates extent that the transferor will also specify goods and services. The standard requirements disclosure set of a comprehensive well as extent and timing as the nature, regarding cash and corresponding any uncertainty of revenue flows with customers. The Bank does not anticipate evaluating its early adopting IFRS 15 and is currently impact. Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited In July 2014, the IASB issued the final version of IFRS of version final the issued IASB the 2014, July In IAS 39 Financial Instruments that replaces 9 Financial all and and Measurement Instruments: Recognition together brings 9 IFRS 9. IFRS of versions previous all three aspects instruments of project: classification and measurement, the accounting accounting. impairment and hedge for financial IFRS 9 is effective 2018, with early application on or after 1 January for annual periods hedge accounting, retrospective permitted. Except for beginning comparative but providing required is application For hedge accounting, information is not compulsory. generally applied prospectively, are the requirements with some limited exceptions. on the the new standard plans to adopt The Group required effective date. During 2016, the Group has the of assessment impact high-level a performed classification and measurement,any perform doesn’t Group The 9. IFRS of aspects and impairment will not have hedge accounting and thus this aspect impact on the financial statements. This preliminary available information assessment is based on currently further from and may be subject to changes arising and detailed analyses or additional reasonable to the supportable information being made available in the future. Group Overall, the Group expects no significant impact on its balance sheet and equity except for the effect of of IFRS 9. The applying the impairment requirements in a allowance resulting expects a higher loss Group a detailed negative impact on equity and will perform to determine the extent. assessment in the future (a) Classification and measurement its on impact significant a expect not does Group The balance sheet or equity on applying the classification of IFRS 9. It expects requirements and measurement to continue measuring are securities Debt value. fair at held currently assets at fair value OCI through value fair at measured be to expected all financial expects not only to hold under IFRS 9 as the Group to also but flows cash contractual collect to assets the basis. frequent relatively a on amount significant a sell held to collect are Loans as well as trade receivables contractual cash flows andrise are to expected cash flows representing to give solely Thus, the Bank expects that principal and interest. payments of amortised at measured to be will continue these the Bank will analyse cost under IFRS 9. However, the contractual cash flowwhether concluding characteristicsbefore detail more in instruments of those all those instruments meet the criteria for amortised under IFRS 9. cost measurement IFRS 9 Financial instrument IFRS 9 Financial NOTES TO THE FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued) 2.2.1 Changes in accounting policy and disclosures (continued) IFRS 16 Leases (continued)

Û provided the new revenue standard, IFRS 15, is Amendments to IFRS 10 and IAS 28: Sale or applied on the same date. Lessees must adopt IFRS Contribution of Assets between an Investor 16 using either a full retrospective or a modified and its Associate or Joint Venture retrospective approach. The Bank does not anticipate The amendments address the conflict between IFRS early adopting IFRS 16 and is currently evaluating its 10 and IAS 28 in dealing with the loss of control of a impact. subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain Amendments to IAS 12 Income Taxes orloss resulting from the sale or contribution of assets In January 2016, through issuing amendments to that constitute a business, as defined in IFRS 3, IAS 12, the IASB clarified the accounting treatment between an investor and its associate or joint venture, of deferred tax assets of debt instruments measured is recognised in full. Any gain or loss resulting from the at fair value for accounting, but measured at cost for sale or contribution of assets that do not constitute a tax purposes. The amendment is effective from 1 business, however, is recognised only to the extent January 2017. The Bank is currently evaluating the of unrelated investors’ interests in the associate or impact, but does not anticipate that adopting the joint venture. The IASB has deferred the effective amendments would have a material impact on its date of these amendments indefinitely, but an entity financial statements. that early adopts the amendments must apply them prospectively. This is not expected to have any impact Amendments to IAS 7 Statement of Cash Flows on the Bank’s financial statements. In January 2016, the IASB issued amendments to IAS 7 Statement of Cash Flows with the intention to Investment Property (Amendments to IAS 40) improve disclosures of financing activities and help Effective for annual periods beginning on or users to better understand the reporting entities’ after 1 January 2018. liquidity positions. Under the new requirements, The amendments clarify when the group should transfer entities will need to disclose changes in their financial property, including property under construction or liabilities as a result of financing activities such as development into, or out of investment property. The changes from cash flows and non-cash items (e.g., amendments state that a change in use occurs when gains and losses due to foreign currency movements). the property meets, or ceases to meet, the definition The amendment is effective from 1 January 2017. The of investment property and there is evidence of the Bank is currently evaluating the impact. change in use. A mere change in management’s intentions for the use of a property does not provide IFRS 2 Classification and Measurement evidence of a change in use. This is not expected to of Share-based Payment Transactions — have any impact on the group’s financial statements. Amendments to IFRS 2 The IASB issued amendments to IFRS 2 Share- Applying IFRS 9 Financial Instruments with based Payment that address three main areas: the IFRS 4 Insurance Contracts - Amendments to effects of vesting conditions on the measurement of IFRS 4 a cash-settled share-based payment transaction; the Effective for annual periods beginning on or classification of a share-based payment transaction after 1 January 2018 with net settlement features for withholding tax The amendments address concerns arising from obligations; and accounting where a modification to implementing the new financial instruments Standard, the terms and conditions of a share-based payment IFRS 9, before implementing the new insurance transaction changes its classification from cash contracts standard that the Board is developing settled to equity settled. to replace IFRS 4. The amendments introduce two options for entities issuing insurance contracts: a On adoption, entities are required to apply the temporary exemption from applying IFRS 9 and an amendments without restating prior periods, but overlay approach. retrospective application is permitted if elected for all three amendments and other criteria are met. Temporary exemption from IFRS 9 The amendments are effective for annual periods The optional temporary exemption from IFRS 9 is beginning on or after 1 January 2018, with early available to entities whose activities are predominantly application permitted. This is not expected to have connected with insurance. The temporary exemption any impact on the Bank’s financial statements.

Orient Bank Limited Annual Report and Consolidated 38 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Ü ...Think Possibilities 39 The amendments clarify that the disclosure disclosure the that clarify amendments The 12, other than those in in IFRS requirements interest paragraphs B10–B16, apply to an entity’s or an associate a joint venture in a subsidiary, or in a joint venture (or a portion of its interest an associate) that is classified (or included in a as held for sale. that is classified) disposal group The amendments are effectivefrom 1 January 2017 and must be applied retrospectively. If an entity that is not itself an investment entity investment entity that is not itself an If an entity venture an associate or joint in has an interest when the entity may, investment entity, that is an the fair method, elect to retain applying the equity investment that by applied measurement value to the investment venture entity associate or joint in interests or joint venture’s entity associate’s election is made separately subsidiaries. This or joint entity associate for each investment at the later of the date on which (a) venture, or joint venture associate the investment entity joint or associate the (b) initially recognised; is an investment entity; and (c) becomes venture or joint venture associate the investment entity first becomes a parent. applied The amendments should be retrospectively and are effective from 1 January If an 2018, with earlier application permitted. an earlier entity applies those amendments for period, it must disclose that fact. This is not expected to have an impact on the group’s on the group’s This is not expected to have an impact financial statements. Transactions Currency 22 Foreign IFRIC Interpretation and Advance Consideration periods beginning on or after 1 January 2018. Effective forKey requirements annual The interpretation clarifies thatof spot exchange rate to use on initial recognition in determining the asset, expense or income (or part of it) on the related of a non-monetary asset or non- the derecognition to advance consideration, monetary liability relating the date of the transaction is the date on which an the nonmonetary asset entity initially recognises advance the from arising liability non-monetary or multiple payments or are consideration. If there a determine must entity the then advance, in receipts date of the transactions for each payment or receipt of advance consideration. Transition Entities may apply the amendments on a fully an entity may apply basis. Alternatively, retrospective This is not expected to have an impact on the group’s on the group’s This is not expected to have an impact financial statements. in Other Entities. of Interests IFRS 12 Disclosure Clarification of the scope of the disclosue 12 in IFRS requirements

Annual Report and Consolidated

The amendments clarifies that: capital organisation, An entity that is a venture may elect, at initial or other qualifying entity, on an investment-by-investment recognition its investments in associates basis, to measure and joint ventures at fair value through profit or loss. This is not expected to have an impact on the financial statements. group’s Short-term exemptions in paragraphs E3–E7 deleted because they have now of IFRS 1 were served their intended purpose. The amendment is effectivein Associates and 2018. IAS 28 Investments from 1 January Joint Ventures. Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited

Joint and Associates in Investments 28 IAS Ventures Clarification that measuring investees through profit or loss is an at investment-by investment fair value choice 2014-2016 cycle (issued in December 2016) 2014-2016 cycle (issued in December amendments Following is a summary of the cycle. the 2014-2016 annual improvements from InternationalIFRS 1 First-time Adoption of Financial Reporting Standards Deletion of short-term adopters exemptions for first-time permits such entities to continue to apply IAS 39 to apply IAS entities to continue permits such and Measurement Recognition Financial Instruments: 1 of IFRS 9 until defer the application while they be must latest. Predominance at the January 2021 that date the annual reporting initially assessed at 9 IFRS before and 2016 April 1 precedes immediately the evaluation of predominance is implemented. Also Entities applying cases. in rare can only be reassessed to make will be required the temporary exemption additional disclosures. The overlay approach that is an option for entities The overlay approach insurance contracts, to adjust adopt IFRS 9 and issue profit or loss for eligible financial for those designated in IAS 39 accounting resulting effectively assets; accounting eliminates adjustment The assets. financial applying IFRS 9 without volatility that may arise from Under this the new insurance contracts standard. amounts to reclassify an entity is permitted approach, between profit or entity An assets. financial designated for loss(OCI) income and other comprehensive item for the amount of a separate line must present the overlay adjustment in profit or loss, as well as a adjustment separate line item for the corresponding in OCI. on the group’s This is not expected to have any impact financial statements. NOTES TO THE FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued) 2.2.1 Changes in accounting policy and disclosures (continued) IAS 28 Investments in Associates and Joint Ventures (continued)

Û the interpretation prospectively to all assets, expenses profit or loss are also recognised in OCI or profit or and income in its scope that are initially recognised on loss, respectively). or after: (i) The beginning of the reporting period in which the Non–monetary items that are measured at historical entity first applies the interpretation cost in a foreign currency are translated using the spot exchange rates as at the date of recognition. Or (ii) The beginning of a prior reporting period presented 2.4 Sale and repurchase agreements as comparative information in the financial Securities sold subject to repurchase agreements statements of the reporting period in which the (‘repos’) are reclassified in the financial statements as entity first applies the interpretation. pledged assets when the transferee has the right by contract or custom to sell or repledge the collateral; Early application of interpretation is permitted and the counterparty liability is included in deposits from must be disclosed. banks or deposits from customers, as appropriate. First-time adopters of IFRS are also permitted to Securities purchased under agreements to resell apply the interpretation prospectively to all assets, (‘reverse repos’) are recorded as loans and advances expenses and income initially recognised on or after to other banks or customers, as appropriate. The the date of transition to IFRS. difference between sale and repurchase price is treated as interest and accrued over the life of the Impact agreements using the effective interest method. The amendments are intended to eliminate diversity in Securities lent to counterparties are also retained in practice, when recognising the related asset, expense the financial statements. or income (or part of it) on the derecognition of a nonmonetary asset or non- monetary liability relating to advance consideration received or paid in foreign 2.5 Financial assets currency. This is not expected to have an impact on The Bank classifies its financial assets in the following the group’s financial statements. categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity and available-for-sale financial assets. The directors 2.3 Foreign currency translation determine the classification of its financial assets (a) Functional and presentation currency at initial recognition. The Bank uses trade date Items included in the Bank’s financial statements accounting for regular way contracts when recording are measured using the currency of the primary financial asset economic environment in which the entity operates (‘the functional currency’). The financial statements (a) Financial assets at fair value through profit or loss are presented in Uganda shillings and figures are This category comprises two sub-categories: financial stated in thousands of Uganda shillings. assets classified as held for trading, and financial assets designated by the Bank as at fair value through (b) Transactions and balances profit or loss upon initial recognition. Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional A financial asset is classified as held for trading if it currency spot rates at the date the transaction first is acquired or incurred principally for the purpose of qualifies for recognition. selling it in the near term or if it is part of a portfolio Non-monetary items that are measured in terms of of identified financial instruments that are managed historical cost in a foreign currency are translated using together and for which there is evidence of a recent the exchange rates at the dates of the recognation. actual pattern of short-term profit-taking. The Group Non-monetary items measured at fair value in a has not designated any financial assets at fair value foreign currency are translated using the exchange through profit or loss. rates at the date when the fair value is measured. The Financial assets at fair value through profit or loss gain or loss arising on translation of non-monetary are carried in the statement of financial position at items measured at fair value is treated in line with the fair value with net changes in fair value presented as recognition of the gain or loss on the change in fair finance costs (negative net changes in fair value) or value of the item (i.e., translation differences on items finance income (positive net changes in fair value) in whose fair value gain or loss is recognised in OCI or the profit or loss.

Orient Bank Limited Annual Report and Consolidated 40 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Ü ...Think Possibilities 41 (directly or through the use of an allowance account) of an allowance account) the use or through (directly or uncollectibility. for impairment The financial assets under category advances to customers. are loans and investments (d) Held-to-maturity non-derivative are Held-to-maturity investments financial assets with fixed or determinable payments positive the have directors the that maturities fixed and other than: to hold to maturity, intention and ability Bank upon initial recognition (a) those that the or loss; profit value through designates as at fair Bank designates as available-for- (b) those that the sale; and (c) those that receivables. meet the definition of loans and at initially recognised Held-to-maturity investments are transaction incremental and fair value including direct at amortised cost, subsequently costs and measured method. using the effective interest Financial liabilities are classified, at initialrecognition, as payables. or as loans and borrowings All financial liabilities are recognisedvalue and, in the case of loans and borrowings initially at fair attributable transaction and payables, net of directly costs. to due Deposits include liabilities financial Group’s The other banks, Customer deposits, Refinance loans, and Other liabilities. Subsequent measurement The measurement of financial liabilities depends on their classiication, as described below: and payables Loans and borrowings, deposits due to other banks, After initial recognition, Customer deposits, Refinanceamortised at subsequently measured are liabilities loans, and Other cost. The interest bearing refinance loansEIR method to determine the amortised cost. Gains use the and losses are recognised in profit or loss when the the EIR as well as through derecognised liabilities are amortisation process. Amortised cost is calculated by taking into account on acquisition and fees or any discount or premium an integral part of the EIR. The EIR costs that are amortisation is included as finance costs in the profit or loss. to show how fair values have been derived, In order financial instruments are of valuation techniques, as summarised hierarchy classified basedbelow: on a 2.5.1 Financial liabilities and measurement Initial recognition Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited (b) Derivatives recorded at fair value through profit or loss A derivative is a financial instrument or other contract of the following characteristics: with all three in a to the change in response a) Its value changes specifiedinterest rate,of index rate, exchange foreign price, commodity financial instrument price, index, or other rating or credit prices or rates, credit variable, provided in the variable that the variable case is not specific to a of party to a ‘underlying’). the contract (aka the non-financial initial net an or no initial net investment requires b) It for than would be required investment that is smaller to expected be would that contracts of types other in market factors. to changes have a similar response date. c) It is settled at a future with The Bank enters into derivative transactions Spot and various counterparties. These include contracts. Derivatives are exchange foreign forward and carried as assets when their at fair value recorded when their fair fair value is positive and as liabilities value is negative. (c) Loans and receivables Loans and receivables are non-derivative that assets with fixed or determinable payments financial other than: not quoted in an active market, are or in (a) those that the Bank intends to sell immediately trading, for held as classified are which term, short the recognition and those that the Bank upon initial or loss; profit designates as at fair value through recognition (b) those that the Bank upon initial or designates as available-for-sale; (c) those for which the holder may not recover substantially all of its initial investment, other than deterioration. because of credit at fair initially recognised are Loans and receivables value – which is the cash consideration to originate the loan including any transaction costs or purchase cost amortised at subsequently measured and – using the effective interest method, less impairment. The effective rate interest (EIR) is the rate that exactly cash payments or receipts discounts estimated future or, instrument financial the of life expected the through a shorter period, to the net carrying when appropriate amount of the financial asset or financial liability. The amortised cost of a financial assetliability or financial is the amount at or which financial liability the financialis measured asset at initial recognition the minus or plus repayments, principal minus cumulative amortisation using the effectivemethod interest of any difference between that initial amount and the maturity amount, and minus any reduction Loans and borrowings, and payables

NOTES TO THE FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued) 2.5.1 Financial liabilities (continued) Loans and borrowings, and payables (continued)

Û • Level 1 financial instruments − spread on credit default swaps and traded debts on Those where the inputs used in the valuation are itself. unadjusted quoted prices from active markets for identical assets or liabilities that the Bank The Bank evaluates the levelling at each reporting has access to at the measurement date. The period on an instrument-by-instrument basis and Bank considers markets as active only if there reclassifies instruments when necessary based on the are sufficient trading activities with regards to facts at the end of the reporting period. the volume and liquidity of the identical assets or liabilities and when there are binding and 2.5.4 Derecognition exercisable price quotes available on the reporting Financial assets are derecognised when the date. contractual rights to receive the cash flows from these assets have ceased to exist or the assets have been • Level 2 financial instruments− transferred and substantially all the risks and rewards Those where the inputs that are used for valuation of ownership of the assets are also transferred (that is, and are significant, are derived from directly or if substantially all the risks and rewards have not been indirectly observable market data available over transferred, the Bank tests control to ensure that the entire period of the instrument’s life. Such continuing involvement on the basis of any retained inputs include quoted prices for similar assets powers of control does not prevent derecognition). or liabilities in active markets, quoted prices for identical instruments in inactive markets and A financial liability is derecognised when the obligation observable inputs other than quoted prices such as under the liability is discharged or cancelled or expires. interest rates and yield curves, implied volatilities, When an existing financial liability is replaced by and credit spreads. In addition, adjustments may another from the same lender on substantially be required for the condition or location of the different terms, or the terms of an existing liability asset or the extent to which it relates to items are substantially modified, such an exchange or that are comparable to the valued instrument. modification is treated as the derecognition of the However, if such adjustments are based on original liability and the recognition of a new liability. unobservable inputs which are significant to the The difference in the respective carrying amounts is entire measurement, the Bank will classify the recognised in the profit or loss. instruments as Level 3. 2.6 Impairment of financial assets • Level 3 financial instruments − (a) Assets carried at amortised cost Those that include one or more unobservable The Bank assesses at each reporting date whether input that is significant to the measurement as there is objective evidence that a financial asset or whole. group of financial assets is impaired. A financial asset or a group of financial assets is impaired and The Bank periodically reviews its valuation techniques impairment losses are incurred only if there is objective including the adopted methodologies and model evidence of impairment as a result of one or more calibrations. However, the base models may not fully events that occurred after the initial recognition of the capture all factors relevant to the valuation of the asset (a ‘loss event’) and that loss event (or events) Bank’s financial instruments such as credit risk (CVA), has an impact on the estimated future cash flows of own credit (DVA) and/or funding costs (FVA). the financial asset or group of financial assets that can be reliably estimated. Therefore, the Bank applies various techniques to estimate the credit risk associated with its financial instruments measured at fair value, which include a The Bank first assesses whether objective evidence portfolio-based approach that estimates the expected of impairment exists individually for financial assets net exposure per counterparty over the full lifetime of that are individually significant, and individually or the individual assets, in order to reflect the credit risk collectively for financial assets that are not individually of the individual counterparties for non- collateralised significant. If the Bank determines that no objective financial instruments. The Bank estimates the value evidence of impairment exists for an individually of its own credit from market observable data, such assessed financial asset, whether significant or not, as secondary prices for its traded debt and the credit it includes the asset in a group of financial assets

Orient Bank Limited Annual Report and Consolidated 42 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Ü ...Think Possibilities 43 a) substandard assets with arrears period between assets with arrears a) substandard 90 and 179 days – 20%; period between b) doubtful assets with arrears 181 days and 365 days – 50% and period over 365 days c) loss assets with arrears – 100%. of losses in the group and their magnitude). The and their magnitude). in the group of losses used for estimating and assumptions methodology regularly by the Group reviewed cash flows are future and estimates loss between differences any reduce to When a loan is uncollectible, actual loss experience. it is written off against therelated allowance for loan impairment. Such loans are written off after and the have been completed necessary procedures all the has been determined. Impairment amount of the loss and banks to advances and loans to relating charges charges in loan impairment recognised customers are or loss. in profit period, the amount of the If, in a subsequent can and the decrease impairment loss decreases event occurring after the objectively to an be related (such as an improvement impairment was recognised recognised rating), the previously credit in the debtor’s adjusting the allowance by impairment loss is reversed is recognised account. The amount of the reversal in profit or loss.in and advances on loans losses impairment of In addition toInternational with Reporting Financial accordance measurement the the Bank is also required as set out above, Standards Act, 2004 to by the Ugandan Financial Institutions as follows: estimate losses on loans and advances A specific allowancefor impairment for those loans to be non-performing and advances considered based on criteria and classification of such loans and Institutions advances established by the Financial (Credit Classification and Provisioning) Regulations, 2005, as follows: as per Financial Institutions The excess of provisions (Credit Classification and Provisioning) Regulations, risk 2005 over IFRS is accounted for in the credit in the statement of changes in equity. reserve 2.7 Offsetting financial instruments Financial assets and liabilities net are amount reported offset in and the legal enforceable is a currently position when there the statement of financial an is there and amounts recognised the offset to right the asset intention to settle on a net basis or realise and settle the liability simultaneously. Financial assets and liabilities net are amount reported offset in and the legal enforceable is a currently position when there the statement of financial an is there and amounts recognised the offset to right the asset intention to settle on a net basis or realise and settle the liability simultaneously. Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited with similar credit risk characteristics and collectively risk characteristics credit with similar are Assets that them for impairment. assesses an and for which assessed for impairment individually are continues to be recognised impairment loss is or assessment of impairment. not included in a collective The amount of the loss as is the measured difference present carrying amount and the between the asset’s value of estimated cash future flows (excluding future discounted that have not been incurred) losses credit rate. original effective interest at the financial asset’s through of the asset is reduced The carrying amount account and the amount of the use of an allowance held- or loan a If loss. or profit in recognised is loss the rate, the to-maturity investment has a variable interest loss is discount rate for measuring any impairment the current effective interest rate determined under the Bank may the contract. As a practical expedient, on the basis of an instrument’s impairment measure fair value using an observable market price. of the estimated value of the present The calculation future cash flows foreclosure offrom result may that flows cash a collateralised the reflects financial asset the collateral, less costs for obtaining and selling is probable. whether or not foreclosure evaluation of For the purposes of a collective basis the on grouped are assets financial impairment, (that is, on the risk characteristics of similar credit that considers grading process basis of the Bank’s location, collateral geographical type, industry, asset factors). type, past-due status and other relevant to the estimation of relevant Those characteristics are future cash flows for groups of such assets by being all amounts indicative of the debtors’ ability to pay to the contractual terms of the assets due according being evaluated. are that assets financial of group a in flows cash Future on estimated are impairment for evaluated collectively the basis of the contractual cash flows of the assets and historical loss experience for assets in the group risk characteristics similar to those in the with credit Historical loss experience is adjusted on the group. basis of current observable data to reflect the effects of current conditions that did not affecton which the historical loss experience is based and the period to remove the effects ofconditions in exist. period that do not currently the historical (a) Assets carried at amortised cost Estimates of changes in future cash flows for groups consistent directionally be and reflect should assets of period observable data from with changes in related unemployment in changes example, (for period to prices, payment status, or other rates, property factors indicative of changes in the probability Loans and borrowings, and and borrowings, and Loans payables NOTES TO THE FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued)

2.8 Cash and cash equivalents Depreciation of assets is calculated using the straight- Cash and cash equivalents include cash in hand, line method to allocate their cost to their residual deposits held at call with banks and other short- term values over their estimated useful lives, as follows: highly liquid investments with original maturities of three months or less. Buildings 7% Leasehold improvements Shorter of useful lives 2.9 Property and equipment and lease terms Property and equipment comprise mainly branches Furniture, Fixtures, 12.5% and offices and includes land. All equipment and Strongroom & Safes land used by the Bank is stated at historical cost less Office Equipment 20.0% depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Motor vehicles 25.0% Computer Equipment, 33.3% Subsequent expenditures are included in the asset’s ATM, POS & SWIFT carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future The assets’ residual values, depreciation methods and economic benefits associated with the item will flow useful lives are reviewed, and adjusted if appropriate, to the Bank and the cost of the item can be measured at the end of each reporting period. Assets are reliably. The carrying amount of the replaced part is reviewed for impairment whenever events or changes derecognised. All other repair and maintenance costs in circumstances indicate that the carrying amount are charged to profit or loss during the financial period may not be recoverable. in which they are incurred. Property and equipment is derecognised on disposal Buildings are measured at fair value and in the or when no future economic benefits are expected for the building, less accumulated depreciation from its use. Any gain or loss arising on derecognition and impairment losses recognised at the date of of the asset (calculated as the difference between revaluation. Valuations are performed with sufficient the net disposal proceeds and the carrying amount frequency to ensure that the carrying amount of a of the asset) is recognised in other operating income revalued asset does not differ materially from its fair in the income statement in the year the asset is value. derecognised. Detailed disclosures are provided in Note 24. A revaluation surplus is recorded in OCI and credited to the asset revaluation surplus in equity. However, to The bank assesses the fair value of the buildings at the extent that it reverses a revaluation deficit of the the end of each reporting period to determine the same asset previously recognised in profit or loss, the frequency of revaluation. If the difference between the increase is recognised in profit and loss. A revaluation fair value of the buildings and their respective carrying deficit is recognised in the statement of profit or loss, amounts is insignificant, the buildings will be revalued except to the extent that it offsets an existing surplus every five years. on the same asset recognised in the asset revaluation surplus. 2.10 Intangible assets Costs associated with maintaining computer An annual transfer from the asset revaluation surplus software programmes are recognised as an expense to retained earnings is made for the difference as incurred. Development costs that are directly between depreciation based on the revalued carrying attributable to the design and testing of identifiable amount of the asset and depreciation based on and unique software products controlled by the the asset’s original cost. Additionally, accumulated Bank are recognised as intangible assets when the depreciation as at the revaluation date is eliminated following criteria are met: against the gross carrying amount of the asset and it is technically feasible to complete the software the net amount is restated to the revalued amount product so that it will be available for use; of the asset. Upon disposal, any revaluation surplus relating to the particular asset being sold is transferred management intends to complete the software to retained earnings. product and use or sell it;

Orient Bank Limited Annual Report and Consolidated 44 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Ü ...Think Possibilities 45 2.12 Employee benefits (a) Pension obligations The Bank operates various pension schemes. The to payments generally funded through schemes are funds, insurance companies or trustee-administered determined by periodic actuarial calculations. The Bank has a defined contribution scheme. A defined contribution plan is a pension plan under which the Bank The Bank has no legal or constructive separate entity. pays fixed contributionsobligations to pay further contributions if the fund into a does not hold sufficient assets to pay all employees current the in service employee to relating benefits the and prior periods. For defined contribution contributions to publicly or privately administered plans, contractual pension insurance plans on a mandatory, the Bank pays recognised or voluntary basis. The contributions are 2.11 Impairment of non-financial assets of non-financial 2.11 Impairment date, whether reporting assesses, at each The Bank be impaired. that an asset may is an indication there or when annual impairment If any indication exists, the Bank estimates the is required, testing for an asset recoverable amount. An asset’s recoverable asset’s fair or CGU’s of an asset’s amount is the higher value in use. The and its of disposal less costs value amount is determined for an individual recoverable asset does not generate cash asset, unless the inflows that are largely independent of assets. other assets or groups of from those of an asset or CGU amount When the carrying amount, the asset is exceeds its recoverable and is written down to its impaired considered amount. recoverable cash future In assessing value in use, the estimated flowsare discounted to their present value pre-tax using a discount rate that the and money of value time the of assessments reflects current market risks specific to the asset. In determining market transactions less costs of disposal, recent fair value such transactions can taken into account. If no are be identified, an appropriate valuation model is used. by valuation corroborated These calculations are prices for publicly traded multiples, quoted share indicators. companies or other available fair value are of continuing operations Impairment losses recognised in the statement function of expense categories consistent with the of profit or previously for properties asset, except the impaired loss in to OCI. For such taken the revaluation with revalued in OCI up to recognised the impairment is properties, revaluation. the amount of any previous Annual Report and Consolidated

it can be demonstrated how the software how the software demonstrated it can be economic future generate probable will product resources other and financial technical, adequate and to use or to complete the development attributable to the software the expenditure during its development can be reliably product measured. there is an ability to use or sell the software software to use or sell the is an ability there product; Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Directly attributable costs that are capitalised as attributable costs that are Directly the software include product part of the software appropriate development employee costs and an overheads. portion of relevant that do not meet Other development expenditures as an expense as recognised these criteria are recognised costs previously Development incurred. as an asset in a not recognised expense are as an subsequent period. as costs recognised development Computer software estimated useful lives, amortised over their assets are years. which does not exceed three capitalised licences are computer software Acquired and to acquire on the basis of the costs incurred bring to use the specific software. These costs are lives. Software amortised over the expected useful 5 years. has a maximum expected useful life of assessed as The useful lives of intangible assets are either finite or indefinite. Intangible assets with finite useful economic life amortised over the lives are is an there and assessed for impairment whenever indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with period. at least at the end of each reporting reviewed a finite useful life are Changes in the expected useful life or the expected pattern of consumption of future economic benefits to modify the considered embodied in the asset are and amortisation period or method, as appropriate, as changes in accounting estimates. The treated are amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets. of an derecognition Gains or losses arising from intangible asset are and the between the net disposal proceeds measured as the recognised carrying amount of the asset and are difference in the statement of profit or loss when derecognised. the asset is NOTES TO THE FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued) 2.12 Employee benefits (continued)

Û as employee benefit expense when they are due. Where the deferred tax liability arises from the Prepaid contributions are recognised as an asset to initial recognition of goodwill or of an asset or the extent that a cash refund or a reduction in the liability in a transaction that is not a business future payments is available. combination and, at the time of the transaction, affects neither the accounting profit nor taxable 2.13 Provisions profit or loss Provisions for restructuring costs and legal claims are In respect of taxable temporary differences recognised when: the Bank has a present legal or associated with investments in subsidiaries, constructive obligation as a result of past events; it is where the timing of the reversal of the temporary probable that an outflow of resources will be required differences can be controlled and it is probable to settle the obligation; and the amount has been that the temporary differences will not reverse in reliably estimated. Provisions are not recognised for the foreseeable future future operating losses. The carrying amount of deferred tax assets is reviewed Where there are a number of similar obligations, the at each reporting date and reduced to the extent that likelihood that an outflow will be required in settlement it is no longer probable that sufficient taxable profit is determined by considering the class of obligations will be available to allow all or part of the deferred as a whole. A provision is recognised even if the tax asset to be utilised. Unrecognised deferred tax likelihood of an outflow with respect to any one item assets are reassessed at each reporting date and are included in the same class of obligations may be recognised to the extent that it becomes probable that small. future taxable profit will allow the deferred tax asset Provisions are measured at the present value of the to be recovered. Deferred tax assets and liabilities expenditures expected to be required to settle the are measured at the tax rates that are expected to obligation using a pre-tax rate that reflects current apply in the year when the asset is realised or the market assessments of the time value of money and liability is settled, based on tax rates (and tax laws) the risks specific to the obligation. The increase in the that have been enacted or substantively enacted at provision due to passage of time is recognised as the reporting date. interest expense. Current and deferred taxes are recognised as income 2.14 Income tax tax benefits or expenses in the income statement (a) Current income tax except for tax related to the fair value remeasurement Current tax assets and liabilities for the current and of available-for-sale assets, foreign exchange prior years are measured at the amount expected to differences and the net movement on cash flow be recovered from, or paid to, the taxation authorities. hedges, which are charged or credited to OCI.These The tax rates and tax laws used to compute the exceptions are subsequently reclassified from OCI to amount are those that are enacted, or substantively the income statement together with the respective enacted, by the reporting date in the countries where deferred loss or gain. The Bank also recognises the the Bank operates and generates taxable income. tax consequences of payments and issuing costs, Current income tax relating to items recognised related to financial instruments that are classified as directly in equity is recognised in equity and not in the equity, directly in equity. The Bank only off-sets its statement of profit or loss. Management periodically deferred tax assets against liabilities when there is evaluates positions taken in the tax returns with respect both a legal right to offset and it is the Bank’s intention to situations in which applicable tax regulations are to settle on a net basis. subject to interpretation and establishes provisions where appropriate. 2.15 Dividend payable Dividends on ordinary shares are charged to equity in (b) Deferred income tax the period in which they are declared. Deferred tax is provided on temporary differences at the reporting date between the tax bases of 2.16 Share capital assets and liabilities and their carrying amounts for Ordinary shares are classified as ‘share capital’ in financial reporting purposes.Deferred tax liabilities equity. Any premium received over and above the par are recognised for all taxable temporary differences, value of the shares is classified as ‘share premium’ in except: equity.

Orient Bank Limited Annual Report and Consolidated 46 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 47 When calculating the effective interest rate, the Bank terms contractual all considering flows cash estimates of the financial instrument (for example, prepayment losses. credit not consider future options) but does paid or all fees and points includes The calculation an are between parties to the contract that received integral part of the effective interest rate, transaction a Once discounts. or premiums other all and costs financial asset ora group similar of financial assets impairment an of result a as down written been has using the rate of income is recognised loss, interest the for flows cash future the discount to used interest the impairment loss. purpose of measuring 2.20 Dividend income Dividends are recognised in profit or loss when payment is established. the right to receive Bank’s 2.21 Acceptances and letters of credit accounted for are Acceptances and letters of credit as off-balance sheet transactions and disclosed as contingent liabilities. 2.19 Fee and commission income on generally recognised Fees and commissions are been provided. an accrual basis when the service has likely to are Loan commitment fees for loans that (together with related deferred be drawn down are as an adjustment to the costs) and recognised direct effective interest rate on the loan. Loan syndication when the syndication as revenue recognised fees are no retained has been completed and the Bank has a has retained part of the loan package for itself or part at the same effective interest rate as the other participants. negotiating, or Commission and fees arising from a transaction participating in the negotiation of, the arrangement of the party – such as for a third other securities, or the or acquisition of shares on recognised – are or sale of businesses purchase Portfolio completion of the underlying transaction. are fees service and advisory management other and service contracts, based on the applicable recognised Performance- usually on a time-apportionate basis. when recognised linked fees or fee components are fulfilled. the performance criteria are Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited 2.18 Interest income and expense 2.18 Interest and expense for all interest-bearing income Interest financial instruments arerecognised in profit or loss method. using the effective interest The effective a or asset financial a of cost interestamortised the calculating method financial liability and of allocating the is interest income a method period. The the relevant over expense interest or of discounts exactly that rate the is rate interest effective through cash payments or receipts estimated future the expected life of the financial instrument when or, a shorter period to the net carrying appropriate, amount of the financial asset or financial liability. (a) The Bank as the lessee (a) The Bank as the (i) Operating lease Leases in which a by another retained are of ownership significantand rewards portion of the risks party, the lessor, are classified as operating leases. payments, made under Payments, including pre- from received operating leases (net of any incentives the lessor) are charged to profit or loss on a straight- Refer to note line basis over the period of the lease. 25. are leases operating under made payments total The on a straight- charged to ‘other operating expenses’ When an line basis over the period of the lease. the lease period operating lease is terminated before to be made to the any payment required has expired, as an expense lessor by way of penalty is recognised place. in the period in which termination takes primarily the Bank are into by The leases entered operating leases. The determination of whether an arrangement is a an arrangement of whether The determination based on the substance a lease, is lease, or contains assessment of an and requires ofthe arrangement dependent is arrangement the of fulfilment the whether the whether or assets or asset specific a of use the on a right to use the asset. arrangement conveys Leases are divided into finance leases and operating leases. 2.17 Leases NOTES TO THE FINANCIAL STATEMENTS (continued)

3. Financial risk management exposures’), including non-equity trading portfolio The Bank’s business involves taking on risks in a assets, derivatives and settlement balances with targeted manner and managing them professionally. market counterparties and reverse repurchase loans. The core functions of the Bank’s risk management Credit risk is the single largest risk for the Bank’s are to identify all key risks for the Bank, measure business; the directors therefore carefully manage the these risks, manage the risk positions and determine exposure to credit risk. The credit risk management capital allocations. The Bank regularly reviews its risk and control are centralised in a credit risk management management policies and systems to reflect changes team, which reports to the Board of Directors and in markets, products and best market practice. head of each business unit regularly. The Bank’s aim is to achieve an appropriate balance between risk and return and minimise potential 3.1.1 Credit risk measurement adverse effects on the Bank’s financial performance. (a) Loans and advances (including loan commitments The Bank defines risk as the possibility of losses or and guarantees) profits foregone, which may be caused by internal or The estimation of credit exposure is complex and external factors. requires the use of models, as the value of a product varies with changes in market variables, expected Risk management is carried out by a central treasury cash flows and the passage of time. The assessment department (Bank Treasury) under policies approved of credit risk of a portfolio of assets entails further by the Board of Directors. Bank Treasury identifies, estimations as to the likelihood of defaults occurring, evaluates and hedges financial risks in close co- of the associated loss ratios and of default correlations operation with the Bank’s operating units. The Board between counterparties. The Bank has developed provides written principles for overall risk management, models to support the quantification of the credit risk. as well as written policies covering specific areas, These rating and scoring models are in use for all key such as foreign exchange risk, interest rate risk, credit credit portfolios and form the basis for measuring risk, use of derivative financial instruments and non- default risks. In measuring credit risk of loan and derivative financial instruments. In addition, internal advances at a counterparty level, the Bank considers audit is responsible for the independent review of risk three components: (i) the ‘probability of default’ management and the control environment. (PD) by the client or counterparty on its contractual obligations; (ii) current exposures to the counterparty The risks arising from financial instruments to which and its likely future development, from which the Bank the Bank is exposed are financial risks, which includes derive the ‘exposure at default’ (EAD); and (iii) the credit risk, liquidity risk and market risk. likely recovery ratio on the defaulted obligations (the ‘loss given default’) (LGD). The models are reviewed 3.1 Credit risk regularly to monitor their robustness relative to actual Credit risk is the risk of suffering financial loss, should performance and amended as necessary to optimise any of the Bank’s customers, clients or market their effectiveness. counterparties fail to fulfil their contractual obligations to the Bank. Credit risk arises mainly from commercial These credit risk measurements, which reflect and consumer loans and advances, credit cards, and expected loss (the ‘expected loss model’), are required loan commitments arising from such lending activities, by the Basel Committee on Banking Regulations and but can also arise from credit enhancement provided, the Supervisory Practices (the Basel Committee) financial guarantees, letters of credit, endorsements and are embedded in the Bank’s daily operational and acceptances. management. The operational measurements can be contrasted with impairment allowances required The Bank is also exposed to other credit risks under IAS 39, which are based on losses that have arising from investments in debt securities and other been incurred at the reporting date (the ‘incurred loss exposures arising from its trading activities (‘trading model’) rather than expected losses.

Orient Bank Limited Annual Report and Consolidated 48 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 49 Mortgages over residential properties. Mortgages over residential Charges over business assets such as premises, inventory and accounts receivable. Charges over financial instruments such as debt securities and equities. Some other specific control and mitigation measures outlined below: are Collateral held as security for financial assets other of than loans and advances depends on the nature the instrument. The table below shows the collateral coverage for of collateral The type loans as at year-end. secured held includes land titles and buildings mainly. (a) Collateral practices and The Bank employs a range of policies is these of traditional most The risk. credit mitigate to which the taking of security for loans and advances, guidelines is common practice. The Bank implements on the acceptability of specific classes of collateral or risk mitigation. credit The principal collateral types for loans and advances are: Annual Report and Consolidated Items that are fully current and the full repayment of the contractual principal and interest principal and interest of the contractual repayment and the full fully current Items that are expected. amounts are Ultimate loss is not is experiencing difficulties. borrower Items for which the occur if adverse conditions persist. expected but could Items that show underlying well defined weaknesses that could lead to loss probable if not to a and the Bank relies is probable items may be impaired The risk that these corrected. large extent on the available security. final losses not yet considered but are to be impaired, considered Items that are the quality of the items. strengthen because of pending factors, which may of collateral and the realization to be uncollectible and where considered Items that are of such considered have been unsuccessful. These items are institution of legal proceedings included in the net assets of the Bank. little value that they should no longer be

Normal Watch Substandard Doubtful Loss Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited 3.1.2 Risk limit control and mitigation policies 3.1.2 Risk limit control concentrations The Bank manages, limits and controls of credit risk to individual counterparties and banks, and particular, wherever they are to industries. identified − in risk it undertakes of credit the levels The Bank structures accepted in by placing limits on the amount of risk and of borrowers, or groups to one borrower, relation risks Such segments. industry and geographical to basis and subject to a revolving on monitored are when considered review, frequent an annual or more product, by risk of credit level the Limits on necessary. quarterly by approved industry sector and country are of Directors. the Board banks including to any one borrower The exposure by sub-limits covering is further restricted and brokers on- and off-balanceto trading items such as relation in limits risk delivery sheet exposures, exposures exchange contracts. Actual foreign forward and daily daily. monitored against limits are changing of light the in reviewed are limits Lending market and economic conditions and periodic credit of default. and assessments of probability reviews The Bank’s internal ratings scale and mapping of external ratings as supplemented by the Bank’s own internal ratings scale and mapping of external as supplemented by the Bank’s ratings The Bank’s as follows: the use of internal tools are rating assessment through NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued) 3.1.2 Risk limit control and mitigation policies (continued)

Netting off Total loan agreements Collateral less Collateral portfolio (cash secured) than 100% over 100% As at 31 December 2016 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Gross loans and advances 254,074,802 15,672,437 60,499,769 177,902,596 Total 254,074,802 15,672,437 60,499,769 177,902,596

Netting off Total loan agreements Collateral less Collateral portfolio (cash secured) than 100% over 100% As at 31 December 2015 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Gross loans and advances 181,730,066 24,582,226 27,392,630 129,755,210 Total 181,730,066 24,582,226 27,392,630 129,755,210

Longer-term finance and lending to corporate entities (c) Master netting arrangements are generally secured; revolving individual credit The Bank further restricts its exposure to credit losses facilities are generally unsecured. In addition, in by entering into master netting arrangements with order to minimise the credit loss the Bank will seek counterparties with which it undertakes a significant additional collateral from the counterparty as soon as volume of transactions. Master netting arrangements impairment indicators are identified for the relevant do not generally result in an offset of assets and individual loans and advances. liabilities of the statement of financial position, as transactions are either usually settled on a gross basis (b) Lending limits (for derivatives and loan or under most netting agreements the right of set off is triggered only on default. books) The Bank maintains strict control limits on net open However, the credit risk associated with favourable derivative positions (that is, the difference between contracts is reduced by a master netting arrangement purchase and sale contracts) by both amount and to the extent that if a default occurs, all amounts with term. the counterparty are terminated and settled on a net basis. The Bank’s overall exposure to credit risk The amount subject to credit risk is limited to expected on derivative instruments subject to master netting future net cash inflows of instruments, which in relation arrangements can change substantially within a short to derivatives are only a fraction of the contract, period, as it is affected by each transaction subject to or notional values used to express the volume of the arrangement. instruments outstanding. This credit risk exposure is managed as part of the overall lending limits with customers, together with potential exposures from (d) Financial covenants (for credit related market movements. Collateral or other security is not commitments and loan books) always obtained for credit risk exposures on these The primary purpose of these instruments is to ensure instruments, except where the Bank requires margin that funds are available to a customer as required. deposits from counterparties. Settlement risk arises in Guarantees and standby letters of credit carry the any situation where a payment in cash, securities or same credit risk as loans. equities is made in the expectati on of a corresponding receipt in cash, securities Documentary and commercial letters of credit – which or equities. Daily settlement limits are established are written undertakings by the Bank on behalf of a for each counterparty to cover the aggregate of customer authorising a third party to draw drafts on all settlement risk arising from the Bank’s market the Bank up to a stipulated amount under specific transactions on any single day. terms and conditions – are collateralised by the

Orient Bank Limited Annual Report and Consolidated 50 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 0.0% 0.0% 34.9% 38.0% 27.1% 100.0% allowance Impairment 51 2015 0.46% 0.99% 1.64% 10.03% 86.88% exposure 100.00% Credit risk Credit 3.0% 0.0% 0.0% 81.0% 16.0% 100.00% per grade taking into account the risk of future events giving rise events future account the risk of taking into to losses. recognised are impairment allowances In contrast, for financial reporting purposes only for losses that on based date reporting the at incurred been have different the to Due impairment. of evidence objective incurred the amount of applied, methodologies credit losses provided for in the financial statements the amount determined from is usually lower than model that is used for internalthe expected loss regulation banking and management operational purposes. included in the amounts The impairment allowance in the statement of financial position at year- end is internal each of the four rating grades. derived from the largest component of the impairment However, loss grade. The table the allowance comes from on items like exposure below shows the Bank’s financial guarantees, loan commitments and the associated obligations related credit and other internal Bank’s impairment allowance for each of the rating categories. provision held provision % of impairment 2016 1.07% 0.31% 0.15% 7.01% 91.46% exposure 100.00% Credit risk Credit Annual Report and Consolidated

98.47% of the loans and advances portfolio is categorised in the top two grades of the internalthe top two grades of is categorised in portfolio advances loans and of the 98.47% rating system (2015: 96.91%); (2015: to be neither past due nor impaired considered 91.46% of the loans and advances portfolio are 86.88%); 5. Loss 4. Doubtful 3. Substandard 2. Watch Bank’s rating Bank’s 1. Normal Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited All credit exposures arise in Uganda. The following table breaks down the Bank’s credit exposure at carrying exposure credit down the Bank’s following table breaks arise in Uganda. The exposures All credit support), categorised by the industry amounts (without taking into account any collateral held or other credit sectors of the Bank's counterparties. 3.1.3 Maximum exposure to credit risk before collateral held or other credit enhancements collateral held or other credit risk before to credit 3.1.3 Maximum exposure the to risk credit of exposure minimal sustain and control to continue to ability the in confident are directors The and debt securities based on the following: both the loan and advances portfolio from Bank resulting 3.1.3 Impairment and provisioning policies 3.1.3 Impairment and provisioning The internal and external rating systems described in losses – that is, Note 3.1.1 focus on expected credit underlying shipments of goods to which they relate relate to which they shipments of goods underlying loan. a direct carry less risk than and therefore unused represent to extend credit Commitments form in the to extend credit portions of authorisations With or letters of credit. of loans, guarantees respect the risk on commitments to extend credit, to credit exposed to loss in an amount Bank is potentially unused commitments. However, equal to the total loss is less than the total unused the likely amount of most commitments to extend commitments, as maintaining contingent upon customers are credit financial as to referred (often standards credit specific covenants). of credit The Bank monitors the term to maturity commitments because longer-term commitments risk than of credit degree generally have a greater commitments. shorter-term Total Ushs ‘000 3,878,917 1,880,069 7,260,056 99,870,917 40,004,708 72,616,778 17,685,465 90,078,616 455,163,307 139,573,246 105,570,815 123,256,280 - - - Others 856,338 Ushs ‘000 3,878,917 45,185,731 10,852,268 12,821,361 39,777,245 21,297,579 34,118,940 100,550,499 ------Public sector 424,115 201,415 201,415 598,293 Ushs ‘000 2,738,200 1,715,792 - - - - trade 227,463 423,729 and retail and retail Ushs ‘000 2,398,303 Whole-sale 58,704,031 39,317,128 18,735,711 16,496,158 14,097,855 - - - - - 1,529 Ushs ‘000 1,669,893 Real estate 72,846,661 19,505,327 53,339,805 59,617,046 57,947,153 - - - - - 180 795,908 Ushs ‘000 2,517,940 23,114,327 20,596,207 12,822,721 12,026,813 Manufacturing ------TE M ENTS Financial Ushs ‘000 7,260,056 institutions 99,870,917 90,078,616 197,209,589 NCI AL ST A IN A SME Other assets Corporate Financial assets – Held to maturity Loan commitments and other obligations related credit At 31 December 2016 − Term loans − Term Group At 31 December 2016 Loans to Retail customers: − Overdrafts as follows: to off-balance sheet items are relating risk exposures Credit LCs, Guarantees and performance bonds Balances with the Central Bank Deposits and balances due from banking institutions TO T H E F NOTES 3. Financial Risk Management (continued) 3. Financial Risk Management 3.1.4 Concentration of risks of financial assets with credit risk exposure risk exposure 3.1.4 Concentration of risks financial assets with credit

Orient Bank Limited Annual Report and Consolidated 52 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities

At 31 December 2015 December 31 At 120,145,867 120,145,867 45,737,526 57,100 25,344,150 37,174,841 11,832,249 -

credit related obligations related credit

24,594,216 24,594,216 17,641,324 - 4,692,244 1,519,318 741,330 - Loan commitments and other other and commitments Loan

performance bonds performance

95,551,651 95,551,651 28,096,202 57,100 20,651,906 35,655,523 11,090,919 - LCs, Guarantees and and Guarantees LCs,

Credit risk exposures relating to off-balance sheet items are as follows: as are items sheet off-balance to relating exposures risk Credit

440,988,610 440,988,610 89,464,041 - 52,079,852 31,533,721 13,026,148 254,884,848

Other assets Other 4,373,696 4,373,696 4,373,696 - - - - -

– Held to maturity to Held – 98,362,345 98,362,345 - - - - - 98,362,345

Financial assets Financial - -

HNWI 15,608,422 15,608,422 - 19,275,067 7,700,852 1,523,899 - 44,108,240 44,108,240

Corporate 29,796,639 29,796,639 20,247,526 11,449,276 - 104,009,651 104,009,651 42,516,210 -

− Term loans Term − 1,819,351 1,819,351 3,495,180 22,209 - 24,913,951 24,913,951 - 30,250,690 30,250,690

− Overdrafts − 1,188,795 1,188,795 90,163 30,764 - 2,051,763 2,051,763 - 3,361,485 3,361,485

Loans to Retail customers: Retail to Loans - -

from banking institutions banking from

141,003,197 141,003,197 - - - - - 141,003,197 141,003,197 - Deposits and balances due due balances and Deposits

Balances with the Central Bank Central the with Balances 15,519,306 15,519,306 - - - - - 15,519,306 15,519,306 -

Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs

Ushs ‘000 Ushs Annual Report and Consolidated

Total Others sector trade estate Real Manufacturing institutions

Public Public retail and Financial

Whole-sale Whole-sale At 31 December 2015 December 31 At Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Total 7,260,056 1,880,069 3,878,919 Ushs ‘000 17,685,465 90,035,159 40,004,708 72,616,778 99,870,917 105,570,815 123,256,280 139,573,246 455,119,852 - - - - - Others 856,338 3,878,919 Ushs ‘000 21,297,579 12,821,361 34,118,940 45,185,731 39,777,245 10,852,268 100,550,501 ------Public sector 201,415 201,415 598,293 424,115 1,715,792 2,738,200 Ushs ‘000 ------trade 423,729 227,463 and retail and retail 2,398,303 Ushs ‘000 14,097,855 16,496,158 18,735,711 39,317,128 58,704,031 Whole-sale ------1,529 1,669,893 Ushs ‘000 57,947,153 59,617,046 53,339,805 19,505,327 72,846,661 Real estate ------180 795,908 2,517,940 Ushs ‘000 12,026,813 12,822,721 20,596,207 23,114,327 Manufacturing ------TE M ENTS Financial 7,260,056 Ushs ‘000 institutions 90,035,159 99,870,917 197,166,132 NCI AL ST A IN A Bank as follows: to off-balance sheet items are relating risk exposures Credit LCs, Guarantees and performance bonds Loan commitments and other obligations related credit At 31 December 2016 Loans to Retail customers: Balances with the Central Bank Deposits and balances due from banking institutions − Overdrafts Corporate SME Financial assets − Term loans − Term Other assets – Held to maturity At 31 December 2016 TO T H E F NOTES (continued) 3. Financial Risk Management (continued) with credit risk exposure assets 3.1.4 Concentration of risks financial

Orient Bank Limited Annual Report and Consolidated 54 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities

At 31 December 2015 December 31 At 120,145,867 120,145,867 45,737,526 57,100 25,344,150 37,174,841 11,832,249 -

credit related obligations related credit

24,594,216 24,594,216 17,641,324 - 4,692,244 1,519,318 741,330 - Loan commitments and other other and commitments Loan

bonds

95,551,651 95,551,651 28,096,202 57,100 20,651,906 35,655,523 11,090,919 - LCs, Guarantees and performance performance and Guarantees LCs,

Credit risk exposures relating to off-balance sheet items are as follows: as are items sheet off-balance to relating exposures risk Credit

440,942,535 440,942,535 89,464,040 - 52,079,852 31,533,721 13,026,148 254,838,774

Other assets Other 4,373,695 4,373,695 4,373,695 - - - - -

– Held to maturity to Held – 98,362,345 98,362,345 - - - - - 98,362,345

Financial assets Financial - -

HNWI 19,275,067 19,275,067 7,700,852 1,523,899 - 15,608,422 15,608,422 - 44,108,240 44,108,240

Corporate 29,796,639 29,796,639 20,247,526 11,449,276 - 104,009,651 104,009,651 42,516,210 -

− Term loans Term − 1,819,351 1,819,351 3,495,180 22,209 - 24,913,951 24,913,951 - 30,250,690 30,250,690

− Overdrafts − 1,188,795 1,188,795 90,163 30,764 - 2,051,763 2,051,763 - 3,361,485 3,361,485

Loans to Retail customers: Retail to Loans - -

banking institutions banking

140,957,123 140,957,123 - - - - - 140,957,123 140,957,123 - Deposits and balances due from from due balances and Deposits

Balances with the Central Bank Central the with Balances 15,519,306 15,519,306 - - - - - 15,519,306 15,519,306

- - Annual Report and Consolidated

Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs Ushs ‘000 Ushs ‘000 Ushs Ushs ‘000 Ushs Ushs ‘000 Ushs

Real estate Real Manufacturing institutions trade sector Others Total

and retail retail and Financial Public Public

Whole-sale Whole-sale At 31 December 2015 December 31 At Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued)

3.1.5 Loans and advances Loans and advances to customers are summarised as follows: 2016 2015 Ushs ‘000 Ushs ‘000 Neither past due nor impaired 232,369,619 157,888,361 Past due but not impaired 17,812,218 18,223,495 Individually impaired 3,892,965 5,618,210 Gross 254,074,802 181,730,066 Less: allowance for impairment (3,318,974) (4,709,112) Net 250,755,828 177,020,954

Loans and advances are summarised as per risk rating as follows:

Sub Normal Watch standard Doubtful Loss Total 31 December 2016 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Neither past due nor 232,369,619 - - - - 232,369,619 impaired Past due but not - 17,812,218 - - - 17,812,218 impaired ndividually impaired - - 388,173 797,550 2,707,241 3,892,965 Gross 232,369,619 17,812,218 388,173 797,550 2,707,241 254,074,802 Less: allowance for impairment (Refer to note 34) (3,178,948) (178,122) (74,839) (460,754) (2,408,748) (6,301,411) Net 229,190,671 17,634,096 313,334 336,796 298,493 247,773,391

31 December 2015 Neither past due nor 157,888,360 - - - - 157,888,360 impaired Past due but not - 18,223,495 - - - 18,223,495 impaired Individually impaired - - 2,982,472 1,804,251 831,487 5,618,211 Gross 157,888,360 18,223,495 2,982,472 1,804,251 831,487 181,730,066 Less: allowance for impairment (Refer to note 34) (2,579,088) (182,235) (588,009) (825,911) (758,966) (4,934,210) Net 155,309,272 18,041,260 2,394,463 978,340 72,521 176,795,856

Orient Bank Limited Annual Report and Consolidated 56 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Total ...Think Possibilities Ushs ‘000 157,888,361 232,369,619 157,888,361 232,369,619 18,223,495 Total Ushs ‘000 18,223,495 17,812,218 17,812,218 - - - - 57 Public sector - Public sector Ushs ‘000 Ushs ‘000 - - - HNWI Ushs ‘000 36,660,860 55,897,374 36,660,860 55,897,374 5,226,986 HNWI Ushs ‘000 5,226,986 14,275,655 14,275,655 Ushs ‘000 Corporate 92,296,002 92,296,002 136,444,787 136,444,787 11,865,648 Corporate Ushs ‘000 11,865,648 2,597,151 2,597,151 2015 3,291,767 Ushs ‘000 Ushs ‘000 26,887,428 38,629,266 26,887,428 38,629,266 14,931,728 18,223,495 Term loans Term 1,128,964 Term loans Term Ushs ‘000 1,128,964 868,973 868,973 2016 2,044,072 1,398,191 2,044,072 6,046,086 1,398,191 Ushs ‘000 Ushs‘000 Overdrafts 11,766,132 17,812,218 1,897 Overdrafts Ushs ‘000 1,897 70,439 70,439 Annual Report and Consolidated

Total Past due but not impaired 31 December 2015 31 December 2016 (b) Loans and advances past due but not impaired (b) Loans and advances past due asset can lead to a financial delays on the side of the borrower and other administrative Late processing not usually past due are loans and advances less than 90 days Therefore, being past due but not impaired. loans amount of Gross unless other information is available to indicate the contrary. impaired, considered as follows: were past due but not impaired were and advances by class to customers that 31 December 2015 Neither past due nor impaired 31 December 2016 (a) Loans and advances neither past due nor impaired past due nor and advances neither (a) Loans (normal due nor impaired neither past that were quality of the portfolio of loans and advances The credit to the internalBank. rating system adopted by the by reference category) can be assessed The impairment allowances shown in the table above are as per Bank of Uganda guidelines. as per Bank of Uganda are in the table above allowances shown The impairment Total Past due but not impaired Neither past due nor Neither past due nor impaired Total Total Less than 30 days Total More than 30 days More For the aging analysis of the loans and advances neither past due nor impaired refer to note 3.1.5 b. to note 3.1.5 refer advances neither past due nor impaired For the aging analysis of the loans and Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued) 3.1.5 Loans and advances (continued)

(c) Loans and advances individually impaired (i) Loans and advances to customers The individually impaired loans and advances to customers before taking into consideration the cash flows from collateral held were Ushs 3,588,442 (2015: 5,618,211). The breakdown of the gross amount of individually impaired loans and advances by class are as follows:

Public Overdrafts Term loans Corporate SME sector Total 31 December 2016 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Individually impaired 411,439 506,469 531,309 2,443,748 - 3,892,965 Total 411,439 506,469 531,309 2,443,748 - 3,892,965 31 December 2015 Individually impaired 1,048,142 2,234,298 115,376 2,220,394 - 5,618,210 Total 1,048,142 2,234,298 115,376 2,220,394 - 5,618,210

The following factors are considered to check whether the loans and advances are impaired: Significant financial difficulty of the issuer or obligor; Breach of contract, such as a default or delinquency in interest or principal payments; the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that would not otherwise be considered; It becoming probable that the borrower will enter bankruptcy or other financial reorganisation; The disappearance of an active market for that asset because of financial difficulties (but not simply because the asset is no longer publicly traded; or Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since initial recognition, although the decrease cannot yet be identified with the individual assets in the group, including: Adverse changes in the payment status of borrowers in the group (e.g. an increased number of delayed payments or an increased number of credit card borrowers who have reached their credit limit and are paying the minimum monthly amount); or National or local economic conditions that correlate with defaults on the assets in the group (e.g. an increase in the unemployment rate in the geographical area of the borrowers, a decrease in property prices for mortgages in the relevant area, a decrease in oil prices for loan assets to oil producers, or adverse changes in industry conditions that affect the borrowers in the group).

Orient Bank Limited Annual Report and Consolidated 58 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 59 3.2.2 Foreign exchange risk 3.2.2 Foreign The Bank exchange currency foreign prevailing takes the in fluctuations on exposure to rates the on its effects financial position of and currency by exposure of on the level limits sets Board cash flows. The for both overnightand in aggregate and intra-day The table below daily. monitored positions, which are exchange foreign to exposure Bank’s the summarises risk at 31 December 2016. Included in the table are financial instrumentsthe atBank’s carrying amounts, categorised by currency. also assumes that market moves occurring over this also assumes that follow a similar patternholding period will to those past. over 10-day periods in the that have occurred is based assessment of past movements The Bank’s on data for the past five in rates, prices, indices, etc. these historical changes years. The Bank applies directly to its current positions − a method known as monitored Actual outcomes are historical simulation. and to test the validity of the assumptions regularly The calculation. VAR the in used parameters/factors losses outside prevent does not use of this approach of these limits in the event of more significant market movements. an integral part of the Bank’s constitutes As VAR established limits are VAR regime, market risk control all trading portfolio annually for by the Board Actual units. business to allocated and operations limits, together with a Bank-wide against exposure The quality daily by Bank Treasury. is reviewed VAR, back- by monitored continuously is model VAR the of for trading books. All back- results testing the VAR on revenues testing exceptions and any exceptional investigated, are distribution VAR the of side profit the to the Board reported are and all back-testing results of Directors. tests (b) Stress an indication of the potential size tests provide Stress conditions. The of losses that could arise in extreme risk include: Treasury tests carried out by Bank stress movements are stress testing, where factor stress applied to each risk category; emerging market stress subject emerging market portfolios are testing, where testing, movements; and ad hoc stress to stress events to which includes applying possible stress stress the example, for − regions or positions specific peg break. following a currency outcome to a region by senior reviewed tests are of the stress The results management in each business unit and by the Board to the testing is tailored The stress of Directors. business and typically uses scenario analysis. TEMENTS NCIAL STA INA Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited 3. Financial Risk Management (continued) Risk Management 3. Financial F TO THE NOTES 3.2.1 Market risk measurement techniques 3.2.1 Market risk measurement is to risk measurement The objective of market within risk exposures market manage and control on risk. return acceptable limits while optimising the for the development is responsible The Bank Treasury of detailed risk management policies and for day-to- day implementation of those policies. at risk (a) Value methodology risk’ (VAR) at ‘value a applies Bank The to its trading and non-trading portfolios to estimate the market risk of positions held and the maximum losses expected, based upon a number of assumptions for various changes in market conditions. The Board sets limits on the value of risk that may be accepted on a daily basis monitored for the Bank, which are rate risk in the non- Interest by Bank Treasury. the use of interest through trading book is measured is a gap analysis (Note 3.2.3). VAR rate repricing statistically based estimate of the potential loss on the adverse market movements. It portfolio from current the ‘maximum’ amount the Bank might expresses lose, but only to a certain level of confidence (98%). There is therefore a specified the VAR than loss could be greater (2%) that actual statistical probability model assumes a certain ‘holding estimate. The VAR period’ until positions can be closed (10 days). It 3.2 Market risk which to market risks, exposure The Bank takes on is the risk that the of fair value a or financial future instrument cash will prices. Market risks arise from changes in market flows fluctuate because of and equity rate, currency open positions in interest and general exposed to are which of all products, specific marketmovements and changes in the level rates or prices such as interest of volatility of market The exchange rates and equity prices. rates, foreign into either to market risk Bank separates exposures trading or non-trading portfolios. non-trading and trading from arising risks market The and in Bank Treasury concentrated activities are Regular reports by two teams separately. monitored and heads of of Directors submitted to the Board are portfolios include those each business unit. Trading transactions market-making positions arising from with clients or with the Bank acts as principal where arise from the market. Non-trading portfolios primarily and retail of the entity’s rate management the interest liabilities. Non-trading banking assets and commercial exchange and equity portfolios also consist of foreign held-to-maturity and Bank’s the from arising risks financial assets. available-for-sale Group and Bank At 31 December 2016 USD EUR GBP Other Total Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Assets Cash and balances with the Central 23,553,069 903,067 1,825,038 375,894 26,657,068 Bank Deposits and balances due from 75,439,782 1,288,676 2,941,944 354,895 80,025,297 banking institutions Derivative financial instruments 376,700 - - - 376,700 Investment securities – Held-to-maturity - - - - - Investment in subsidiary - - - - - Loans and advances to customers 149,257,599 305,167 - - 149,562,766 Other assets 517,422 86,919 4,836 - 609,177 Total financial assets 249,144,572 2,583,829 4,771,818 730,789 257,231,008 Liabilities Deposits from banks 3,613,008 - - - 3,613,008 Derivative financial instruments 40,476 - - - 40,476 Deposits from customers 209,389,584 2,495,165 4,593,380 2,416 216,480,545 Refinance loans - - - - - Other liabilities 10,372,866 7,825 4,720 16 10,385,427 Total financial liabilities 223,415,934 2,502,990 4,598,100 2,432 230,519,456 Net on-balance sheet financial 25,728,638 80,839 173,718 728,357 26,711,552 position Credit commitments 11,337,510 - - - 11,337,510 At 31 December 2015 Assets Cash and balances with the Central Bank 22,841,576 809,703 1,119,162 51,367 24,821,808 Deposits and balances due from 127,962,801 6,398,253 3,580,398 1,014,712 138,956,164 banking institutions Investment securities - – Held-to-maturity - - - - - Investment in subsidiary - - - - - Loans and advances to customers 105,291,988 805 - - 105,292,793 Other assets 721,630 81,623 2,623 - 805,876 Total financial assets 256,817,995 7,290,384 4,702,183 1,066,079 269,876,641 Liabilities Deposits from banks - - - - - Deposits from customers 251,416,338 6,938,908 4,922,422 1,073 263,278,741 Refinance loans - - - - - Other liabilities 5,039,934 20,102 5,311 20 5,065,367 256,456,272 6,959,010 4,927,733 1,093 268,344,108 Total financial liabilities Net on-balance sheet financial position 361,723 331,374 (225,550) 1,064,986 1,532,533 Credit commitments 17,477,157 - - - 17,477,157

Orient Bank Limited Annual Report and Consolidated 60 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS GBP GBP ...Think Possibilities 22,555 15,788 (22,555) (15,789) 226,883 158,818 (226,883) (158,818) Ushs ‘000 Ushs ‘000 61 EUR EUR 8,084 5,659 (8,084) (5,659) 33,137 23,196 (33,137) (23,196) Ushs ‘000 Ushs ‘000 USD USD 53,461 37,422 36,172 25,321 (53,461) (37,422) (36,172) (25,321) Ushs ‘000 Ushs ‘000 TEMENTS NCIAL STA INA Annual Report and Consolidated

10% 10% (10%) At 31 December 2015 (10%) (ii) Equity At 31 December 2016 At 31 December 2016 At 31 December 2015 (10%) (10%) 10% 10% Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited 3. Financial Risk Management (continued) Risk Management 3. Financial tax and equity: before exchange rates on the profit of a 10% change in foreign Below is the impact tax before (i) Profit F TO THE NOTES 3.2.3 Interest rate risk 3.2.3 Interest of because fluctuate will instrument a financial of flows cash future the that risk the is risk rate interest flow Cash will instrument financial a of value the that risk the is risk rate interest value Fair rates. interest market in changes fluctuations of effects the to exposure on takes Bank The rates. interest market in changes of because fluctuate in the prevailing levels of market interest rates on both its fair value and cash flow risks. The Board sets limits at risk that may be undertaken, which is monitored and value rate repricing on the level of mismatch of interest daily by Bank Treasury. risks. It includes rate interest to book fair value exposure non-trading Bank’s summarise the tables below The at carrying financial instruments the Bank’s - - - 879 Total 40,476 120,870 376,700 196,846 Ushs ‘000 2,150,275 2,149,396 3,613,008 3,660,027 2,745,136 3,918,290 68,929,759 17,071,791 99,870,917 90,078,616 11,541,193 22,791,061 41,192,526 68,282,059 446,244,663 444,094,388 423,248,243 554,216,672 250,755,828 513,024,147 ------Non 879 40,476 376,700 196,846 Ushs ‘000 3,660,027 2,745,136 3,918,290 2,150,275 2,149,396 72,318,786 11,541,193 22,791,061 41,192,526 68,282,059 17,071,791 113,511,312 203,497,291 201,347,016 184,234,749 (129,028,229) Interest bearing Interest ------Over 5 years Ushs ‘000 5,237,438 6,251,676 6,251,676 1,014,238 6,251,676 ------Over 1 year 120,870 Ushs ‘000 3,166,820 3,166,820 3,045,950 12,665,611 191,707,964 182,209,171 194,874,782 194,874,782 ------7 to 12 Months Ushs ‘000 (2,223,345) 5,527,227 5,292,217 51,309,389 51,309,389 51,309,389 49,086,044 49,086,044 18,266,600 ------4 to 6 Months Ushs ‘000 23,518,177 75,692,992 75,692,992 41,221,925 10,952,890 14,707,899 60,985,092 14,707,899 14,707,899 ------0 to 3 Months Ushs ‘000 3,613,008 (58,763,397) 34,263,815 19,676,926 60,859,126 173,563,264 173,563,264 169,950,256 114,799,867 114,799,867 TE M ENTS NCI AL ST A IN A Total liabilities Total Interest sensitivity gap Interest Loans and advances to customers Derivative financial instruments Investment securities – Held-to-maturity Other assets financial assets Total Other assets income tax recoverable Current and equipment Property Operating lease prepayments Intangible assets land Freehold income tax asset Deferred non-financial assets Total assets Total Deposits and balances due from banking Deposits and balances due from institutions Group As at 31 December 2016 Assets Cash and balances with the Central Bank Total non-financial liabilities Total Deferred income tax liability Deferred Other liabilities financial liabilities Total Other liabilities Deposits from customers Deposits from Refinance loans Derivative financial instruments Liabilities banks Deposits from 3. Financial Risk Management (continued) 3. Financial Risk Management TO T H E F NOTES risk (continued) rate 3.2.3 Interest

Orient Bank Limited Annual Report and Consolidated 62 Financial Statements For the year ended 31 December 2016

OVERVIEW GOVERNANCE FINANCIAL STATEMENTS

41,562,841 41,562,841 (140,639,875) 6,684,494 120,630,287 7,617,562 13,508,593 33,761,781 gap sensitivity Interest

Total liabilities Total 457,809,091 457,809,091 223,625,309 5,917 5,794,871 47,218,788 27,149,136 154,015,070

Total non-financial liabilities non-financial Total 1,250,476 1,250,476 1,250,476 - - - - -

...Think Possibilities

1,250,476 1,250,476 Other liabilities Other 1,250,476 1,250,476

Total financial liabilities financial Total 456,558,615 456,558,615 222,374,833 5,917 5,794,871 47,218,788 27,149,136 154,015,070

12,079,641 12,079,641 Other liabilities Other 12,079,641 12,079,641 - - - - -

104,167 104,167 Refinance loans Refinance - - - - 104,167 - - - 63

440,372,643 440,372,643 Deposits from customers from Deposits 210,295,192 210,295,192 5,917 5,794,871 47,114,621 27,149,136 150,012,906

4,002,164 4,002,164 Deposits from banks from Deposits 4,002,164 4,002,164

Liabilities Liabilities

Total assets Total 538,684,0667 122,297,568 6,690,411 126,425,157 54,836,350 40,657,729 187,776,851

Total non-financial assets non-financial Total 40,562,612 40,562,612 40,562,612 - - - - -

21,944,698 21,944,698 Deferred income tax asset tax income Deferred 21,944,698 21,944,698 - - - - -

- - Freehold land Freehold ------

3,051,650 3,051,650 Intangible assets Intangible 3,051,650 3,051,650 - - - - -

- - Operating lease prepayments lease Operating ------

11,629,949 11,629,949 Property and equipment equipment and Property 11,629,949 11,629,949 - - - - -

349,942 349,942 Current income tax recoverable tax income Current 349,942 349,942 - - - - -

3,586,372 3,586,372 Other assets Other 3,586,372 3,586,372 - - - - -

Total financial assets financial Total 498,121,455 498,121,455 81,734,957 6,690,411 126,425,157 54,836,350 40,657,729 187,776,851

4,218,270 4,218,270 Other assets Other 4,218,270 4,218,270

177,020,955 177,020,955 Loans and advances to customers to advances and Loans 5,658,181 5,658,181 93,863,702 34,319,957 11,204,197 31,974,918 - -

98,362,346 98,362,346 – Held-to-maturity – 1,032,230 1,032,230 32,561,455 20,516,393 18,296,051 25,956,217 - -

- - Investment securities Investment ------

141,003,197 141,003,197 Deposits and balances due from banking institutions banking from due balances and Deposits 11,157,481 11,157,481 129,845,716 - - - - -

77,516,687 77,516,687 Cash and balances with the Central Bank Central the with balances and Cash 77,516,687 77,516,687 - - - - -

Annual Report and Consolidated

Assets

Ushs ‘000 Ushs Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs

Total bearing years 5 year 1 Months Months Months

As at 31 December 2016 December 31 at As Interest Interest Over Over 12 to 7 6 to 4 3 to 0

Group Group Non

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited

Interest sensitivity gap sensitivity Interest (58,763,397) 60,985,092 60,985,092 (2,223,345) 191,707,964 191,707,964 6,251,676 6,251,676 (129,028,229) 68,929,759 68,929,759

Total liabilities Total 173,563,264 173,563,264 14,707,899 14,707,899 51,309,389 51,309,389 3,166,820 3,166,820 203,497,291 203,497,291 - 446,244,663 446,244,663

Total non-financial liabilities non-financial Total ------2,150,275 2,150,275 2,150,275 2,150,275

879 879 Deferred income tax liability tax income Deferred 879 879

2,149,396 2,149,396 Other liabilities Other 2,149,396 2,149,396

Total financial liabilities financial Total 173,563,264 173,563,264 14,707,899 14,707,899 51,309,389 51,309,389 3,166,820 3,166,820 201,347,016 201,347,016 - 444,094,388 444,094,388

17,071,791 17,071,791 Other liabilities Other ------17,071,791 17,071,791 -

120,870 120,870 Refinance loans Refinance 120,870 120,870 ------

423,248,243 423,248,243 Deposits from customers from Deposits 3,045,950 3,045,950 51,309,389 14,707,899 169,950,256 184,234,749 184,234,749 -

40,476 40,476 Derivative financial instruments financial Derivative - - - 40,476 40,476

3,613,008 3,613,008 Deposits from banks from Deposits 3,613,008 3,613,008

Liabilities Liabilities

Total assets Total 194,874,782 194,874,782 49,086,044 75,692,992 114,799,867 554,216,672 554,216,672 113,511,312 6,251,676

Total non-financial assets non-financial Total 41,192,526 41,192,526 41,192,526 - - - - -

22,791,061 22,791,061 Deferred income tax asset tax income Deferred 22,791,061 22,791,061 - - - - -

- - Freehold land Freehold ------

3,918,290 3,918,290 Intangible assets Intangible 3,918,290 3,918,290 - - - - -

- - Operating lease prepayments lease Operating ------

11,541,193 11,541,193 Property and equipment equipment and Property 11,541,193 11,541,193 - - - - -

196,846 196,846 Current income tax recoverable tax income Current 196,846 196,846 - - - - -

2,745,136 2,745,136 Other assets Other 2,745,136 2,745,136 - - - - -

Total financial assets financial Total 513,024,147 513,024,147 72,318,786 6,251,676 194,874,782 49,086,044 75,692,992 114,799,867

3,660,027 3,660,027 Other assets Other 3,660,027 3,660,027

250,755,828 250,755,828 Loans and advances to customers to advances and Loans - - 5,237,438 182,209,171 5,527,227 23,518,177 34,263,815

99,870,917 99,870,917 – Held-to-maturity – - - 1,014,238 12,665,611 5,292,217 41,221,925 19,676,926

- - Investment securities Investment ------

376,700 376,700 Derivative financial instruments financial Derivative 376,700 376,700 - - - - -

institutions

90,078,616 90,078,616 - - - - 18,266,600 10,952,890 60,859,126 Deposits and balances due from banking banking from due balances and Deposits

68,282,059 68,282,059 Cash and balances with the Central Bank Central the with balances and Cash 68,282,059 68,282,059 - - - - -

Assets

Ushs ‘000 Ushs Ushs ‘000 Ushs Ushs ‘000 Ushs Ushs ‘000 Ushs Ushs ‘000 Ushs Ushs ‘000 Ushs ‘000 Ushs

Total Months Months Months 1 year 1 Interest bearing Interest years 5

As at 31 December 2016 December 31 at As 0 to 3 to 0 4 to 6 to 4 7 to 12 to 7 Over Over Non Group - - - Total 80,000 40,476 204,305 376,700 120,870 Ushs ‘000 3,918,290 2,745,136 3,524,303 2,149,396 2,149,396 3,613,008 41,277,054 22,791,061 11,538,262 99,870,917 68,448,445 90,035,159 68,282,059 16,997,627 554,122,020 250,755,828 512,844,966 446,545,917 444,396,521 423,624,540 ------Non Interest Interest bearing 80,000 40,476 204,305 376,700 Ushs ‘000 3,918,290 2,745,136 3,524,303 2,149,396 2,149,396 41,277,054 22,791,061 11,538,262 72,183,062 68,282,059 16,997,627 113,460,116 203,798,545 201,649,149 184,611,046 (129,466,086) ------Over 5 years Ushs ‘000 6,251,676 5,237,438 6,251,676 1,014,238 6,251,676 ------Over 1 year 120,870 Ushs ‘000 3,166,820 3,166,820 3,045,950 12,665,611 194,874,782 182,209,171 194,874,782 191,707,964 ------7 to 12 Months Ushs ‘000 5,527,227 (2,223,345) 49,086,044 49,086,044 25,292,217 51,309,389 18,266,600 51,309,389 51,309,389 ------4 to 6 Months Ushs ‘000 75,692,992 23,518,177 75,692,992 41,221,925 60,985,092 14,707,899 10,952,890 14,707,899 14,707,899 ------0 to 3 Months Ushs ‘000 3,613,008 34,263,815 19,676,926 60,815,669 114,756,410 114,756,410 173,563,264 173,563,264 169,950,256 (58,806,854) TE M ENTS NCI AL ST A IN A Total assets Total Total non-financial assets Total Operating lease prepayments Intangible assets Land Freehold income tax asset Deferred Property and equipment Property Other assets income tax recoverable Current Loans and advances to customers Other assets financial assets Total Investment in subsidiary Investment securities – Held-to-maturity Derivative financial instruments sensitivity gap Interest Other liabilities non-financial liabilities Total liabilities Total Deposits and balances due from banking institutions Deposits and balances due from financial liabilities Total Deposits from customers Deposits from Refinance loans Other liabilities Assets Cash and balances with the Central Bank Liabilities banks Deposits from Derivative financial instruments Bank As at 31 December 2016 3. Financial Risk Management (continued) 3. Financial Risk Management TO T H E F NOTES risk (continued) rate 3.2.3 Interest

Orient Bank Limited Annual Report and Consolidated 64 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities

Total assets Total 538,607,336 538,607,336 122,266,912 6,690,411 126,425,157 54,836,350 40,657,729 187,730,777

Total non-financial assets non-financial Total 40,642,633 40,642,633 40,642,633 - - - - -

21,945,634 21,945,634 Deferred income tax asset tax income Deferred 21,945,634 21,945,634 - - - - -

- - Freehold Land Freehold ------

3,051,650 3,051,650 Intangible assets Intangible 3,051,650 3,051,650 - - - - -

- - Operating lease prepayments lease Operating ------

11,624,362 11,624,362 Property and equipment equipment and Property 11,624,362 11,624,362 - - - - -

354,615 354,615 Current income tax recoverable tax income Current 354,615 354,615 - - - - -

3,586,372 3,586,372 Other assets Other 3,586,372 3,586,372 - - - - -

80,000 80,000 Investment in subsidiary in Investment 80,000 80,000 - - - - -

Total financial assets financial Total 497,964,703 497,964,703 81,624,279 6,690,411 126,425,157 54,836,350 40,657,729 187,730,777

4,107,592 4,107,592 Other assets Other 4,107,592 4,107,592 - - - - -

177,020,955 177,020,955 Loans and advances to customers to advances and Loans 5,658,181 5,658,181 93,863,702 34,319,957 11,204,197 31,974,918 - -

98,362,346 98,362,346 – Held-to-maturity – 1,032,230 1,032,230 32,561,455 20,516,393 18,296,051 25,956,217 - -

- - Investment securities Investment ------

institutions

140,957,123 140,957,123 11,157,481 11,157,481 129,799,642 - - - - - Deposits and balances due from banking banking from due balances and Deposits

77,516,687 77,516,687 Cash and balances with the Central Bank Central the with balances and Cash 77,516,687 77,516,687 - - - - -

Annual Report and Consolidated

Assets

Ushs ‘000 Ushs Ushs ‘000 Ushs Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs Ushs ‘000 Ushs ‘000 Ushs

Total bearing Months Months Months 5 years 5 year 1

As at 31 December 2015 December 31 at As 7 to 12 to 7 6 to 4 3 to 0 Interest Interest Over Over

Bank Bank Non Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Total 104,167 Ushs ‘000 4,002,164 1,250,476 1,250,476 12,028,193 41,303,418 440,526,762 456,661,286 457,911,762 - Non Interest Interest bearing Ushs ‘000 1,250,476 1,250,476 12,028,193 (140,853,255) 210,449,311 222,477,504 223,727,981 ------Over 5 years Ushs ‘000 6,690,411 ------Over 1 year Ushs ‘000 126,425,157 - - 7 to 12 Months 104,167 Ushs ‘000 7,617,562 47,114,621 47,218,788 47,218,788 - - - 4 to 6 Months Ushs ‘000 (1,609,598) (2,272,188) 1,609,598 2,272,188 27,149,136 27,149,136 27,149,136 13,508,593 Ushs ‘000 Equity - - - 0 to 3 Months Ushs ‘000 4,002,164 2,299,426 3,245,983 27,914,920 (2,299,426) (3,245,983) 155,813,693 159,815,857 159,815,857 Ushs ‘000 Profit before before Profit tax TE M ENTS NCI AL ST A IN A Deposits from customers Deposits from Bank As at 31 December 2015 banks Deposits from Liabilities At 31 December 2016 At 31 December 2015 (10%) (10%) Refinance loans 10% 10% Other liabilities Total financial liabilities Total Total non-financial liabilities Total Other liabilities Total liabilities Total Interest sensitivity gap Interest Below is the impact of a 10% change in interest rates on the profit before tax and equity: before rates on the profit Below is the impact of a 10% change in interest TO T H E F NOTES risk (continued) rate 3.2.3 Interest 3. Financial Risk Management (continued) 3. Financial Risk Management

Orient Bank Limited Annual Report and Consolidated 66 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 67 3.3.2 Funding approach by a reviewed regularly of liquidity are Sources to maintain a wide separate team in Bank Treasury diversification by currency, provider,term. product and held for 3.3.3 Financial liabilities and assets managing liquidity risk The table below presents the cash flows payable by the Bank under financial liabilities and contractual for managing liquidity risk by remaining assets held The amounts disclosed date. maturities at the reporting undiscounted cash the contractual in the table are flows, whereas the Bank manages liquidity the details), for 3.3.1 Note (see basis risk different a on based analysis. different in a significantly not resulting Monitoring Monitoring and reporting take the form of cash flow week for the next day, projections and measurement periods for key are as these respectively, and month The starting point for those liquidity management. is an analysis of the contractual maturity projections of the financial liabilities and the expected collection assets (Notes 3.3.3). date of the financial medium- also monitors unmatched Bank Treasury and type of undrawn lending term assets, the level the facilities and of overdraft commitments, the usage liabilities such as standby letters impact of contingent and guarantees. of credit Annual Report and Consolidated

Managing the concentration and profile of debt maturities. Maintaining a portfolio of highly marketable assets Maintaining a portfolio of highly marketable that can easily be liquidated as protectionagainst to cash flow; interruption any unforeseen of Monitoring the liquidity ratios of the statement financial position against internal andregulatory and requirements; Day-to-day funding, managed by monitoring Day-to-day funding, managed by monitoring future cash flows to ensure that of funds can be met. This includes replenishment requirements by customers. borrowed or are as they mature in global The Bank maintains an active presence money markets to enable this to happen; Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited � 3.3.1 Liquidity risk management process as carried liquidity management process, The Bank’s by a separate out within the Bank and monitored includes: team in Bank Treasury, Liquidity risk is the risk that the Bank is unable to the Bank is unable is the risk that Liquidity risk result fall due as a obligations when they meet its being withdrawn, cash of customer deposits commitments, or other contractual from requirements calls margin or maturities debt as such outflows, cash available deplete would outflows Such derivatives. for lending, trading activities for client cash resources lack of circumstances, extreme and investments. In the statement of in in reductions liquidity could result financial position and sales of assets, or potentially an inability to fulfil lending be unable to do so is inherent that the Bank will commitments. The risk in all banking operations and can be affectedrange byof a institution-specific and market-wide events events, merger including, but not limited to, credit systemic shocks and natural and acquisition activity, disasters. 3.3 Liquidity risk 3.3 Liquidity NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued) 3.3.3 Financial liabilities and assets held for managing liquidity risk (continued)

Group 0 to 3 4 to 6 7 to 12 Over Over months months months 1 year 5 years Total Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 As at 31 December 2016 Assets Cash and balances with the Central Bank 68,282,059 - - - - 68,282,059 Deposits and balances due from banking institutions 78,921,135 11,157,481 - - - 90,078,616 Derivative financial instruments 376,700 - - - - 376,700 – Held-to- maturity 19,676,926 41,221,925 25,292,217 12,546,921 1,166,373 99,904,362 Loans and advances to customers 34,263,815 23,518,177 5,527,227 224,064,975 6,494,423 293,868,617 Other assets 3,660,027 - - - - 3,660,027 Total financial assets 205,180,662 75,897,583 30,819,444 236,611,896 7,660,796 556,170,381 Liabilities Deposits from banks 3,613,008 - - - - 3,613,008 Derivative financial instruments 40,476 - - - - 40,476 Deposits from customers 354,185,005 14,707,899 51,309,389 3,748,041 - 423,950,334 Refinance loans - - - 126,914 - 126,914 Other liabilities 17,071,791 - - - - 17,071,791 Total financial liabilities 374,910,280 14,707,899 51,309,389 3,874,955 - 444,802,523 On-balance sheet liquidity gap (169,729,618) 61,189,684 (20,489,945) 232,736,941 7,660,796 111,367,858 Off-balance sheet items Loan commitments 3,495,736 1,864,045 12,325,684 - - 17,685,465 Guarantees 7,015,354 3,631,269 25,402,483 13,879,924 - 49,929,030 Performance bonds 1,039,547 187,580 1,556,401 - - 2,783,527 Letters of credit 45,098,400 3,284,731 4,138,903 - - 52,522,033 Total off- balancesheet items 56,649,036 8,967,625 43,423,470 13,879,924 - 122,920,055

Net mismatch (226,378,654) 52,222,059 (63,913,416) 218,857,017 7,660,796 (11,552,197)

Orient Bank Limited Annual Report and Consolidated 68 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - Total ...Think Possibilities 104,167 Ushs ‘000 4,218,270 2,537,290 4,002,164 12,079,640 24,594,216 45,175,340 47,839,019 77,516,687 70,827,965 102,775,130 (49,317,900) 457,581,963 528,409,928 441,395,992 120,145,865 141,003,197 202,896,644 ------69 Over 5,917 5,917 5 years 8,310,456 Ushs ‘000 1,187,065 8,316,373 7,129,308 8,310,456 ------Over 1 year Ushs ‘000 6,664,101 6,664,101 5,912,693 5,912,693 32,644,281 150,912,545 118,268,264 144,248,444 138,335,751 - - - - - 7 to 12 months 104,167 316,920 Ushs ‘000 4,234,065 47,218,788 24,691,516 59,011,473 12,573,513 35,159,393 34,319,957 47,114,621 18,034,895 11,792,685 (23,366,708) - - - - - 4 to 6 months 245,405 Ushs ‘000 7,166,370 4,989,559 2,726,419 (1,619,160) 27,149,136 18,296,051 15,127,753 40,657,729 11,204,197 11,157,481 27,149,136 13,508,593 - 0 to 3 months Ushs ‘000 4,218,270 1,974,967 3,832,902 4,002,164 12,079,641 25,956,217 19,522,764 38,615,395 63,946,028 31,974,918 77,516,687 376,544,022 269,511,808 129,845,716 360,462,217 (170,978,242) (107,032,214) Annual Report and Consolidated

On-balance sheet liquidity gap Refinance loans Other liabilities financial Total liabilities Net mismatch Investment securities – Held-to- maturity Other assets financial Total assets Guarantees Performance bonds Letters of credit off- Total balancesheet items Off-balance sheet items Loan commitments Deposits and balances due banking from institutions Loans and advances to customers Liabilities Deposits from banks Deposits from customers As at 31 December 2015 As at 31 December Assets Cash and balances with the Central Bank Group Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued) 3.3.3 Financial liabilities and assets held for managing liquidity risk (continued)

Bank 0 to 3 4 to 6 7 to 12 Over Over months months months 1 year 5 years Total Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 As at 31 December 2016 Assets Cash and balances with the Central Bank 68,282,059 - - - - 68,282,059 Deposits and balances due from banking institutions 78,877,678 11,157,481 - - - 90,035,159 Derivative financial instruments 376,700 - - - - 376,700 – Held-to- maturity 19,676,926 41,221,925 25,292,217 12,546,921 1,166,373 99,904,362 Loans and advances to customers 34,263,815 23,518,177 5,527,227 224,064,975 6,494,423 293,868,617 Other assets 3,524,303 - - - - 3,524,303 Total financial assets 205,001,481 75,897,582 30,819,444 236,611,895 7,660,796 555,991,200 Liabilities Deposits from banks 3,613,008 - - - - 3,613,008 Derivative financial instruments 40,476 - - - - 40,476 Deposits from customers 354,185,005 14,707,899 51,309,389 3,748,041 - 423,950,334 Refinance loans - - - 126,914 - 126,913 Other liabilities 16,997,627 - - - - 16,997,626 Total financial liabilities 374,836,115 14,707,899 51,309,389 3,874,954 - 444,728,357 On-balance sheet liquidity gap (169,834,634) 61,189,683 (20,489,945) 232,736,941 7,660,796 111,262,843 Off-balance sheet items Loan commitments 3,495,736 1,864,045 12,325,684 - - 17,685,465 Guarantees 7,015,354 3,631,269 25,402,483 13,879,924 - 49,929,030 Performance bonds 1,039,547 187,580 1,556,401 - - 2,783,527 Letters of credit 45,098,400 3,284,731 4,138,903 - - 52,522,033 Total off- balancesheet items 56,649,036 8,967,625 43,423,470 13,879,924 - 122,920,055 Net mismatch (226,483,670) 52,222,058 (63,913,416) 218,857,017 7,660,796 (11,657,212)

Orient Bank Limited Annual Report and Consolidated 70 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - Total ...Think Possibilities 104,167 Ushs ‘000 4,107,592 4,002,164 2,537,290 77,516,687 12,028,193 24,594,216 45,175,340 71,591,890 47,839,019 202,896,644 528,253,176 140,957,123 102,775,130 440,526,762 (48,553,977) 456,661,286 120,145,867 ------71 Over 5 years 7,129,308 8,316,373 1,187,065 8,316,373 8,316,373 Ushs ‘000 ------Over 1 year Ushs ‘000 5,912,693 5,912,693 32,644,281 118,268,264 150,912,545 150,912,545 144,999,852 ------7 to 12 months 316,920 104,167 Ushs ‘000 5,991,897 4,234,065 18,034,895 24,691,516 34,319,957 59,011,473 52,915,409 53,019,576 12,573,513 35,159,393 (29,167,496) ------4 to 6 months 245,405 Ushs ‘000 2,726,419 7,166,370 4,989,559 (1,619,160) 11,157,481 40,657,729 27,149,136 27,149,136 13,508,593 18,296,051 11,204,197 15,127,753 - - 0 to 3 months Ushs ‘000 4,002,164 3,832,902 4,107,592 1,974,967 77,516,687 25,956,217 31,974,918 12,028,193 19,522,764 38,615,395 63,946,028 129,799,642 269,355,056 360,462,217 376,492,574 (107,137,518) 171,083,546) Annual Report and Consolidated

Off-balance sheet items Loan commitments Liabilities Deposits from banks Other assets As at 31 December 2015 As at 31 December Assets Cash and balances with the Central Bank Bank Deposits and balances due banking from institutions Investment securities – Held-to- maturity Loans and advances to customers financial Total assets Deposits from customers Refinance loans Other liabilities financial Total liabilities On-balance sheet liquidity gap Guarantees Performance bonds Letters of credit Total off- Total balancesheet items Net mismatch Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued)

3.3.4 Assets held for managing liquidity risk Certificates of deposit; The Bank holds a diversified portfolio of cash and high-quality highly-liquid securities to support Government bonds and other securities that are payment obligations and contingent funding in a readily acceptable in repurchase agreements stressed market environment. The Bank’s assets held with central banks; and for managing Secondary sources of liquidity in the form of liquidity risk comprise: highly liquid instruments in the Bank's trading Cash and balances with central banks; portfolios.

3.3.5 Current and Non-Current Assets and Liabilities The table below shows the current and non-current assets and liabilities as at 31 December 2015 and 2016 respectively.

Group Less than 12 More than 12 Statement months after months after of financial the reporting the reporting position date date Total As at 31 December 2016 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Assets Cash and balances with Central 68,282,059 68,282,059 - 68,282,059 Bank Deposits and balances due from 90,078,616 90,078,616 - 90,078,616 banking institutions Derivative financial instruments 376,700 376,700 - 376,700 Government securities – 99,870,917 86,191,069 13,679,848 99,870,917 Held-to-maturity Loans and advances to customers 250,755,828 20,196,430 230,559,398 250,755,828 Other assets 6,405,163 6,405,163 - 6,405,163 Current income tax recoverable 196,846 196,846 - 196,846 Property and equipment 11,541,193 - 11,541,193 11,541,193 Operating lease prepayments - - - - Intangible assets 3,918,290 - 3,918,290 3,918,290 Freehold land - - - - Deferred income tax asset 22,791,061 - 22,791,061 22,791,061 Total Assets 554,216,673 271,726,883 282,489,790 554,216,673 Liabilities Deposits due to other banks 3,613,008 3,613,008 - 3,613,008 Derivative financial instruments 40,476 40,476 - 40,476 Customer deposits 423,248,243 420,202,293 3,045,950 423,248,243 Refinance loans 120,870 - 120,870 120,870 Other liabilities 19,221,187 19,221,187 - 19,221,187 Deferred income tax liability 879 879 879 Total Liabilities 446,244,663 443,076,964 3,167,699 446,244,663

Orient Bank Limited Annual Report and Consolidated 72 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - - - - Total Total ...Think Possibilities 80,000 376,700 204,305 104,167 349,942 Ushs ‘000 Ushs ‘000 6,269,439 3,918,290 4,002,164 7,804,643 3,051,650 68,282,059 90,035,159 99,870,917 11,538,262 22,791,061 77,516,687 13,330,117 98,362,345 11,629,949 21,944,698 141,003,197 440,372,643 457,809,091 177,020,954 538,684,065 250,755,828 554,122,020 ------73 date date 80,000 Ushs ‘000 Ushs ‘000 5,800,787 5,800,787 3,051,650 3,918,290 29,418,562 99,521,882 11,629,949 21,944,698 13,679,848 11,538,262 22,791,061 months after months after the reporting the reporting months after 165,566,741 the reporting the reporting 230,559,398 282,566,859 More than 12 More More than 12 More ------376,700 204,305 104,167 349,942 Ushs ‘000 Ushs ‘000 6,269,439 4,002,164 7,804,643 68,282,059 90,035,159 86,191,069 20,196,430 77,516,687 68,943,783 13,330,117 77,499,072 Less than 12 Less than 12 Less than 271,555,161 141,003,197 434,571,855 452,008,303 373,117,324 reporting date reporting reporting date reporting months after the months after the months after - - - - 80,000 position position 376,700 204,305 104,167 349,942 Ushs ‘000 Ushs ‘000 Statement Statement Statement 6,269,439 3,918,290 4,002,164 7,804,643 3,051,650 of financial of financial of financial 68,282,059 90,035,159 99,870,917 11,538,262 22,791,061 77,516,687 98,362,345 13,330,117 11,629,949 21,944,698 250,755,828 554,122,020 141,003,197 440,372,643 457,809,091 177,020,954 538,684,065 Annual Report and Consolidated

Assets Cash and balances with Central Bank Liabilities Deposits due to other banks Deposits and balances due from due from Deposits and balances banking institutions Customer deposits Assets with Central Cash and balances Bank Government securities – Held-to- maturity Refinance loans Other liabilities Liabilities Total Loans and advances to customers income tax recoverable Current Other assets and equipment Property Operating lease prepayments Intangible assets land Freehold income tax asset Deferred Assets Total Deposits and balances due from Deposits and balances due from banking institutions Derivative financial instruments Government securities – Held-to-maturity Loans and advances to customers Other assets Investment in subsidiary Current income tax recoverable Current Property and equipment Property Operating lease prepayments Intangible assets Freehold Land Freehold Deferred income tax asset Deferred Total Assets Total Bank As at 31 December 2016 As at 31 December 2015 As at 31 December Group Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued) 3.3.5 Current and Non-Current Assets and Liabilities (continued)

Bank Less than 12 More than 12 Statement months after months after of financial the reporting the reporting position date date Total As at 31 December 2016 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Liabilities Deposits due to other banks 3,613,008 3,613,008 - 3,613,008 Derivative financial instruments 40,476 40,476 - 40,476 Customer deposits 423,624,540 420,578,590 3,045,950 423,624,540 Refinance loans 120,870 - 120,870 120,870 Other liabilities 19,147,023 19,147,023 - 19,147,023 Total Liabilities 446,545,917 443,379,097 3,166,820 446,545,917

More than 12 Statement Less than 12 months after of financial months after the the reporting position reporting date date Total As at 31 December 2015 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Assets Cash and balances with Central 77,516,687 77,516,687 - 77,516,687 Bank Deposits and balances due from 140,957,123 140,957,123 - 140,957,123 banking institutions Government securities – 98,362,345 68,943,783 29,418,562 98,362,345 Held-to-maturity Loans and advances to 177,020,954 77,499,072 99,521,882 177,020,954 customers Other assets 7,693,964 7,693,964 - 7,693,964 Investment in subsidiary 80,000 - 80,000 80,000 Current income tax recoverable 354,615 354,615 - 354,615 Property and equipment 11,624,362 - 11,624,362 11,624,362 Operating lease prepayments - - - - Intangible assets 3,051,650 - 3,051,650 3,051,650 Freehold Land - - - - Deferred income tax asset 21,945,634 - 21,945,634 21,945,634 Total Assets 538,607,334 372,965,245 165,642,090 538,607,334 Liabilities Deposits due to other banks 4,002,164 4,002,164 4,002,164 Customer deposits 440,526,762 434,725,974 5,800,787 440,526,762 Refinance loans 104,167 104,167 - 104,167 Other liabilities 13,278,670 13,278,670 - 13,278,670 Total Liabilities 457,911,763 452,110,975 5,800,787 457,911,762

Orient Bank Limited Annual Report and Consolidated 74 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS 2015 2015 ...Think Possibilities 143,277 143,277 Ushs ‘000 Ushs ‘000 11,176,616 11,319,893 11,176,616 11,319,893 119,211,211 349,405,505 230,194,294 230,194,294 119,211,211 349,405,505 75 Fair value Fair value 2016 2016 161,895 161,895 Ushs ‘000 Ushs ‘000 17,345,861 17,507,756 17,345,861 17,507,756 318,635,460 113,559,789 432,195,249 318,635,460 113,559,789 432,195,249 2015 2015 104,167 104,167 Ushs ‘000 Ushs ‘000 13,330,117 13,434,284 12,079,640 12,183,807 98,362,345 98,362,345 177,020,954 275,383,299 177,020,954 275,383,299 2016 2016 Carrying amounts Carrying amounts 120,870 120,870 Ushs ‘000 Ushs ‘000 19,221,187 19,342,057 17,071,790 17,192,660 99,870,917 99,870,917 250,755,828 250,755,828 350,626,745 350,626,745 Annual Report and Consolidated

Other liabilities Other liabilities Financial liabilities Refinance loan Financial assets Loans and advances to customers Financial liabilities Refinance loan Financial assets to customers Loans and advances Government securities held-to-maturity Government securities held-to-maturity Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited (i) Loans and advances to customers net of charges for impairment. The estimated fair value of loans and advances Loans and advances are received. Expected cash cash flows expected to be the discounted amount of estimated future represents fair value. market rates to determine discounted at current flows are (ii) Government securities held-to-maturity this information is not The fair value for these held-to-maturity assets is based on market prices. Where maturity and similar credit, available, fair value is estimated using quoted market prices for securities with yield characteristics. (iii) Refinance loans value of the cash flows using computing the present loans is obtained through The fair value of the refinance over the term of the loans. rates for similar facilities. The discounted cash flows are the interest (iv) Other liabilities value of the cash flows using computing the present The fair value of the other liabilities is computed through of the bank. the WACC Bank at fair value (a) Financial instruments not measured amounts and fair values of those financial assets and liabilities The following table summarises the carrying of financial position at their fair values, whose carrying amounts are statement on the Bank’s not presented of their fair values: approximation not a reasonable The following table summarises the carrying amounts and fair values of those financial assets and liabilities not liabilities and assets financial those of values fair and amounts carrying the summarises table following The statement of presented on financialthe positionBank’s at their fair values, whose carryingamounts are not a values: of their fair approximation reasonable 3.4 Fair value of financial instruments of financial 3.4 Fair value Group at fair value not measured (a) Financial instruments NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued) 3.4 Fair value of financial instruments (continued)

(b) Fair value hierarchy the asset or liability, either directly (that is, as IFRS 13 specifies a hierarchy of valuation techniques prices) or indirectly (that is, derived from prices). based on whether the inputs to those valuation Level 3 – inputs for the asset or liability that techniques are observable or unobservable. are not based on observable market data Observable inputs reflect market data obtained from (unobservable inputs). This level includes equity independent sources; unobservable inputs reflect the investments and debt instruments with significant Bank’s market assumptions. unobservable components.

These two types of inputs have created the following This hierarchy requires the use of observable market fair value hierarchy: data when available. The Bank considers relevant Level 1 – Quoted prices (unadjusted) in active and observable market prices in its valuations where markets for identical assets or liabilities. This possible. level includes listed equity securities and debt The fair value of the financial assets and liabilities in instruments on exchanges (for example, Uganda the table below is included at the amount at which Stock Exchange). the instrument could be exchanged in a current Level 2 – Inputs other than quoted prices transaction between willing parties, other than in a included within Level 1 that are observable for forced or liquidation sale.

Level 1 level 2 Level 3 Total As at 31 December 2016 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Assets measured at fair value Government securities – Held-to-maturity - 113,559,789 - 113,559,789 Loans and advances to customers - - 318,635,460 318,635,460 - 113,559,789 318,635,460 432,195,249 Liabilities measured at fair value Refinance loans - - 161,895 161,895 Other liabilities - - 17,345,861 17,345,861 - - 17,507,756 17,507,756

Level 1 level 2 Level 3 Total As at 31 December 2015 Ushs ‘000 Ushs ‘000 Ushs ‘000 Ushs ‘000 Assets measured at fair value Government securities – Held-to-maturity - - 119,211,211 119,211,211 Loans and advances to customers - - 230,194,294 30,194,294 - - 349,405,505 349,405,505 Liabilities measured at fair value Refinance loans - - 143,277 143,277 Other liabilities - - 11,176,616 11,176,616 - - 11,319,893 11,319,893

Orient Bank Limited Annual Report and Consolidated 76 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - 2015 ...Think Possibilities 16.05% 17.68% (80,000) Ushs ‘000 5,362,429 2,761,323 1,369,366 2,601,106 (3,051,650) 58,154,511 68,308,898 76,500,000 52,792,082 (21,945,634) 329,019,881 260,710,984 77 2016 20.26% 22.03% (80,000) (336,224) Ushs ‘000 6,473,229 3,357,070 4,727,505 3,116,160 (3,918,290) 80,825,158 70,667,933 96,750,000 74,351,929 (22,791,061) 366,899,562 296,231,630 Tier capital, general banking capital: share 1 created earningsretained and reserves reserve, earnings, less any of retained by appropriations by the central bank; and; deductions determined Tier loan capital qualifying subordinated 2 capital: allowances. and collective impairment The regulatory capital requirements are strictly strictly are requirements capital The regulatory The economic capital. when managing observed Bank’s The risk weighted assets are measured by means of a measured are The risk weighted assets assigned weights are of 4 risk weights. Risk hierarchy to assets and off balance sheet itemsaccording of default to own estimates of probabilities the Bank’s fonversion (PD), loss given default (LGD) and credit and claims to central business factors (CCF) for retail governments, institutions and corporates. in accordance Own estimates of risk parameters are set out by Basel II.The to the minimum requirements of regulatory table below summarises the composition years ended capital and the ratios of the Bank for the those two 31 December 2016 and 2015. During the externallyyears, the Bank complied with all of to which it is subject. imposed capital requirements Annual Report and Consolidated

To maintain a strong capital base to support the capital base a strong maintain To business. development of its To comply with the capital requirements set by with the capital requirements comply To the Central Bank; as a ability to continue the Bank’s safeguard To going concernso that it can continue to provide returns for shareholders and benefits for other stakeholders; and Total regulatory capital regulatory Total Total capital ratio Total 8% and 12% respectively. and total capital ratios are core The minimum required Total qualifying Tier 2 capital Total Core capital ratio Core Less: Intangible assets income tax asset Less: Deferred exchange gains foreign Less: Unrealized Less: Investment in subsidiary General provisions Off-balance sheet risk-weighted assets Total On-balance sheet Revaluation reserve Risk-weighted assets: Retained earnings qualifying Tier 1 capital Total Tier 2 capital Tier 1 capital capital Share Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Capital adequacy and the use of regulatory capital Capital adequacy and the use of regulatory management, by the Bank’s daily monitored are the guidelines employing techniques based on implemented developed by the Basel Committee, as for supervisory by the Bank of Uganda (the Authority), purposes. The required information is filed with the maintains a Authority on a quarterly basis. The Bank weighted assets and total capital to its risk ratio of core weighted assets above capital to its risk- regulatory as respectively the minimum levels of 8% and 12% . established under the FIA 2005 regulations The Bank’s objectives when managing capital, which when managing objectives The Bank’s face of the ‘equity’ on the than concept is a broader position, are: the statement of financial 3.5 Capital management 3.5 Capital NOTES TO THE FINANCIAL STATEMENTS 3. Financial Risk Management (continued) 3.4 Fair value of financial instruments (continued)

Nominal statement of Risk weighted financial position amounts Risk amounts 2016 2015 Weight 2016 2015 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Balance sheet assets (net of provisions) Cash and balances with Central Bank 68,282,059 77,516,687 0% - - Deposits and balances due from banking institutions 66,621,846 25,281,027 20% 13,324,369 5,056,205 Due from banks outside Uganda with long-term ratings as follows; Rated AAA to AA(-) 169,572 21,758,869 20% 33,914 4,351,774 Rated A (+) to A (-) 17,622,863 83,153,932 50% 8,811,432 41,576,966 Rated A (-) to non-rated 5,620,878 10,763,295 100% 5,620,878 10,763,295 Government securities 99,870,917 98,362,345 0% - - Loans and advances to customers 250,633,336 179,289,803 100% 250,633,336 179,289,803 Investment in subsidiary 80,000 80,000 0% - - Property and equipment 11,538,262 11,624,362 100% 11,538,262 11,624,362 Other assets 6,269,439 7,693,964 100% 6,269,439 7,693,964 Current income tax recoverable 204,305 354,615 0% - 354,615 Total assets 526,913,477 515,878,899 296,231,630 260,710,984 Off-balance sheet positions Performance bonds 2,783,527 2,537,291 50% 1,391,764 1,268,645 Guarantees 49,929,030 45,175,340 100% 49,929,030 45,175,340 Letters of credit 52,522,033 47,839,019 20% 10,504,407 9,567,804 Foreign currency contracts 336,224 - 0% - - Unutilised commitments 17,685,465 24,594,216 50% 8,842,733 12,297,108 123,256,279 120,145,866 70,667,932 68,308,897 Total risk-weighted assets 650,169,756 636,024,766 366,899,563 329,019,882

The breakdown of the Loans and advances to customers is as below 2016 2015 Shs ‘000 Shs ‘000 Gross loans and advances 254,074,802 181,730,066 Less Interest Suspended (497,126) (267,376) Less Specific Provisions (2,944,341) (2,172,887) Net loans and advances 250,633,336 179,289,803

Orient Bank Limited Annual Report and Consolidated 78 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 79 are estimated from observable data in respect of data in respect observable estimated from are similar financial instruments or using models. Where are not available, they inputs are market observable assumptions. appropriate estimated based on techniques (for example, models) valuation Where validated to determine fair values, they are used are and periodically reviewed models All them. sourced that independent of those by qualified personnel are certified before they are used,calibrated and are models to ensure extent the market prices. To data and comparative that outputs only observable data; however, practical, models use reflect actual risk and risk (both own credit such as credit areas require and correlations counterparty risk), volatilities to note 3.4. management to make estimates. Refer (c) Held-to-maturity investments guidance, the Bank with IAS 39 In accordance classifies some non-derivative financial assets with fixed or determinable payments and as fixed maturity held-to-maturity. significant judgement. In making This this judgement, the classification to hold such Bank evaluates its intention and ability requires investments to maturity. to investments these keep to fail to were Bank the If maturity other than for the – specific for example, circumstances selling an insignificant amount close the to reclassify to maturity – the Bank is required the Accordingly, category as available-for-sale. entire at fair value instead investments would be measured of amortised cost. Refer to note 20. , plant and equipment (d) Property amounts, The bank carries its buildings at revalued being its fair value at the date of the in other recognised Changes in fair value are income. Revaluations shall be made comprehensive with sufficient regularity to ensure thatamount the carrying does not differ materiallywould be determined using fair value at the end of the from that which period. Refer to note 25. reporting gements tes and jud Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited The Bank makes estimates and assumptions that and assumptions makes estimates The Bank affect the reported amounts assets of and liabilities within the next with IFRS are in conformity assumptions required financialyear. All the with in accordance best estimates undertaken estimates and and judgements are Estimates applicable standard. based basis, and are evaluated on a continuous including factors, other and experience past on events. to future expectations with regard judgements for and directors’ Accounting policies especially critical to the Bank’s certain items are financial position due to their materiality. and results (a) Impairment losses on loans and advances portfolios to assess its loan The Bank reviews In determining impairment at least on a quarterly basis. be recorded whether an impairment loss should in profit or loss, the Bank makes judgements data indicating an is any observable whether there as to decrease impairment trigger followed by measurable in the estimated future cash flows from a portfolio of loans before the decrease can be identified with that portfolio. data indicating This evidence may include observable adverse change in the has been an that there or national or in a group, payment status of borrowers with defaults local economic conditions that correlate use estimates directors The on assets in the group. assets with based on historical loss experience for and objective evidence risk characteristics credit portfolio when of impairment similar to those in the scheduling future cash flows. The methodology and the amount assumptions used for estimating both and regularly timing reviewedof cash future flows are and estimates loss between differences any reduce to actual loss experience. Refer to note 22. (b) Fair value of financial instruments The fair value of quoted prices are active market exists or where financial instruments whereusing by determined are available otherwise not no valuation techniques. In these cases, the fair values g estima cal accountin 4. Criti NOTES TO THE FINANCIAL STATEMENTS (continued)

2016 2015 5. Interest income and Interest expenses Ushs ‘000 Ushs ‘000 Group and Bank Interest income Loans and advances 32,710,396 25,157,815 Deposits and balances due from banking institutions 2,840,857 1,746,298 35,551,253 26,904,113 Investment securities: - Held-to-maturity 14,759,829 13,508,541 50,311,082 40,412,654 Interest expense Deposits from banks 720,716 1,395,771 Deposits from customers 17,119,791 16,009,086 BOU refinance schemes 10,747 13,542 17,851,254 17,418,399

The effective interest rate for loans and advance is 16.5% (2015:15.7%). The effective interest ratefor deposits is 4.4% (2015: 4.2%). The effective interest rate for government securities is 14.6% (2015: 13.7%). 2016 2015 6. Loan impairment charges Ushs ‘000 Ushs ‘000 Group and Bank Loans and advances to customers (Note 22) Net Increase in impairment 2,830,954 5,668,591 2,830,954 5,668,591 - identified 302,967 2,332,155 - unidentified 2,527,987 3,336,436 2,830,954 5,668,591

2016 2015 7. Net fee and commission income Ushs ‘000 Ushs ‘000 Group Fee and commission income Credit related fees and commissions 2,362,019 2,255,705 Commission income 13,672,795 20,520,976 Commission on trade 459,687 181,533 Other operating income 3,600,959 6,728,672 20,095,460 29,686,886 Bank Fee and commission income Credit related fees and commissions 2,362,019 2,255,705 Commission income 13,672,795 20,520,976 Other operating income 3,559,182 6,732,278

19,593,996 29,508,959

Orient Bank Limited Annual Report and Consolidated 80 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - 2015 2015 2015 ...Think Possibilities 84,717 84,717 719,301 705,684 726,950 937,345 705,684 937,345 Ushs ‘000 Ushs ‘000 Ushs ‘000 2,306,933 1,137,984 2,306,933 4,418,777 1,146,734 1,252,605 4,418,777 1,422,015 9,889,088 1,255,323 1,424,365 9,899,087 (4,529,013) (4,529,013) 11,018,006 11,105,506 14,114,279 14,213,247 81 2016 2016 2016 78,808 78,808 838,143 717,173 840,433 717,173 336,224 Ushs ‘000 Ushs ‘000 Ushs ‘000 2,177,009 1,222,472 2,177,009 5,649,500 1,232,174 1,477,178 5,649,500 1,365,327 1,493,319 1,367,727 1,346,066 1,346,066 3,685,424 4,021,648 12,160,205 12,257,225 15,577,028 11,454,853 15,699,891 11,459,543 tive expenses Annual Report and Consolidated

Bank costs IT and software IT and software costs IT and software National Social Security Fund 10. General and administra Group and equipment furniture Occupancy, Bank and salaries Wages enefits expenses 9. Employee b Group and salaries Wages National Social Security Fund contributions Other staff costs and equipment furniture Occupancy, Marketing and public relations and entertainment Travel and postage Telecommunication Other staff costs Defined contribution fund Marketing and public relations and entertainment Travel and postage Telecommunication Other administrative expenses Defined contribution fund Other administrative expenses Realised exchange losses/gains Realised exchange Group and Bank Group exchange gain Unrealised nge gains/ (losses) reign excha 8. Net fo Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued)

2016 2015 11. Depreciation and amortisation Ushs ‘000 Ushs ‘000 Group Depreciation of property and equipment (Note 25) 2,507,727 2,812,105 Amortisation of intangible assets (Note 26) 2,661,458 2,435,860 5,169,185 5,247,965 Bank Depreciation of property and equipment (Note 25) 2,505,071 2,810,295 Amortisation of intangible assets (Note 26) 2,661,458 2,435,860 5,166,529 5,246,155

2016 2015 12. Reversal of charges Ushs ‘000 Ushs ‘000 Group and Bank Reversal of charges 1,036,776 1,139,542 1,036,776 1,139,542 Reversal of charges relates to concessions given to customers.

2016 2015 13. Other operating expenses Ushs ‘000 Ushs ‘000 Group Audit fees 155,900 199,990 Other general expenses 12,287,123 11,310,996 12,443,023 11,510,986 Bank Audit fees 155,900 199,990 Other general expenses 12,227,371 11,275,247 12,383,271 11,475,237

2016 2015 14. Income tax Ushs ‘000 Ushs ‘000 Group Current income tax 244,429 38,880 Withholding tax expense 2,756,366 2,701,708 Deferred tax credited to profit (Note 27) (1,930,883) (3,776,957) Prior year deferred tax adjustment (Note 27) 832,141 - Income tax expense/(credit) 1,902,053 (1,065,371)

Orient Bank Limited Annual Report and Consolidated 82 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - - - - - 2015 2015 ...Think Possibilities 5,872 5,871 472,710 141,813 441,309 132,393 Ushs ‘000 Ushs ‘000 2,701,708 2,701,708 2,701,708 (3,915,222) (3,776,957) (3,914,763) (1,075,249) (1,075,249) (1,065,371) 83 2016 2016 1,548 150,309 832,141 150,311 832,141 832,141 150,980 Ushs ‘000 Ushs ‘000 7,937,564 2,381,269 2,756,366 2,756,366 1,807,054 1,807,054 2,756,366 1,902,053 7,626,061 2,287,818 (4,219,582) (1,931,762) (4,220,251) Annual Report and Consolidated

Profit before income tax before Profit 30%) at the tax rate of 30% (2015: calculated Tax Effect of: - Final tax on Government securities Bank income tax Current Withholding tax expense tax deferred - Prior year tax adjustment- under provision- on government - Income not subject to tax: interest securities Charged/credited to profit (Note 27) to profit Charged/credited - Expenses not deductible for tax purposes Income tax expense/(credit) Prior year deferred tax adjustment (Note 27) tax adjustment Prior year deferred Income tax expense/(credit) Group Effect of: - Final tax on government securities The tax on the Group’s profit before income tax differs from the theoretical amount as follows: from the theoretical tax differs income before profit the Group’s The tax on - Income not subject to tax: interest on government to tax: interest securities - Income not subject - Bank: Prior year tax adjustment- under provision- deferred tax deferred adjustment- under provision- - Bank: Prior year tax year tax adjustment- under provision- - Subsidiary: Prior tax deferred - Expenses not deductible for tax purposes Income tax expense/(credit) The tax on the Bank’s profit before income tax differs from the theoretical amount as follows: from the theoretical tax differs income before profit The tax on the Bank’s tax income before Profit calculated at the tax rate of 30% (2015: 30%) Tax Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued)

15. Financial instruments by category Group Derivatives Financial recorded at liabilities at Loans and Held to fair value amortised receivables maturity through cost Total At 31 December 2016 Ushs ‘000 Ushs ‘000 profit or loss Ushs ‘000 Ushs ‘000 Financial assets Cash and bank balances with 68,282,059 - - - 68,282,059 the Central Bank Deposits and balances due 90,078,616 - - - 90,078,616 from banking institutions Derivative financial - - 376,700 - 376,700 instruments Investment securities - 99,870,917 - - 99,870,917 Loans and advances to 250,755,828 - - - 250,755,828 customers Other assets 4,218,270 - - - 4,218,270 413,334,773 99,870,917 376,700 - 513,582,390 Financial liabilities Deposits from banks - - - 3,613,008 3,613,008 Deposits from customers - - - 423,248,243 423,248,243 Derivative financial - - 40,476 - 40,476 instruments Refinance loans - - - 120,870 120,870 Other liabilities - - - 17,071,791 17,071,791 - - 40,476 444,053,912 444,094,388 At 31 December 2015 Financial assets Cash and bank balances with 77,516,687 - - - 77,516,687 the Central Bank Deposits and balances due 141,003,197 - - - 141,003,197 from banking institutions Investment securities - 98,362,345 - - 98,362,345 Loans and advances to 177,020,954 - - - 177,020,954 customers Other assets 4,107,592 - - - 4,107,592 399,648,431 98,362,345 - - 498,010,776 Financial liabilities at amortised cost Deposits from banks Deposits from customers - - - 4,002,164 4,002,164 Customer deposits - - - 440,372,643 440,372,643 Refinance loans 104,167 104,167 Other liabilities - - - 1,250,476 1,250,476 - - - 445,729,450 445,729,450

Orient Bank Limited Annual Report and Consolidated 84 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS Total ...Think Possibilities 40,476 120,870 104,167 376,700 Ushs ‘000 3,524,303 4,107,592 3,613,008 4,002,164 16,997,627 12,028,193 99,870,917 98,362,345 77,516,687 68,282,059 90,035,159 444,396,521 456,661,286 250,755,828 177,020,954 423,624,540 140,957,123 497,964,701 440,526,762 512,844,966 ------85 cost 120,870 104,167 Financial Ushs ‘000 amortised 3,613,008 4,002,164 liabilities at 16,997,627 12,028,193 444,356,045 456,661,286 423,624,540 440,526,762 ------40,476 through through 376,700 376,700 fair value Derivatives recorded at recorded profit or loss or profit ------Held to maturity Ushs ‘000 99,870,917 98,362,345 99,870,917 98,362,345 ------Ushs ‘000 3,524,303 4,107,592 Loans and receivables 77,516,687 68,282,059 90,035,159 250,755,828 177,020,954 412,597,349 399,602,356 140,957,123 140,957,123 Annual Report and Consolidated

Other liabilities Other liabilities Loans and advances to customers Other assets Loans and advances to customers Other assets Investment securities Derivative liabilities Refinance loans Investment securities Refinance loans Deposits from customers Deposits from Deposits and balances due banking institutions from Financial liabilities at amortised cost banks Deposits from customers Deposits from Cash and bank balances with the Central Bank At 31 December 2015 Financial assets Financial liabilities at amortised cost banks Deposits from Deposits and balances due Deposits and balances institutions banking from Derivative financial instruments At 31 December 2016 Financial assets with Cash and bank balances the Central Bank Bank Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued)

2016 2015 16. Cash and balances with Central Bank Ushs ‘000 Ushs ‘000 Group and Bank Cash in hand 28,098,003 27,117,381 Balances with the Central bank other than mandatory reserve deposits 7,260,056 15,519,306 Included in cash and cash equivalents (Note 17) 35,358,059 42,636,687 Mandatory reserve deposits with Central Bank 32,924,000 34,880,000 68,282,059 77,516,687 Mandatory reserve deposits are not available for use in the Bank’s day-to-day operations. Cash-in-hand and balances with the Central Bank and mandatory reserve deposits are non-interest-bearing.

The required cash reserve with Bank of Uganda as at 31 December 2016 was Ushs: 32,924 million. The cash ratio requirement is non-interest earning and is based on the value of customer deposits as adjusted by the Bank of Uganda. The cash reserves held are allowed to flactuate to not less than 50% of the mandatory requirement on a given day provided the average for the specified two weeks period is not lower than minimum requirements, and are subject to sanctions for non-compliance.

2016 2015 17. Cash and cash equivalents Ushs ‘000 Ushs ‘000 For the purpose of the statement of cash flows, cash and cash equivalents include: Group Cash and balances with the Central Bank (Note 16) 35,358,059 42,636,687 Deposits and balances due from banking institutions (Note 18) 90,078,616 141,003,197 Treasury bills maturing within 90 days (Note 20) 20,840,700 11,000,000 Treasury bonds maturing within 90 days (Note 20) - 17,731,347 146,277,375 212,371,231 Bank Cash and balances with the Central Bank (Note 16) 35,358,059 42,636,687 Deposits and balances due from banking institutions (Note 18) 90,035,159 140,957,123 Treasury bills maturing within 90 days (Note 20) 20,840,700 11,000,000 Treasury bonds maturing within 90 days (Note 20) (1) 17,731,347 146,233,917 212,325,157

For the purposes of the statement of cash flows, cash and cash equivalents comprise balances with less than 90 days maturity from the date of acquisition including: cash and balances with Banks, Treasury bills and other eligible bills, and amounts due from other banks. Cash and cash equivalents exclude the cash reserve requirement held with the Bank of Uganda.

Banks are required to maintain a prescribed minimum cash balance with the Bank of Uganda that is not available to finance the bank’s day-to-day activities. The amount is determined by Bank of Uganda as a percentage of the average outstanding customer deposits over a cash reserve cycle period of 2 weeks. Whilst it is available for use in the bank’s activities and may fall to 50% of the margin on a given day there are sanctions for non-compliance. As at 31 December, the reserve requirement was Ushs 32.92 billion (2015: Ushs 34.88 billion).

Orient Bank Limited Annual Report and Consolidated 86 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS 2015 2015 2015 ...Think Possibilities liabilities Ushs ‘000 Ushs ‘000 Ushs ‘000 25,927,020 25,927,020 (8,273,966) (2,319,604) 98,362,345 58,577,949 33,593,685 66,851,915 15,526,883 39,784,396 17,731,347 31,104,000 42,104,000 11,000,000 34,730,320 34,730,320 106,272,877 141,003,197 106,226,803 140,957,123 Notional amount 87 - 40,476 40,476 2016 2016 2016 Ushs ‘000 Ushs ‘000 Ushs ‘000 (7,256,489) (4,258,622) value liabilities 99,870,917 40,288,839 13,679,848 47,545,328 33,865,480 59,582,078 43,000,000 63,840,700 20,840,700 44,138,166 45,940,450 90,078,616 44,094,709 45,940,450 90,035,159 Carrying amount Notional 26,263,244 26,263,244 amount assets of asset 376,700 376,700 Carrying value Annual Report and Consolidated

tive financial instruments g institutions bankin Total government securities Total Unearned interest Maturing after 365 days Treasury Bonds Treasury Face value Maturing within 90 days Maturing between 90 and 365 days Unearned interest Maturing after 90 days 20. Government securities Bank and Group Securities held-to-maturity bills Treasury Face value Maturing within 90 days Derivatives held for trading exchange contracts Foreign Placements with other banks Placements with other banks Placements with other 19. Deriva and Bank Group to its customers. that the Bank provides to products generally related Derivatives held for trading are The Bank may also take positions with the expectation as trading risk for risk department and is treated treasury of Bank’s Most of the trading portfolio is within the profiting from favourable movements in rates. as recorded instruments financial derivative of values fair the shows below table The purposes management is the quantity gross, amounts. The notional amount, recorded assets or liabilities together with their notional transactions of volume the indicate amounts notional The instrument. underlying contracts’ derivative the of risk. not indicative of either the market risk or credit outstanding at the year end and are Bank other banking institutions Balances due from Group other banking institutions Balances due from es due fom ances duer and bal 18. Deposits Total Total There were no foreign exchange contracts in 2015. no foreign were There Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued)

2016 2015 21. Investment in subsidiary Ushs ‘000 Ushs ‘000 Bank Equity securities – at cost: – Equity Stock Brokers Ltd 80,000 80,000 Total investment in subsidiary 80,000 80,000

The principal place of business of Equity Stock Brokers Ltd is Kampala. The Bank owns 80% of the company while 20% is owned by Shoal. Further the profit that has been allocated to Shoal Ltd for the year ended 31st Dec 2016 is Ushs. 43.3mn. The accumulated non-controlling interest is Ushs. 94.1mn. Summary of Equity Stock Brokers Limited’s financial statements 2016 2015 Ushs ‘000 Ushs ‘000 Total assets 558,411 316,497 Total liabilities 76,856 51,445 Revenue 501,464 193,927 Profit after tax 216,504 15,172

2016 2015 22. Loans and advances to customers Ushs ‘000 Ushs ‘000 Group and Bank a) Analysis of loan advances to customers by category: Retail - Overdrafts 1,880,069 3,361,485 - Term loans 40,004,708 30,250,690 41,884,777 33,612,175 Corporate 139,573,247 104,009,651 SME 72,616,778 44,108,240 254,074,802 181,730,066 Gross loans and advances to customers 254,074,802 181,730,066 Less: allowance for impairment (3,318,974) (4,709,112) Net loans and advances to customers 250,755,828 177,020,954

b) Gross advances to customers by industry composition: - Trade and commerce 58,667,114 52,079,852 - Agriculture 39,149,700 13,051,873 - Manufacturing 23,114,327 13,026,149 - Transport & communication 14,223,992 14,127,152 - Building and construction 72,828,900 54,299,132 - Personal, service industry and others 46,090,769 35,145,908 Gross advances to customers 254,074,802 181,730,066

Orient Bank Limited Annual Report and Consolidated 88 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS 2015 2015 2015 ...Think Possibilities (261,196) (266,103) (349,942) (354,615) Ushs ‘000 Ushs ‘000 Ushs ‘000 2,714,487 2,701,708 3,430,947 4,373,696 7,804,643 3,320,269 4,373,695 7,693,964 5,668,591 5,877,826 8,717,465 3,336,436 4,709,112 1,372,676 3,336,436 4,709,112 (2,803,233) (2,790,221) (6,385,310) (6,837,305) 89 2016 2016 2016 790,987 (349,942) (354,615) (196,846) (204,305) Ushs ‘000 Ushs ‘000 Ushs ‘000 3,000,795 2,906,676 2,526,246 3,878,917 6,405,163 2,390,520 3,878,919 6,269,439 2,830,954 4,709,112 4,971,297 2,527,987 3,318,974 2,527,987 3,318,974 (2,847,699) (2,756,366) (4,668,330) (4,221,093) ax recoverable Annual Report and Consolidated

Current tax charge Current year paid - current Tax tax charge Current year paid - current Tax Bank Balance as at 1 January Other receivables Other receivables include advance payments made for insurance, advertisement, stationary and software Prepayments comprises of mainly charges and commission receivable maintenance among others. Other receivables among others. 24. Current income t Group Balance as at 1 January Prepayments Bank Prepayments 23. Other assets Group Charge to the statement of comprehensive income Charge to the statement of comprehensive for loan impairment in the provision Net increase security for its loans and advances: buildings, land, deposits, The bank hold the following collateral as stock among others. margins accounts, plant, machinery and Reconciliation of allowance account for losses on loans and advances to customers is as follows: to customers is loans and advances for losses on of allowance account Reconciliation At 1 January for loan impairment in the provision Increase as Per IAS 39 . Individually assessed as Per IAS 39 . Collectively assessed no longer required Recoveries and allowances during the year offs Write At 31 December Identified Impairment Unidentified Impairment Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited - - - Total (334,436) (323,256) (351,603) (797,189) (748,095) Ushs’000 2,812,105 3,212,524 4,710,717 (3,312,789) 1,065,718 15,741,334 27,333,617 18,230,183 29,860,101 29,860,102 30,778,464 ------65,100 Work In Work 805,366 Progress (781,237) Ushs’000 1,756,118 1,039,981 1,039,981 3,864,486 (4,099,101) - - - - ment Office Equip - 69,264 547,292 547,227 234,706 630,149 (276,477) Ushs’000 3,311,557 4,820,925 3,858,817 5,437,416 5,437,416 6,025,794 - - - - - Motor 81,464 vehicles 234,680 965,840 831,203 (321,850) (350,197) (474,231) Ushs’000 1,053,010 1,574,168 1,223,971 1,223,971 - - 6,539 (1,406) (1,406) 31,459 (29,208) 723,226 247,347 & SWIFT Ushs’000 Computer ATM, POS ATM, 6,613,074 7,971,087 1,010,978 7,622,646 8,724,366 8,724,366 8,949,044 Equipment, - - - - 99,652 32,987 & Safes (17,203) 219,776 238,533 118,404 Fixtures, Fixtures, Ushs’000 Furniture, 1,790,739 2,741,031 2,010,516 2,873,670 2,873,670 3,213,404 Strongroom Strongroom - - - - ) (69) ments 86,301 44,182 31,220 530,833 313,092 - improve Ushs’000 1,727,107 4,307,276 2,257,940 4,706,669 4,706,669 4,782,001 Leasehold ------continue d 657,660 225,516 883,176 (748,095) Ushs’000 Buildings 4,807,377 4,807,377 4,807,377 1,065,718 5,125,000 ------Land TE M ENTS ( 43,029 588,188 631,217 Ushs’000 1,046,652 1,046,652 1,046,652 1,046,652 NCI AL ST A IN A ty a nd equipment At 1 January 2015 25. Pr ope r Group At 1 January 2015 DEPRECIATION ACCUMULATED COST or VALUATION Charge for the year Elimination of accummulated depreciation Additions Eliminated on disposal Elimination of accummulated depreciation Increase on revaluation Increase Disposals WIP (Note 26) from Transfer At 31 December 2015 At 31 December 2015 At 1 January 2016 Additions Disposals Transfer from WIP (Note 26) from Transfer Elimination of accummulated depreciation Increase on revaluation Increase At 31 December 2016 TO T H E F NOTES

Orient Bank Limited Annual Report and Consolidated 90 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities

Work in progress (WIP) relates to the following projects prepaid cards, master card and new branch capital expenditure among others. among expenditure capital branch new and card master cards, prepaid projects following the to relates (WIP) progress in Work

December 2016 is Ushs 1.065 billion. The revaluation surplus is not distributable to the shareholders. the to distributable not is surplus revaluation The billion. 1.065 Ushs is 2016 December

The buildings at plot 1 Busoga Square, Busoga Avenue, Jinja were revalued on 2nd March 2016 by Remax Ltd. The revaluation surplus for the year ended 31 31 ended year the for surplus revaluation The Ltd. Remax by 2016 March 2nd on revalued were Jinja Avenue, Busoga Square, Busoga 1 plot at buildings The

11,629,949 11,629,949 At 31 December 2015 December 31 At 1,039,981 1,039,981 1,578,600 258,131 1,101,719 863,154 2,448,728 3,924,201 415,435

11,541,193 11,541,193 At 31 December 2016 December 31 At 805,366 805,366 1,784,301 167,685 721,265 1,001,531 1,977,095 4,708,875 375,074

4,708,875 4,708,875 At valuation At ------4,708,875 -

6,832,318 6,832,318 At cost At 375,074 375,074 805,366 805,366 1,784,301 167,685 721,265 1,001,531 1,977,096 -

NET CARRYING AMOUNT CARRYING NET

At 31 December 2016 December 31 At 4,241,493 4,241,493 663,518 8,227,779 2,211,873 2,804,905 416,125 671,578 19,237,270 19,237,270 -

(748,095) depreciation (748,095) ------

Elimination of accummulated accummulated of Elimination

(752,514) Eliminated on disposal on Eliminated (262,946) (448,790) (29,188) (11,522) (67) - - - -

2,507,727 2,507,727 Charge for the year the for Charge 645,622 645,622 146,468 634,320.70 212,879 547,032 281,044 40,361 - -

18,230,152 18,230,152 At 1 January 2016 January 1 At 3,858,817 3,858,817 965,840 7,622,646 2,010,516 2,257,940 883,176 631,217 - -

Annual Report and Consolidated

Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000

ments Buildings Land & Safes & Progress ment vehicles SWIFT & Total

Strongroom Strongroom - improve Work In In Work - Equip Motor POS ATM,

Fixtures, Fixtures, Leasehold Equipment, Equipment, Office Office

Furniture, Furniture, Computer Computer Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited - - - Total (351,603) (334,436) (323,256) (797,189) (748,095) Ushs’000 3,207,134 2,810,295 4,710,717 1,065,718 (3,312,789) 27,327,761 15,737,487 18,224,527 29,848,856 29,848,856 30,767,218 ------65,100 Work In Work 805,366 Progress (781,237) Ushs’000 1,756,118 1,039,981 1,039,981 3,864,486 (4,099,101) ------ment Office Equip - 69,264 547,227 547,292 234,706 630,149 (276,477) Ushs’000 4,820,925 3,311,557 3,858,817 5,437,416 5,437,416 6,025,794 ------Motor 81,464 vehicles 234,680 965,840 831,203 (350,197) (321,850) (474,231) Ushs’000 1,574,168 1,053,010 1,223,971 1,223,971 - - - - - 6,539 (1,406) (1,406) 31,459 (29,208) 717,836 247,347 & SWIFT Ushs’000 Computer ATM, POS ATM, 7,965,232 6,609,226 1,009,168 7,616,988 8,713,121 8,713,120 8,937,799 Equipment, ------99,652 32,987 & Safes (17,203) 219,776 238,533 118,404 Fixtures, Fixtures, Ushs’000 Furniture, 2,741,031 1,790,739 2,010,516 2,873,670 2,873,670 3,213,404 Strongroom Strongroom ) ------(69) hold ments Lease - 86,301 44,182 31,220 530,833 313,092 - improve Ushs’000 4,307,276 1,727,107 2,257,940 4,706,668 4,706,668 4,782,000 continue d ------657,660 225,516 883,176 (748,095) Ushs’000 Buildings 4,807,377 4,807,377 4,807,377 1,065,718 5,125,000 ------TE M ENTS ( Land 43,029 588,188 631,217 Ushs’000 1,046,652 1,046,652 1,046,652 1,046,652 NCI AL ST A IN A Bank COST or VALUATION At 1 January 2015 ACCUMULATED DEPRECIATION ACCUMULATED At 1 January 2015 Additions Charge for the year Disposals Eliminated on disposal Transfer from WIP (Note 26) from Transfer Elimination of accummulated depreciation Elimination of accummulated depreciation Increase on revaluation Increase At 31 December 2015 At 31 December 2015 At 1 January 2016 Additions Disposals Transfer from WIP (Note 26) from Transfer Elimination of accumulated depreciation Increase on revaluation Increase At 31 December 2016 TO T H E F NOTES (continued) Property25. and equipment

Orient Bank Limited Annual Report and Consolidated 92 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities

The land relates to land on plot 6 and 6A Kampala Road and Arua. and Road Kampala 6A and 6 plot on land to relates land The

Work in progress (WIP) relates to the following projects prepaid cards, master card and new branch capital expenditure amoing others. amoing expenditure capital branch new and card master cards, prepaid projects following the to relates (WIP) progress in Work

December 2016 is Ushs 1.065 billion. The revaluation surplus is not distributable to the shareholders. the to distributable not is surplus revaluation The billion. 1.065 Ushs is 2016 December

At 31 December 2015 December 31 At 11,624,362 11,624,362 1,039,981 1,578,600 258,131 1,096,131 863,154 2,448,728 3,924,201 415,435

At 31 December 2016 December 31 At 11,538,262 11,538,262 805,366 1,784,301 167,685 718,334 1,001,532 1,977,095 4,708,875 375,074

4,708,875 4,708,875 At valuation At ------4,708,875 -

6,829,387 6,829,387 At cost At 375,074 375,074 805,366 805,366 1,784,301 167,685 718,334 1,001,532 1,977,095 -

NET CARRYING AMOUNT CARRYING NET

At 31 December 2016 December 31 At 4,241,493 4,241,493 663,518 8,219,464 2,211,872 2,804,905 416,125 671,578 19,228,955 19,228,955 -

(748,095) depreciation (748,095) ------

Elimination of accummulated accummulated of Elimination

(752,514) Eliminated on disposal on Eliminated (262,946) (448,790) (29,188) (11,522) (67) - - - -

2,505,071 2,505,071 Charge for the year the for Charge 645,622 645,622 146,468 631,664 212,879 547,032 281,044 40,361 - -

18,224,495 18,224,495 At 1 January 2016 January 1 At 3,858,817 3,858,817 965,840 7,616,988 2,010,516 2,257,940 883,176 631,217 - -

Annual Report and Consolidated

Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000

Bank

ments Buildings Land & Safes & Progress ment vehicles SWIFT & Total

Strongroom Strongroom - improve Work In In Work - Equip Motor POS ATM,

Fixtures, Fixtures, hold Equipment, Equipment, Office Office

Furniture, Furniture, - Lease Computer Computer Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued) 25. Property and equipment (continued)

Revaluation of buildings Management determined that the buildings in Jinja constitute a separate class of property, plant and equipment, based on the nature, characteristics and risks of the property.

Fair value of the properties was determined using the depreciated replacement cost method. The valuation have been performed by a valuer and are based on proprietary databases of prices of transactions for properties of similar nature, location and condition. As at 2 March 2016, the properties’ fair values of Ushs 1,425 million are based on valuations performed by Re/max Ltd. A gain from the revaluation of the buildings in Jinja of Ushs. 1,065 million in 2016 was recognised in other comprehensive income.

Significant unobservable inputs Significant increases (decreases) in estimated value in isolation would result in a significantly higher (lower) fair value on a linear basis. The fair value measurements have been categorised in level 3 of the fair value hierarchy.

Significant unobservable input data: Price per acre: USD 600,000 Reconciliation of the carrying amount Ushs’000 Carrying amount as at 1 January 2016 3,924,201 Depreciation for the year (281,044) Level 3 revaluation gain 1,065,718 Carrying amount and fair value as at 31 December 2016 4,708,875

If the buildings were measured using the cost method, the carrying amounts would be as follows: 2016 2015 Ushs ‘000 Ushs ‘000 Buildings(cost) 3,318,264 3,318,264 Accumulated depreciation (3,176,761) (2,951,245) Net carrying amount 141,503 367,019

2016 2015 26. Intangible assets Ushs ‘000 Ushs ‘000 Group and Bank Cost At 1 January 10,332,711 8,942,000 Additions 216,377 1,056,275 Transfer from work in progress (Refer to note 25) 3,311,721 334,436 At 31 December 2015 13,860,809 10,332,711 Accumulated amortisation At 1 January 7,281,061 4,845,201 Amortisation charge 2,661,458 2,435,860 At 31 December 2016 9,942,519 7,281,061 Net carrying amount 3,918,290 3,051,650 The transfer from work in progress in Property, Plant and Equpiment (Note 25) is Ushs 3,312 million whereas the transfer above is Ushs 3,311 million. The difference of Ushs 1.068 million has been expensed as it was not a capital item.

Orient Bank Limited Annual Report and Consolidated 94 Financial Statements For the year ended 31 December 2016

OVERVIEW GOVERNANCE FINANCIAL STATEMENTS

- 879 December 31 at As

Charged/credited to profit or loss or profit to Charged/credited - 879

At 1 January 2016 January 1 At - -

- - ...Think Possibilities

b) Deffered income tax liability tax income Deffered b) Accelerated tax depreciation tax Accelerated

Group Ushs ‘000 Ushs Ushs ‘000 Ushs

2016 2015

At 31 December 2015 December 31 At (21,945,634) - 738,948 (20,742,949) (1,468,316) (473,317)

- - Charged/credited to other comprehensive income comprehensive other to Charged/credited ------

(3,776,957) Charged/credited to profit to Charged/credited - - - (2,089,152) (1,056,411) (631,394)

(18,167,677) At 1 January 2015 January 1 At - 738,948 (18,653,797) (411,905) 158,077

At 31 December 2016 December 31 At (22,791,061) 100,867 993,142 (22,211,544) (1,066,017) (607,510)

319,715 Charged/credited to other comprehensive income comprehensive other to Charged/credited - - 319,715 - - -

(65,521) Charged to equity to Charged - - (65,521) - - -

832,141 832,141 Prior year deferred tax adjustment tax deferred year Prior - - - (0) 707,448 124,693

(1,931,762) Charged/credited to profit to Charged/credited 100,867 100,867 - (1,468,595) (305,149) (258,885)

(21,945,634) At 1 January 2016 January 1 At - - 738,948 (20,742,949) (1,468,316) (473,317)

Bank

At 31 December 2015 December 31 At (21,944,698) - 739,884 (20,742,949) (1,468,316) (473,317)

- - Charged/credited to other comprehensive income comprehensive other to Charged/credited ------

(3,776,957) Charged/credited to profit to Charged/credited (1,056,411) (1,056,411) (631,394) - - - (2,089,152)

(18,167,741) At 1 January 2015 January 1 At (18,653,797) (411,905) 158,077 739,884 739,884 -

At 31 December 2016 December 31 At (1,066,017) (607,509) (22,211,544) (22,791,061) 100,867 993,142

319,715 319,715 Charged/credited to other comprehensive income comprehensive other to Charged/credited - - - - 319,715 319,715 - - -

(65,521) Charged to equity to Charged - - (65,521) - - -

832,141 832,141 Prior year deferred tax adjustment tax deferred year Prior 124,693 124,693 707,448 707,448 (0) (0) - - -

(1,931,762) Charged/credited to profit to Charged/credited (258,885) (1,468,595) (305,149) 100,867 100,867 -

(21,945,634) At 1 January 2016 January 1 At (1,468,316) (473,317) (20,742,949) 738,948 738,948 - -

Shs’000 Shs’000 Shs’000 Shs’000 Shs’000 Shs’000

Annual Report and Consolidated a) Deffered income tax asset tax income Deffered a)

Total investments surplus Losses Tax impairment depreciation

financial financial revaluation on loan for Charges tax tax

Group Derivative Derivative tax Deferred Accelerated

Deferred income tax is calculated using the enacted income tax rate of 30% (2014: 30%). The movement on the deferred income tax account is as follows: as is account tax income deferred the on movement The 30%). (2014: 30% of rate tax income enacted the using calculated is tax income Deferred

ome t ome c in ed rr efe D 27. x x a Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued)

2016 2015 28. Deposits from banks Ushs ‘000 Ushs ‘000 Group and Bank Deposits due to other banks 3,613,008 4,002,164 3,613,008 4,002,164

29. Customer deposits Deposits due to customers primarily comprise savings deposits, amounts payable on demand, and term deposits. 2016 2015 Ushs ‘000 Ushs ‘000 Group Demand deposits 202,021,598 227,705,328 Time deposits 138,842,268 135,198,539 Savings accounts 82,384,377 77,468,775 423,248,243 440,372,642 Private enterprises and individuals 412,252,216 408,665,404 Government and parastatals 10,996,027 31,707,239 423,248,243 440,372,643 Bank Demand deposits 202,197,895 227,759,448 Time deposits 139,042,268 135,298,539 Savings accounts 82,384,377 77,468,775 423,624,540 440,526,762 Segment analysis Corporate 116,878,984 158,828,846 Retail 214,601,015 200,249,010 SME 92,144,541 81,448,906 423,624,540 440,526,762 Private enterprises and individuals 412,628,513 408,819,525 Government and parastatals 10,996,027 31,707,237 423,624,540 440,526,762

30. Refinance loans 2016 2015 Group and Bank Ushs ‘000 Ushs ‘000 APEX III/Agricultural Credit Facility (ACF) Loans 120,870 104,167 120,870 104,167 The refinance loan with Bank of Uganda and is denominated in Uganda Shillings (Ushs) and are unsecured. They attract interest of 10% and mature in June 2018.

Orient Bank Limited Annual Report and Consolidated 96 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - ‘000 ...Think Possibilities 2015 2015 76.50 76.50 Millions Ushs ‘000 2,555,148 2,540,979 10,774,969 13,330,117 10,737,691 13,278,670 96,750,000 96,750,000 76,500,000 76,500,000 shares Ushs shares Total value of Total 97 2016 2016 Value Value 20.25 96.75 76.50 1,000 1,000 1,000 1,000 Millions per share Ushs ‘000 3,902,408 3,896,802 15,318,779 19,221,187 15,250,221 19,147,023 96,750 96,750 76,500 76,500 Number of & fully paid (thousands) shares issued shares al Annual Report and Consolidated

Increase in shares Increase As at 31 December 2016 At 1 January 2016 Number of shares 2015 At 1 January 2015 and December 2015 2016 At 1 January 2016 and December 2016 32. Issued capit Bank and accruals Provisions Group and accruals Provisions Other Total Other Total At 31 December 2016 was 96.75 million (2015: 76.5 million) with a par paid up at year end shares The total number of ordinary authorised shares The total number of ordinary (2015: Ushs 1,000 per share). value of Ushs 1,000 per share for issue is 100 million. r liabilities 31. Othe The other liabilities mentioned below relates to margins deductions payable among others. accounts and statutory held for off balancesheet items, transit liability accounts cash collateral rate. They are interest liability accounts do not attract any The margin and transit sheet items. for the off balance Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued) 33. Revaluation reserve The revaluation reserve shows the effects from the revaluation of buildings after deduction of deferred income taxes. Changes in the revaluation surplus may be transfered to retained earnings in the subsequent periods as the asset is used or when it is derecognised. The revaluation reserve relates to surplus on revalued property and is not available for distribution to shareholders. 2016 2015 Ushs ‘000 Ushs ‘000 At start of year 2,601,106 2,562,073 Transfer of excess depreciation net of tax (230,949) 39,033 Increase in revaluation surplus 746,003 - At end of year 3,116,160 2,601,106 34. Credit risk reserve The statutory credit risk reserve represents an appropriation of retained earnings to comply with the Financial Institutions Act, 2004. The balance in the reserve represents the extent to which provisions for loan losses determined in accordance with the Financial Institutions Act, 2004 exceed amounts determined in accordance with IFRS. The reserve is not distributable. Below is the reconciliation of the statutory credit risk reserve per the Bank of Uganda guidelines and per IFRS: 2016 2015 Ushs ‘000 Ushs ‘000 Provisions as per Bank of Uganda guidelines Specific provisions 2,944,341 2,172,887 General Provisions 3,357,070 2,761,323 6,301,411 4,934,210 Provisions as per IFRS guidelines Individual impairment 790,987 1,372,676 Collective impairment 2,527,987 3,336,436 3,318,974 4,709,112 Statutory credit risk reserve 2,982,437 225,098

35. Dividends payable The directors do not recommend the payment of dividends for the year (2015: Nil).

36. Commitments and contingent liabilities The Bank is a litigant in several cases which arise from normal day to day banking.

The directors have carried out an assessment of all the cases outstanding as at 31 December 2016 - supported by independent professional legal advice - and where considered necessary based on the merits of each case, a provision has been raised. In aggregate the total provisions amounting to Shs 2,098 million (2015: Shs 1,250 million) has been made. Below is the schedule of movement in the legal provision:

Orient Bank Limited Annual Report and Consolidated 98 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS - ...Think Possibilities 2015 2015 2015 13,905 64,144 853,609 803,111 154,121 352,301 668,168 387,051 916,344 (406,244) Ushs ‘000 Ushs ‘000 Ushs ‘000 1,250,476 5,644,577 1,055,219 2,537,291 24,594,216 45,175,340 47,839,019 120,145,866 99 2016 2016 2016 11,436 70,293 376,297 549,779 776,905 438,618 336,224 (950,570) Ushs ‘000 Ushs ‘000 Ushs ‘000 1,250,476 1,797,819 2,097,725 5,496,220 1,215,523 1,036,369 2,783,527 17,685,465 49,929,030 52,522,033 123,256,279 ty disclosures ar Annual Report and Consolidated

) ted-p continued Opening balance in provision Increase adjustments) (payments and in provision Decrease Closing balance rise to losses above amounts of pending legal cases will not give believe that the resolution The directors provided. already Salaries and short-term benefits Directors’ remuneration Directors’ fees Directors’ c) Key management compensation-Orient Leadership Team Deposits from Equity Stock Brokers Ltd Equity Stock Brokers Deposits from rate for deposits is 4.4% (2015: 4.2%). The effective interest b) Related party transactions Interest: parties/directors paid to related Interest Ltd paid to Equity Stock Brokers Interest Other emoluments Defined contribution benefits a) Related party balances and shareholders directors Deposits from 37. Rela as follows: end were parties as at the year and balances with related Transactions Name of parent: (c) Loan commitments, guarantee and other financial facilities (c) Loan commitments, guarantee guarantees conducts business involving acceptances, letters of credit, In common with other banks, the Bank and performance bonds. The majority of these facilities parties. are offset by corresponding obligations third of Loan commitments Performance Bonds Guarantees contracts currency Foreign (b) Capital commitments million). of Shs 805 million (2015: Shs 1,033 the Bank had capital commitments At 31 December 2016, abilities contingent li and 36. Commitments ( Documentary and letters of credit Total Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited NOTES TO THE FINANCIAL STATEMENTS (continued)

38. Prior year adjustments The following 2015 items have been restated;

2015 2015 Previously Restated stated Variance Note Ushs ‘000 Ushs ‘000 Ushs ‘000 Group Statement of financial position Assets Land a 1,046,652 15,100,000 (14,053,348) Property, Plant and Equipment b 11,629,949 11,214,515 415,435 Capital and reserves Revaluation reserve c 2,601,106 12,768,567 (10,167,461) Retained earnings d 1,497,897 1,517,471 (19,574) Statement of changes in equity Revaluation reserve c 2,601,106 12,768,567 (10,167,461) Retained earnings d 1,497,897 1,517,471 (19,574)

Bank Statement of financial position Assets Land a 1,046,652 15,100,000 (14,053,348) Property, Plant and Equipment b 11,624,362 11,208,927 415,435 Capital and reserves Revaluation reserve c 2,601,106 12,768,567 (10,167,461) Retained earnings d 1,369,366 5,746,424 (4,377,057) Statement of changes in equity Revaluation reserve c 2,601,106 12,768,567 (10,167,461) Retained earnings d 1,369,366 5,746,424 (4,377,057) Statement of comprehensive income Depreciation and amortisation e 2,810,295 2,790,721 19,574

Orient Bank Limited Annual Report and Consolidated 100 Financial Statements For the year ended 31 December 2016 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 101 Annual Report and Consolidated

Land and a revaluation the land was revalued year, bank is to carry land at cost. In the prior (a) The policy of the policy. bank’s the with line in not was which statements, financial the in passed billion 14.05 Ushs of surplus the recognition to reverse in order of this error, a correction to 14.05 billion relates The adjustment of Ushs surplus. of the revaluation Plant and Equipment Property, Equipment. and plant property, to land of reclassification a to relates million 415 Ushs of adjustment The (b) booked This as was a previously separate note in the financial statements butreclassified has to now been plant and equipment. property, Revaluation reserve surplus revaluation the reverse to an error of the correction to relates 10.1 billion (c) The adjustment of Ushs cost. at than rather model revaluation a on recognised erroneously being land the of result a as tax of net Refer to note (a). Retained earnings the tax on the revaluation to reverse of an error to a correction (d) The adjustment of Ushs 4.4 billion relates model rather than at cost. (Refer on a revaluation recognised being erroneously of the land surplus as a result (Refer to note recognised of amortisation that had not been previously to note (a)) and also the recognition (e). and amortisation Depreciation recorded. that was not previously to amortisation of property relates (e) The adjustment of Ushs 19 million applied appropriately was policy accounting the as 2015, to prior periods the to change no been has There presented. statement of financial position has been no third a result, periods. As in those previous Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited

OVERVIEW GOVERNANCE FINANCIAL STATEMENTS ...Think Possibilities 103 , ORIENT WITH THE CURRENT BUSINESS ACCOUNT control you stay in finances of your business and simple with affordable, banking straightforward services Annual Report and Consolidated

Financial Statements For the year ended 31 December 2016 the year For Statements Financial Orient BankOrient Limited Orient Bank Limited

Orient Plaza, No. 14 Kampala Road P. O. Box 3072 Kampala - Uganda Tel: +256 417 719100 Fax: +256 414 348039 [email protected] www.orient-bank.com