29. Leases

Bank is a contractual party of leasing agreements related to such base assets as:

• property,
• vehicles,
• land, including perpetual usufruct right to land,
• cash deposit machines,
• equipment,
• IT equipment.

The leasing period of vehicles equals 1 to 5 years. Leasing agreements contain extension options. In respect of vehicles, the Bank concludes also leaseback agreements.

The Bank is also a party to real estate leasing agreements. The contracts are concluded for both a definite period of 1 to 30 years and indefinite period. In the case of contracts concluded for an indefinite period, the Bank determines the leasing period based on the notice period. The agreements provide for variable leasing fees depending on the index (e.g. CSO, HICP).

The Bank has also land lease agreements concluded for an indefinite period, and perpetual usufruct rights for land received for the period of 40 to 100 years. Lease payments are indexed in accordance with the land management act.

Lease contracts under which substantially all the risk and rewards of ownership are transferred to the lessee are classified as finance leases. The statement of financial position includes the value of receivables equal to the net leasing investment. The revenue recognition from finance lease agreements reflects the constant periodic rate of return on the net leasing investment made by the Bank under finance leases.

The Bank does not offer operational leasing products, i.e. those in which substantially all the risks and rewards of ownership are not transferred to the lessee.