Annual Report 2019

Central Bank of the Republic of Armenia Notes to the 2019 consolidated financial statements 25. Management of capital (continued) The general reserve is formed according to the Law and cannot be distributed. General reserve is formed to cover general risks (potential losses) arising as a result of banking operations. Promissory Note issued by the Government represents a contribution made by the Government by the way of issuing a non-interest bearing on demand promissory note in the case when the losses in the result of the financial year in the consolidated financial statements of the Group exceed the aggregate amount of its reserves. As at 31 December 2019 and 31 December 2018 carrying amount of a non-interest bearing on-demand promissory note issued by the Government amounts to AMD 73,810,843 thousand. Revaluation reserve for financial assets measured at fair value through other comprehensive income in the amount of AMD 2,422,299 thousand (positive effect) as at 31 December 2019 (31 December 2018: AMD 1,838,897 thousand (positive effect) represents difference between the fair value of the Group's financial assets measured at fair value through other comprehensive income as at the reporting date and their fair value at initial recognition. 26. Commitments Capital commitments The capital commitments outstanding at 31 December 2019 related to the Group's development of software amount to AMD 488,542 thousand (31 December 2018: AMD 338,420 thousand). Litigation The Group management is unaware of any actual, pending or threatened significant claims against the Group. 27. Related party transactions Transactions with members of the key management Amount of the key management remuneration included into "Employee compensation, staff training and related payments" line (refer to Note 11): In thousands of Armenian Drams Key management including the Board members Total 2019 2018 319,776 319,776 329,949 329,949 Total amount of loans issued to the members of the key management outstanding as at 31 December 2019 is AMD 173,288 thousand (31 December 2018: AMD 183,833 thousand). Total amount of deposits placed in the Bank by the members of the key management outstanding as at 31 December 2019 is AMD 194,873 thousand (31 December 2018: AMD 261,940 thousand). During the year ended 31 December 2019 the Group recognized interest expenses in amount of AMD 25,540 thousand and interest income in amount of AMD 5,790 thousand from the transactions with the key management (31 December 2018: 29,216 AMD thousand and 4,513 AMD thousand). In accordance with the Bank's internal regulations, loans cannot be provided to the Bank's employees who have deposits with the Bank. 36

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