Financial statements for Q2 2024

GFH Financial Group B.S.C
12 August 2024
 

 

 

 

 

GFH FINANCIAL GROUP BSC

 

CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION

 

30 June 2024


 

 

 

    Commercial registration                     :     44136 (registered with Central Bank of Bahrain

                                                                  as an Islamic wholesale Bank)

 

    Registered Office                              :     2nd Floor, Harbor House

                                                                  Building Number 1436

                                                                  Block: 346, Road: 4626                              

                                                                  Manama, Kingdom of Bahrain

                                                                  Telephone +973 17538538

 

    Directors                                          :     Abdulmohsen Rashed Alrashed, Chairman (from March 2024)

                                                                  Ghazi Faisal Ebrahim Alhajeri, Vice Chairman

                                                                  Hisham Ahmed Alrayes                               

                                                                  Ali Murad   

                                                                  Darwish Al Ketbi                             

                                                                  Fawaz Talal Al Tamimi

                                                                  Rashid Nasser Al Kaabi

                                                                  Yusuf Abdulla Taqi (till March 2024)

                                                                  Edris Mohd Rafi Mohd Saeed Al-Rafi (till March 2024)

                                                                  Abdulaziz Abdulhamid Albassam (from March 2024)             Abdulla Jehad Alzain (from March 2024)

                                                                  H.H Shaikha Minwa Bint Ali Bin Khalifa Al Khalifa (from March                                                                                   2024)

                                                                 

 

    Chief Executive Officer                     :     Hisham Ahmed Alrayes

                                                           

    Auditors                                           :     KPMG Fakhro


CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

for the six months ended 30 June 2024   

 

 

 

CONTENTS                                                                                                                  Page

 

 

Independent auditors' report on review of condensed consolidated interim financial

information                                                                                                                         1

                                                                                                               

Condensed consolidated interim financial information

Condensed consolidated statement of financial position                                                   2

Condensed consolidated statement of income                                                                  3

Condensed consolidated statement of total comprehensive income                                 4

Condensed consolidated statement of income and attribution related to quasi-equity      5

Condensed consolidated statement of changes in owners' equity                                    6-7

Condensed consolidated statement of cash flows                                                              8

Condensed consolidated statement of changes in off-balance-sheet assets

under management                                                                                                             9

Notes to the condensed consolidated interim financial information                                  10-33

                                                                                                                                   

 

 

 


Independent auditors' report on review of condensed consolidated interim financial information

To the Board of Directors of

GFH Financial Group BSC

Kingdom of Bahrain

Introduction

We have reviewed the accompanying 30 June 2024 condensed consolidated interim financial information of GFH Financial Group BSC (the "Bank") and its subsidiaries (together the "Group"), which comprises:

 

·      the condensed consolidated statement of financial position as at 30 June 2024;

·      the condensed consolidated statement of income for the three month and six-month periods ended 30 June 2024;

·      the condensed consolidated statement of total comprehensive income for the three-month and six-month periods ended
30 June 2024;

·      the condensed consolidated statement of income and attribution related to quasi-equity for the three-month and six-month periods ended 30 June 2024;                     

·      the condensed consolidated statement of changes in owners' equity for the six-month period ended
30 June 2024;

·      the condensed consolidated statement of cash flows for the six-month period ended 30 June 2024;

·      the condensed consolidated statement of changes in off-balance-sheet assets under management for the six-month period ended 30 June 2024; and

·      notes to the condensed consolidated interim financial information.

 

The Board of Directors of the Bank is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with FAS 41, "Interim Financial Reporting". Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with Auditing standards for Islamic Financial Institutions and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying 30 June 2024 condensed consolidated interim financial information is not prepared, in all material respects, in accordance with FAS 41, "Interim Financial Reporting".

 

 

 

12 August 2024


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2024                                                                                                                         US$ 000's

 


Note

30 June

2024


31 December 2023


30 June

2023



(reviewed)


(audited)


(reviewed)

ASSETS







Cash and bank balances


   290,253   


376,884


398,578

Treasury portfolio

8

   4,768,073   


5,135,032


4,944,127

Financing contracts

9

  1,795,753  


1,544,810


1,535,395  

Real estate investment

10

          1,244,496   


1,371,932


1,320,989

Co-investments

11

  278,371  


254,610


169,471

Proprietary investments

12

1,183,067  


 1,044,727


1,033,743

Receivables and other assets

13

   1,046,358   


825,331


726,535  

Property and equipment


   282,243   


229,534


207,223

Assets held for sale


-


338,619


-

 

TOTAL ASSETS

 

10,888,614  

 

11,121,479


10,336,061

 







LIABILITIES







Clients' funds


  148,596  


206,222


151,190

Placements from financial institutions


   1,939,146   


2,323,217


2,959,023

Placements from non-financial institutions and individuals


  1,183,290  


960,050


1,182,960

Customer current accounts


  474,507  


203,697


225,831

Term financing

14

  1,981,348  


2,124,307


1,975,706

Other liabilities

15

  404,165  


548,056


630,094

Liabilities directly associated with assets held for sale


 -  


230,562


-

 

TOTAL LIABILITIES


6,131,052    


6,596,111


7,124,804

 

 






QUASI EQUITY

16

3,606,931   


3,451,006


2,159,380

 

OWNERS' EQUITY







Share capital


1,015,637


1,015,637


1,015,637

Treasury shares


(85,705)


(125,525)


(123,293)

Statutory reserve


47,518


47,518


36,995

Investment fair value reserve


(39,270)


(46,103)


(55,527)

Cash flow hedge reserve


-


(2,135)


-

Other reserve


(16,020)


(13,612)


-

Retained earnings


41,821    


105,831


90,860

Share grant reserve


5,440


7,930


8,530

Total equity attributable to shareholders of the Bank

 

969,421     


989,541


973,202

Non-controlling interests


181,210   


84,821


78,675

 

TOTAL OWNERS' EQUITY

 

1,150,631     


1,074,362


1,051,877

TOTAL LIABILITIES, QUASI EQUITY AND OWNERS' EQUITY

 

10,888,614      


11,121,479


10,336,061

The Board of Directors approved the condensed consolidated interim financial information on 12 August 2024 and signed on its behalf by:

 

 

 

 

Abdulmohsen Rashed Alrashed                                                                            Hisham Alrayes

Chairman                                                                                                              Chief Executive Officer & Board member

 

The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

for the six months period ended 30 June 2024                                                                              US$ 000's                     

 

 



Six months ended

 

Three months ended


Note

 

 

30 June

      2024

(reviewed)

 

30 June

2023

(reviewed)

 

 

30 June

      2024

(reviewed)

 

30 June

2023

(reviewed)

 

Investment banking







Deal related income


59,902

80,890


26,670

38,726

Asset management


28,226

9,627


15,300

6,704



88,128

90,517

 

41,970

45,430

Commercial banking







Income from financing


 62,394

53,704


 31,187

 26,485

Treasury and investment income


 49,293

45,464


 23,135

 19,951

Fee and other income


 15,463

14,629


 7,522

 9,161

Commercial banking finance cost


(54,607)

(45,170)


(28,060)

 (26,592)



72,543

68,627


33,784

29,005

Treasury and Proprietary Investments







Finance and treasury portfolio income, net


 89,070

 121,990


 48,487

 64,308

Direct investment income, net


 79,149

 4,152


 19,531

 1,097

Income from co-investments


 14,696

 21,629


 7,883

 13,933

Share of profit from equity-accounted investees


 12,589

 17,244


 5,556

 10,426

Income from sale of assets


 46,850

 5,713


 36,727

 5,641

Leasing and operating income


 14,147

 8,877


 9,275

 4,447

Other income


 1,713

 2,340


 832

 390

Finance expenses - Repo and FI


 (86,655)

 (124,875)


 (34,788)

 (63,518)



171,559

 57,070


93,503

36,724

Total income


332,230

216,214


169,257

111,159








Finance expense - term financing and others


   33,448  

 31,359


 19,666

 10,598

Impairment allowances, net

17

  18,605 

 6,952


 4,819

 6,316

Other expenses


 111,814

 78,266


 50,202

 37,166

Total expenses


163,867

116,577


74,687

54,080








Profit for the period before attribution to quasi equity


168,363

99,637


94,570

57,079

Less: Net profit attributable to quasi-equity                                  


 (100,466)

  (42,448)


(57,016)

(24,328)

Profit for the period


67,897

57,189


37,554

32,751

 

Profit attributable to:






Shareholders of the Bank

 60,747

54,616


 33,612

30,609

Non-controlling interests

 7,150

2,573


 3,942

2,142

 

67,897

57,189


37,554

32,751

 






Earnings per share






Basic and diluted earnings per share (US cents)                 18

1.71

1.55


0.93

0.86

 

 

 

 

 

 

 

Abdulmohsen Rashed Alrashed                                                                                  Hisham Alrayes

Chairman                                                                                                                    Chief Executive Officer & Board member

 

The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.



 

CONDESNED CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

for the six months period ended 30 June 2024                                                                             US$ 000's                

 



Six months ended

 

Three months ended



30 June 2024

30 June 2023

 

30 June 2024

30 June 2023



(reviewed)

(reviewed)

 

(reviewed)

(reviewed)

Profit for the period


67,897

57,189


37,554

32,751








Other comprehensive income (OCI)







Items that may subsequently be classified to income statement







Fair value changes on debt investments carried at fair value through OCI


6,013    

2,311


3,035

(3,092)

Fair value changes on equity investments carried at fair value through OCI


(3,977)

(5,122)


(5,545)

(22)

Attributable to quasi-equity                   


(290)

-


(427)

-

Total other comprehensive income for the period


1,746

(2,811)


(2,937)

(3,114)

Total comprehensive income

 

69,643

54,378

 

34,617

29,637

 

 

 


 



Total comprehensive income attributable to:







Shareholders of the Bank


67,307

52,284


31,405

27,707

Non-controlling interests


2,336 

2,094

 

3,212

1,930



69,643

54,378

 

34,617

29,637

 

 

 


 

The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF INCOME AND ATTRIBUTION RELATED TO QUASI-EQUITY

For the six months period ended 30 June 2024                                                                            US$ 000's                

 



Six months ended

 

Three months ended



30 June

2024

30 June 2023

 

30 June 2024

30 June

2023



(reviewed)

(reviewed)

 

(reviewed)

(reviewed)

Net operating income attribution to quasi equity


168,363

99,637

 

94,570

57,079

Adjusted for:







Less: income not attributable to quasi-equity


(152,463)  

(184,363)


(76,707)

(115,694)

Add: Profit expense on due to banks and non-banks


60,944   

52,223  


30,496

28,939

Add:  expenses not attributable to quasi-equity


157,952  

152,886  


72,335

90,389

Less: institution's share of income for its own/ share of investments


(79,968)  

(55,428)


(38,944)

(25,846)

Less: allowance for impairment allowances attributable to quasi-equity


5,570   

(9,610)


3,289

(9,597)

Total income available for quasi-equity holders


160,398   

55,345  


85,039

25,270

Profit equalization reserve - net movement


 

-

-


-

-

Total income attributable to quasi-equity holders (adjusted for reserves)


160,398

55,345  


85,039

25,270

Less: Mudarib's share


(5,074)  

(8,375)


(1,850)

(942)

Less: Wakala fees


(54,858)  

(4,522)


(26,173)

-

Net income attributable to quasi-equity

 

100,466   

42,448  

 

57,016

24,328

Investment risk reserve -net movement


-

-


-

-








Profit distributable to quasi-equity

 

100,466  

42,448

 

57,016

24,328

Other comprehensive income that may subsequently be classified to statement of income


290   

-


427

-

Total comprehensive income - attributable to quasi-equity


100,756   

42,448


57,443

24,328

Add: Other comprehensive income not subject to immediate distribution


(290)

-


(427)

-

Net profit attributable to quasi-equity


100,466  

42,448


57,016

24,328

 

 


 

The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY                                                                                                                                                                                                                                                            

for the six months period ended 30 June 2024                                                                                                                                                                                                                                                                                                              US$ 000's

 

 

 

 

Attributable to shareholders of the Bank

 

 

Total owners' equity

30 June 2024 (reviewed)

Share capital

 Treasury shares

 Statutory reserve

 

 

Cashflow hedge reserve

 

 

Other reserve

Investment fair value reserve

Retained earnings

Share grant reserve

Total

Non-Controlling Interests (NCI)





 

 

 






Balance at 1 January 2024              

1,015,637

(125,525)

47,518

(2,135)

(13,612)

(46,103)

105,831

7,930

989,541

84,821

1,074,362

Profit for the period

-

-

-

-

-

-

60,747

-

60,747

7,150

 67,897

Other comprehensive income

-

-

-

2,135

(2,408)

6,833

-

-

6,560

(4,814)

1,746

Total comprehensive income for the period

-

-

-

2,135

(2,408)

6,833

60,747

-

67,307

2,336

 69,643


 

 

 









Issue of shares under incentive scheme (net)

-

-

-

-

-

-

-

(2,490)

(2,490)

-

(2,490)

Transfer to zakah and charity fund

-

-

-

-

-

-

(7,037)

-

(7,037)

-

(7,037)

Dividends declared for 2023

-

-

-

-

-

-

(61,000)

-

(61,000)

-

(61,000)

Sale of treasury shares

-

174,422

-

-

-

-

(20,941)

-

153,481

-

153,481

Purchase of treasury shares

-

(134,602)

-

-

-

-

-

-

(134,602)

-

(134,602)

 

Additional NCI without a change in control (note 1)

-

-

-

-

-

-

(35,779)

-

(35,779)

124,650

88,871

Sale of shares in subsidiary

 

-

-

-

-

-

-

-

-

-

(37,937)

(37,937)

Reduction in NCI due to additional stake in subsidiary (note 1)

-

-

-

-

-

-

-

-

-

(4,947)

(4,947)

 

Additional NCI on acquisition of subsidiary (note 23)

 -

-

-

-

-

-

-

-

-

12,287

12,287

 

Balance at 30 June 2024

1,015,637

(85,705)

47,518

-

(16,020)

(39,270)

41,821

5,440

 969,421

 181,210

 1,150,631

 

 


The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY

for the six months period ended 30 June 2024 (continued)                                                                                                                                                                                                                                                                                                        US$ 000's

 

 


Attributable to shareholders of the Bank



30 June 2023 (reviewed)

Share capital

Treasury shares

Statutory reserve

Investment fair value reserve

Retained earnings

Share grant reserve

 

 

 

Total

Non-Controlling Interests

(NCI)

Total owners' equity





 






Balance at 1 January 2023

1,015,637

(105,598)

36,995

(53,195)

95,831

6,930

996,600

74,794

1,071,394











Profit for the period

-

-

-

-

54,616

-

54,616

2,573

57,189

Other comprehensive income

-

-

-

(2,332)

-

-

(2,332)

(479)

(2,811)

Total comprehensive income for the period

-

-

-

(2,332)

54,616

-

52,284

2,094

54,378


 

 

 







Long Term Incentive Plan (LTIP)

-

-

-

-

-

1,600

1,600

-

1,600

Transfer to zakah and charity fund

-

-

-

-

(1,000)

-

(1,000)

-

(1,000)

Dividends declared for 2022

-

-

-

-

(56,261)

-

(56,261)

-

(56,261)

Purchase of treasury shares

-

(47,169)

-

-

-

-

(47,169)

-

(47,169)

Sale of treasury shares

-

29,474

-

-

(2,326)

-

27,148

-

27,148

Additional NCI without a change in control

-

-

-

-

-

-

-

5,747

5,747

Reduction in NCI due to loss of control

-

-

-

-

-

-

-

(3,960)

(3,960)

 

Balance at 30 June 2023

1,015,637

(123,293)

36,995

(55,527)

90,860

8,530

973,202

78,675

1,051,877

 


 

 

The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS-

for the six months period ended 30 June 2024                                                                     US$ 000's

 

 

30 June 2024

(reviewed)

 

30 June 2023

(reviewed)

OPERATING ACTIVITIES

 

 


Profit for the period

67,897  


57,189

Adjustments for:




Treasury and proprietary investments

 (258,214)


(181,945)

Foreign exchange loss

 2,608


2,238

Finance expense

275,176  


201,403

Impairment allowances, net

18,605  


6,952

Depreciation and amortisation

6,333  


4,299


112,405  


90,136

Changes in:




Placements with financial institutions (original maturities of more than 3 months)

68,074  


418,680

Financing assets

(145,944)


(106,914)

Receivable and other assets

(214,592)  


(142,303)

CBB Reserve and restricted bank balance

(4,974)


(8,230)

Clients' funds

(57,626)


27,890

Customer current accounts

270,810  


94,597

Placements from financial, non-financial institutions and individuals

(160,831)


(713,145)

Quasi equity

155,925


945,706

Other liabilities

(236,903)


168,750

Net cash (used in) / generated from operating activities

 

(213,656)  


775,167


 



INVESTING ACTIVITIES

 

 


Payments for purchase of equipment

(2,973)


(2,581)

Purchase of proprietary investment securities, net

-


(52,891)

Purchase of treasury portfolio, net

(8,500)


(237,445)

Cash acquired on acquisition of subsidiary

5,584


1,346

Cash paid on acquisition of subsidiary

-


(7,000)

Cash paid on acquisition of additional stake in subsidiary

(4,000)


-

Proceeds from sale of real estate

64,224


11,771

Dividends received from proprietary investments and co-investments

28,790


20,659

Payment for Purchase of real estate

 (1,208)


(12,026)

Net cash generated from /(used in) investing activities

 

81,917   


(278,167)

 

 



FINANCING ACTIVITIES

 

 


Financing liabilities, net

(75,872)


33,773

Finance expense paid

(244,051)


(153,228)

Dividends paid

(58,865)


(57,860)

Sale/(Purchase) of treasury shares, net

39,827


(17,694)

Net cash used in financing activities

 

(338,961)


(195,009)

 

 



Net (decrease) / increase in cash and cash equivalents during the period

(470,700)


301,991

Cash and cash equivalents at 1 January

1,687,727


1,041,064


 



Cash and cash equivalents at 30 June *

1,217,027


1,343,055


 




 



Cash and cash equivalents comprise:

 



Cash and balances with banks (excluding CBB reserve balance and restricted cash)

209,130


320,958

Placements with financial institutions (original maturities of 3 months or less)

1,007,897


1,022,097


 

1,217,027


1,343,055

 

* net of expected credit loss of US$ 26 thousands (30 June 2023: US$ 31 thousands).

 

The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.

 


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN OFF-BALANCE-SHEET ASSETS UNDER MANAGEMENT

for the six months period ended 30 June 2024                                                                                                                                                                                                                                                                                                                US$ 000's

 

 30 June 2024 (Reviewed)

 

Opening Balance

Additions during the period

Distribution/ NAV Movement

Income

Expenses

Group fees

Closing Balance

Real Estate

 9,142,438

 438,273

 (394,512)

 98,339

 (78,623)

 (19,716)

 9,186,199

Private Equity

 709,755

 155,500

 (168,053)

 27,586

 (19,627)

 (8,510)

  696,651  

As at 30 June 2024

 9,852,193

 593,773

 (562,565)

 125,925

 (98,250)

  (28,226)

  9,882,850  

 

The above assets under management are also funded by financing arrangements at the level of operations amounting to US$ 3.82 billion (31 December 2023: US$ 3.55 billion).

 

The Group fees is in the form of management fee, performance fee and/ or Wakala fees at the level of investment vehicles or investors.  The above amounts include the groups co-investments in these products amounting to US$ 278,371 thousand (31 Dec 2023: US$ 254,610 thousand).

 

 

 30 June 2023 (Reviewed)

Opening Balance

Additions during the period

Distribution/ NAV Movement

Income

Expenses

Group fees

Closing Balance

Real Estate

 7,132,745

 542,722

 (447,877)

 35,131

 (26,353)

 (8,777)

 7,227,591

Private Equity

 584,187

 380,854

 (323,858)

 7,864

 (7,014)

 (850)

 641,183

As at 30 June 2023

 7,716,932

 923,576

 (771,735)

 42,995

 (33,367)

 (9,627)

 7,868,774

 

The above assets under management are also funded by financing arrangements at the level of operations amounting to US$ 3.27 billion (31 December 2022: US$ 3.27 billion).

 

The Group fees is in the form of management fee, performance fee and/ or Wakala fees at the level of investment vehicles or investors.  The above amounts include the groups co-investments in these products amounting to US$ 169,471 million (31 Dec 2022: US$ 142,051 thousand).

 

 

 

 

 

 

 

The accompanying notes 1 to 23 form an integral part of the condensed consolidated interim financial information.

 


 

1    Reporting entity

 

GFH Financial Group BSC ("the Bank") was incorporated in 1999 in the Kingdom of Bahrain under Commercial Registration No. 44136 and operates under an Islamic Wholesale Investment Banking license issued by the Central Bank of Bahrain ("CBB"). The Bank's shares are listed on the Bahrain, Kuwait, Dubai and Abu Dhabi Financial Market Stock Exchanges. The Bank's sukuk certificates are listed on London Stock Exchange. The Bank's activities are regulated by the CBB. The principal activities of the Bank include investment advisory services and investment transactions which comply with Islamic rules and principles determined by the Bank's Shari'a Supervisory Board.

 

The condensed consolidated interim financial information for the six months ended 30 June 2024 comprise the financial information of GFH Financial Group BSC (GFH or the "Bank") and its subsidiaries (together referred to as "the Group"). 

 

The following are the principal subsidiaries consolidated in the condensed consolidated interim financial information.

 

Investee name

Country of incorporation

Effective ownership interests as at

30 June 2024

Activities

GFH Partners Ltd

(formally known as GFH Capital Limited)

United Arab Emirates

100%

Investment management

GFH Capital S.A.

Saudi Arabia

100%

Investment management

Al Areen Hotels W.L.L.

Kingdom of Bahrain

 

100%

Hospitality management services

Khaleeji Bank BSC ('KHALEEJI')*

57.95%

Islamic retail bank

GFH Equities BSC (c)**

76.63%

Investment management

 

*During the period, the Group's stake in KHALEEJI was diluted due to capital increase. The effective ownership as on 30 June 2024 is 57.95% (31 December 2023: 85.41%).

 

** During the period, the Group acquired additional stake in GFH Equities BSC (c) which resulted in increase in effective ownership as on 30 June 2024 to 76.63% (31 December 2023: 62.91%).

 

The Bank has other investment holding companies, SPV's and subsidiaries, which are set up to supplement the activities of the Bank and its principal subsidiaries.

      

 

2          Basis of preparation

 

The condensed consolidated interim financial information of the Group has been prepared in accordance with Financial Accounting Standard FAS 41, Interim Financial Reporting ("FAS 41") issued by the Accounting and Auditing Organisation of Islamic Financial Institutions ("AAOIFI"). In line with the requirements of AAOIFI and the Central Bank of Bahrain (CBB) rule book, for matters not covered under AAOIFI standards the group uses guidance from the relevant IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards").

 

These condensed consolidated interim financial information are reviewed and not audited. The condensed consolidated interim financial information of the Group does not contain all information and disclosures required for the annual consolidated financial statements and should be read in conjunction with the Group's audited annual consolidated financial statements for the year ended 31 December 2023. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2023.

 

 

3          Significant accounting policies

 

The accounting policies and methods of computation applied by the Group in the preparation of the condensed consolidated interim financial information are the same as those used in the preparation of the Group's last audited consolidated financial statements as at and for the year ended 31 December 2023, except those arising from certain changes due to adoption of the following standards and amendments to standards effective from 1 January 2024. The impact of adoption of these standards and amendments is set out below.

 

a.   New standards, amemdments and interpretations issued and effective for annual periods beginning on or after 1 January 2024:

 

1)   FAS 1 General Presentation and Disclosures in the Financial Statements

 

AAOIFI has issued the revised FAS 1 General Presentation and Disclosures in the Financial Statements in 2021. This standard describes and improves the overall presentation and disclosure requirements prescribed in line with the global best practices and supersedes the earlier FAS 1. It is applicable to all the Islamic Financial Institutions and other institutions following AAOIFI FAS's. This standard is effective for the financial reporting periods beginning on or after 1 January 2024 with an option to early adopt.

 

The revision of FAS 1 is in line with the modifications made to the AAOIFI conceptual framework for financial reporting. Significant changes relevant to the Group are a) Definition of Quasi-equity is introduced; b) Concept of comprehensive income has been introduced; and c) Disclosure of movement in Zakah and Charity have been relocated disclosed into the notes to the condensed consolidated financial information.

 

During the period, the Group has adopted FAS 1 revised. As a result of this adoption following changes were made to the primary statements of the Group. Below is a summary of the new primary statements:

 

Primary statements introduced

Statement of total comprehensive income

Statement of income and attribution related to quasi-equity

Statement of changes in off-balance-sheet assets under management

 

 


 

3    SIGNIFICANT ACCOUNTING POLICIES (continued)

 

New standards, amendments and interpretations issued and effective for annual periods beginning on or after 1 January 2024: (continued)

 

Primary statements discontinued

 

Statement of sources and uses of zakah and charity fund

 

As a result of the adoption of FAS 1 revised certain prior year figures have been represented and regrouped to be consistent with the current year presentation. Such grouping did not affect previously reported net profit, total assets, total liabilities and total equity of the Group. Further, the Group has elected to present statement of income and a statement of other comprehensive income as two separate statements.

 

a.   New standards, amendments, and interpretations issued but not yet effective

 

(i) FAS 45: Quasi-Equity (Including Investment Accounts)

AAOIFI has issued Financial Accounting Standard (FAS) 45 "Quasi-Equity (Including Investment Accounts)" during 2023. The objective of this standard is to establish the principles for identifying, measuring, and presenting "quasi-equity" instruments in the financial statements of Islamic Financial Institutions "IFIs".

 

The standard prescribes the principles of financial reporting to participatory investment instruments (including investment accounts) in which an IFI controls underlying assets (mostly, as working partner), on behalf of the stakeholders other than owner's equity. This standard provides the overall criteria for on-balance sheet accounting for participatory investment instruments and quasi-equity, as well as, pooling, recognition, derecognition, measurement, presentation and disclosure for quasi-equity.

 

This standard shall be effective for the financial reporting periods beginning on or after 1 January 2026 with an option to early adopt.

 

The Group does not expect any significant impact on the adoption of this standard.

 

(ii) FAS 46: Off-Balance-Sheet Assets Under Management

AAOIFI has issued Financial Accounting Standard ("FAS") 46 "Off-Balance-Sheet Assets Under Management" during 2023. The objective of this standard is to establish principles and rules for recognition, measurement, disclosure, and derecognition of off-balance-sheet assets under management, based on Shari'a and international best practices. The standard aims to improve transparency, comparability, accountability, and governance of financial reporting related to off-balance-sheet assets under management.

 

This standard is applicable to all IFIs with fiduciary responsibilities over asset(s) without control, except for the following:

• The participants' Takaful fund and / or participants' investment fund of a Takaful institution; and

• An investment fund managed by an institution, being a separate legal entity, which is subject to financial reporting in line with the requirements of the respective AAOIFI FAS.

 

This standard shall be effective for the financial reporting periods beginning on or after 1 January 2026 with an option to early adopt.

 

This standard shall be effective for the financial periods beginning on or after 1 January 2026 with an option to early adopt. This standard shall be adopted at the same time as adoption of FAS 45 "Quasi-Equity (Including Investment Accounts)".

 

The Group does not expect any significant impact on the adoption of this standard.

 

 

 

 

3    SIGNIFICANT ACCOUNTING POLICIES (continued)

 

(iii) FAS 47: Transfer of Assets Between Investment Pools

AAOIFI has issued Financial Accounting Standard ("FAS") 47 "Transfer of Assets Between Investment Pools" during 2023.  The objective of this standard is to establish guidance on the accounting treatment and disclosures for transfers of assets between investment pools that are managed by the same institution or its related parties. The standard applies to transfers of assets that are not part of a business combination, a disposal of a business, or a restructuring of an institution.

 

The standard defines an investment pool as a group of assets that are managed together to achieve a common investment objective, such as a fund, a portfolio, or a trust. The standard also defines a transfer of assets as a transaction or event that results in a change in the legal ownership or economic substance of the assets, such as a sale, a contribution, a distribution, or a reclassification.

 

The transfer of assets between investment pools should be accounted for based on the substance of the transaction and the terms and conditions of the transfer agreement. The standard classifies transfers of assets into three categories: transfers at fair value, transfers at carrying amount, and transfers at other than fair value or carrying amount. The standard also specifies the disclosure requirements for transfers of assets between investment pools.

 

This standard shall be effective for the financial periods beginning on or after 1 January 2026 with an option to early adopt.

 

The Group does not expect any significant impact on the adoption of this standard.

 

 

4          Estimates and judgements

 

Preparation of condensed consolidated interim financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The areas of significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were similar to those applied to the audited consolidated financial statements as at and for the year ended 31 December 2023.

 

 

5          Financial risk management

 

The Group's financial risk management objectives and policies are consistent with those disclosed in the audited consolidated financial statements for the year ended 31 December 2023.

 

Regulatory ratios

a.   Net stable funding Ratio (NSFR)

NSFR as a percentage is calculated as "Available stable funding" divided by "Required stable funding".

 



 

 

5         Financial risk management (continued)

 

The Consolidated NSFR calculated as per the requirements of the CBB rulebook, is as follows:                      

 

As at 30 June 2024

 

No.

Item

 No Specified Maturity

 Less than 6 months

 More than 6 months and less than one year

 Over one year

 Total weighted value

Available Stable Funding (ASF):

1

Capital:






2

Regulatory Capital

                  953,060

                       -  

                              -  

               73,471

              1,026,531

3

Other Capital Instruments

                                -  

                       -  

                              -  

                          -  

                                -  

4

Retail deposits and deposits from small business customers:






5

Stable deposits


         161,520

                   42,773

                 2,964

                  197,043

6

Less stable deposits

                                -  

     2,457,037

                734,449

            133,885

              3,006,223

7

Wholesale funding:






8

Operational deposits






9

Other Wholesale funding

                                -  

     3,650,787

            1,342,099

            873,354

              4,830,111

10

Other liabilities:






11

NSFR Shari'a-compliant hedging contract liabilities


                       -  

                              -  

                          -  


12

All other liabilities not included in the above categories

                                -  

         370,447

                              -  

               61,802

                     61,802

13

Total ASF





              9,121,709

Required Stable Funding (RSF):

14

Total NSFR high-quality liquid assets (HQLA)

        1,953,905.05

                       -  

                              -  

                          -  

                     98,293

15

Depsoits held at other financial institutions for opetational purposes






16

Performing financing and sukuk/ securities:

                                -  

     1,301,248

                              -  

        1,160,492

              1,181,605

17

Performing financial to financial institutions by level 1 HQLA

                                -  

                       -  

                         -  

                          -  

                     -  

18

Performing financing to financial institutions secured by non-level 1 HQLA and unsecured performing financing to financial institutions

                                -  

            74,928

                   77,516

        1,146,167

              1,050,465

 

 

 

 

 

 

 

5         Financial risk management (continued)

 

No.

Item

 No Specified Maturity

 Less than 6 months

 More than 6 months and less than one year

 Over one year

 Total weighted value

19

Performing financing to non- financial corporate clients, financing to retail and small business customers, and financing to sovereigns, central banks and PSEs, of which:

                                -  

         124,931

                123,120

            366,961

                  362,550

20

With a risk weight of less than or equal to 35% as per the CBB Capital Adequacy Ratio guidelines

                                -  

                       -  

                              -  

                          -  

                                -  

21

Performing residential mortgages, of which:

                                -  

                       -  

                              -  

                          -  

                                -  

22

With a risk weight of less than or equal to 35% under the CBB Capital Adequacy Ratio Guidelines

                                -  

                       -  

                              -  

                          -  

                                -  

23

Securities/sukuk that are not in default and do not qualify as HQLA, including exchange-traded equities

                                -  

         962,862

                146,125

            444,612

                  999,106

24

Other assets:






25

Physical traded commodities, including gold

                                -  




                                -  

26

Assets posted as initial margin for Shari'a-compliant hedging contracts contracts and
contributions to default funds of CCPs


                       -  

                              -  

                          -  

                                -   

27

NSFR Shari'a-compliant hedging assets


                       -  

                              -  

                          -  

                           896

28

NSFR Shari'a-compliant hedging contract liabilities before deduction of variation
margin posted


                       -  

                              -  

                          -  

                                -  

29

All other assets not included in the above categories

              3,144,346

                       -  

                              -  

                          -  

              3,144,346

30

OBS items


                       -  

                              -  

                          -  

                     74,655

31

Total RSF


     2,463,970

                346,761

        3,118,232

              6,911,916

32

NSFR(%)





132%



 

 

5         Financial risk management (continued)

 

As at 31 December 2023

 

No.

Item

No Specified Maturity

Less than 6 months

More than 6 months and less than one year

Over one year

Total weighted value

Available Stable Funding (ASF):

1

Capital:






2

Regulatory Capital

1,023,275

-

-

64,133

1,087,409

3

Other Capital Instruments

-

-

-

-

-

4

Retail deposits and deposits from small business customers:






5

Stable deposits

-

159,304

36,446

3,763

189,725

6

Less stable deposits

-

1,964,119

518,381

503,663

2,737,913

7

Wholesale funding:






8

Operational deposits

-

-

-

-

-

9

Other Wholesale funding

-

4,157,571

544,672

1,438,472

5,452,622

10

Other liabilities:






11

NSFR Shari'a-compliant hedging contract liabilities


-

-

-


12

All other liabilities not included in the above categories

-

481,509

-

36,139

36,139

13

Total ASF





9,503,808

 

Required Stable Funding (RSF):

14

Total NSFR high-quality liquid assets (HQLA)

1,761,766




97,918

15

Depsoits held at other financial institutions for opetational purposes






16

Performing financing and sukuk/ securities:


1,841,985


791,830

949,354

17

Performing financial to financial institutions by level 1 HQLA

-

-

-

-

-

18

Performing financing to financial institutions secured by non-level 1 HQLA and unsecured performing financing to financial institutions

-

19,610

934

1,041,445

895,500

19

Performing financing to non- financial corporate clients, financing to retail and small business customers, and financing to sovereigns, central banks and PSEs, of which:

-

254,059

76,796

364,685

402,473

20

With a risk weight of less than or equal to 35% as per the CBB Capital Adequacy Ratio guidelines

-

-

-

-

-

21

Performing residential mortgages, of which:

-

-

-

-

-

22

With a risk weight of less than or equal to 35% under the CBB Capital Adequacy Ratio Guidelines

-

-

-

-

-

 

 

 

 

 

 

 

 



 

 

5      FINANCIAL RISK MANAGEMENT (continued)

 

No.

Item

No Specified Maturity

Less than 6 months

More than 6 months and less than one year

Over one year

Total weighted value

23

Securities/sukuk that are not in default and do not qualify as HQLA, including exchange-traded equities

-

1,048,701

25,995

578,308

1,115,656

24

Other assets:

-

-

-

-

-

25

Physical traded commodities, including gold

-




-

26

Assets posted as initial margin for Shari'a-compliant hedging contracts contracts and
contributions to default funds of CCPs


-

-

-

-

27

NSFR Shari'a-compliant hedging assets


-

-

-

2,195

28

NSFR Shari'a-compliant hedging contract liabilities before deduction of variation
margin posted


-

-

-

-

29

All other assets not included in the above categories

2,908,175

-

-

-

2,908,175

30

OBS items


-

-

-

62,381

31

Total RSF


3,164,354

103,726

2,776,269

6,433,652

32

NSFR(%)





148%

 

 

b.      Liquidity Coverage Ratio (LCR)

LCR is computed as a ratio of Stock of High-Quality Liquid Assets (HQLA) over the Net cash outflows over the next 30 calendar days.

 


Average balance


30 June 2024

(reviewed)

31 December 2023

(audited)


 


Stock of HQLA

561,223

444,865

Net cashflows

237,299

196,313

LCR %

240%

233%




Minimum required by CBB

100%

100%

 



 

 

5          FINANCIAL RISK MANAGEMENT (continued)

 

c.   Capital Adequacy Ratio

 


30 June 2024

(reviewed)

31 December 2023

(audited)




CET 1 Capital before regulatory adjustments

1,002,368   

1,023,275

Less: regulatory adjustments

-

-




CET 1 Capital after regulatory adjustments

1,002,368   

1,023,275

AT1 Capital

9,862  

-

T 2 Capital adjustments

73,471

64,133

Regulatory Capital

1,085,701

1,087,409




Risk weighted exposure:



Credit Risk Weighted Assets

  5,328,436  

4,585,950

Market Risk Weighted Assets

  153,717  

90,135

Operational Risk Weighted Assets

  511,093  

506,408

Total Regulatory Risk Weighted Assets

5,993,246

5,182,493




Investment risk reserve (30% only)

2

2

Profit equalization reserve (30% only)

3

3

Total Adjusted Risk Weighted Exposures

                 5,993,241

5,182,488

 



Capital Adequacy Ratio (CAR)

18.12%

20.98%

Tier 1 Capital Adequacy Ratio

16.89%

19.74%

 



Minimum CAR required by CBB

12.50%

12.50%

 

 

6          Seasonality

 

Due to the inherent nature of the Group's business (investment banking, commercial banking and treasury  and proprietary), the six-months results reported in this condensed consolidated interim financial information may not represent a proportionate share of the overall annual results.   

 

 

7          Comparatives

 

Comparative figures have been regrouped to conform with the presentation for current period. Such regrouping did not affect previously reported profit for the period or total equity. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8          Treasury portfolio


30 June

2024


31 December 2023


30 June

2023

 

(reviewed)


(audited)


(reviewed)







Placements with financial institutions

1,011,100


1,458,368


1,079,143







Derivatives

At fair value through statement of income

896


2,195


3,035

 






Equity type investments






At fair value through OCI

-     Quoted sukuk

32,889


33,326


33,008

 






At fair value through statement of income



  



-     Structured notes*

 437,723


404,839


390,631

-     Quoted fund

 26,347


27,099


28,803







Debt type investments






At fair value through OCI*






-     Quoted sukuk

791,535


784,300   


805,585







At amortised cost


 

 

 

 

-     Quoted sukuk *

 2,487,772


2,447,489


2,619,503

-     Unquoted sukuk

  4,546  


3,494


3,494







Less: Impairment allowances

(24,735)


(26,078)


(19,075)


 






4,768,073   


5,135,032


4,944,127

 

* Short-term and medium-term facilities of US$ 1,727,513 thousand (31 December 2023: US$ 1,857,388 thousand) are secured by quoted sukuk of US$ 2,986,593 thousand (31 December 2023: US$ 2,762,506 thousand) and structured notes of US$ 437,723 thousand (31 December 2023: US$ 404,839 thousand).

 

 

9          Financing CONTRACTS


30 June

2024

 

31 December 2023


30 June

2023

 

(reviewed)


(audited)


(reviewed)







Murabaha*

1,290,801


1,029,324


1,016,521

Wakala

-


-


239

Mudharaba

20,862


20,564


18,652

Ijarah assets

550,890


559,200


571,112


1,862,553


1,609,088


1,606,524

Less: Impairment allowances

(66,800)


(64,278)


(71,129)








1,795,753  


1,544,810


1,535,395

 

*Murabaha financing receivables are net of deferred profits of US$ 36,247 thousands                                                           (31 December 2023: US$ 41,727 thousands).



 

 

9    Financing Contracts (continued)

 

The movement on financing contracts and impairment allowances is as follows:

 

Financing contracts

Stage 1

Stage 2

Stage 3

Total

 

 

 

 

 

Financing contracts (gross)

 1,485,710

 233,902

 142,941

 1,862,553

Expected credit loss

  (7,652)

 (10,178)

 (48,970)

 (66,800)

 

Financing contracts (net)

1,478,058

223,724

93,971

1,795,753

 

Impairment allowances

Stage 1

Stage 2

Stage 3

Total

 

 

 

 

 

At 1 January 2024

4,788

18,310

41,180

64,278

Net movement between stages

 5,372

 (7,308)

 1,936

 -  

Net charge for the period

  (2,508)

(824)

7,198

3,866

Write-offs

-

-

(1,344)

(1,344)

 

At 30 June 2024 (reviewed)

7,652

10,178

48,970  

66,800  

 

31 December 2023

Stage 1

Stage 2

Stage 3

Total

 





Financing contracts (gross)

  1,192,539  

 284,047

 132,502

  1,609,088  

Expected credit loss

 (4,788)

 (18,310)

 (41,180)

 (64,278)

 

Financing contracts (net)

  1,187,751  

 265,737

 91,322

  1,544,810  

 

Impairment allowances

Stage 1

Stage 2

Stage 3

Total

 





Balance at 1 January 2023

18,046

11,990

34,336

64,372

Net transfers

 (6,879)

 (1,920)

 8,799

 -  

Net charge for the year

 (6,379)

 8,240

 644

 2,505

Write-off

 -

 -

 (2,599)

 (2,599)

At 31 December 2023 (audited)

4,788

18,310

41,180

64,278

 

Financing assets

Stage 1

Stage 2

Stage 3

Total

 





Financing assets (gross)

1,219,642

291,391

95,491

1,606,524

Expected credit loss

(6,144)

(28,374)

(36,611)

(71,129)

 

Financing assets (net)

1,213,498

263,017

58,880

1,535,395

 

Impairment allowances

Stage 1

Stage 2

Stage 3

Total






At 1 January 2023

18,046

11,990

34,336

64,372

Net movement between stages

(5,082)

3,774

1,308

-

Net charge for the period

(6,820)

12,610

967

6,757

 

At 30 June 2023 (reviewed)

6,144

28,374

36,611

71,129

 



 

 

10         Investment in real estate


30 June

2024

 

31 December 2023


30 June

2023

 

(reviewed)


(audited)


(reviewed)

Investment Property






-     Land

 448,694


483,685


572,314

-     Building

 124,305


141,471


199,177


572,999


625,156


771,491

Development Property






-     Land

 165,727  


165,565


154,183

-     Building

 505,770  


581,211


395,315


671,497  


746,776


549,498




 




1,244,496  


1,371,932


1,320,989

 

11    Co-investments


30 June

2024

 

31 December 2023


30 June

2023

 

(reviewed)


(audited)


(reviewed)

At fair value through OCI






-     Unquoted securities

270,584


247,048


160,532







At fair value through statement of income






-     Unquoted securities

Impairment allowance

9,393

 (1,606)


9,168

(1,606)


8,939

-

 

 

 





278,371


254,610


169,471

 

 

12         Proprietary investments


30 June

2024

 

31 December 2023


30 June

2023

 

(reviewed)


(audited)


(reviewed)

Equity type investments






At fair value through statement of income






-     Unquoted securities

 9,942


2,942


2,942

-     Listed securities

 11,266


14,252


14,830


21,208


17,194


17,772

At fair value through OCI






-     Listed securities (at fair value)

 20,035


-


-

-     Equity type Sukuk

 940,382


827,012


833,051

-     Unquoted securities 

 60,598


64,045


56,999

 

1,021,015

 

891,057


890,050

 

 

 




Equity-accounted investees

142,810 

 

137,390


125,932

Impairment allowance

  (1,966)

 

(914)


(11)


1,183,067  


1,044,727


1,033,743

 



 

 

 

13    RECEIVABLES AND OTHER ASSETS

 


30 June

2024

 

31 December 2023


30 June 2023


(reviewed)

 

(audited)


(reviewed)



 




Investment banking receivables*

305,611


307,597


206,390

Receivable from equity-accounted investees

93,789  


93,318


89,844

Financing to projects, net

11,695


12,241


10,765

Receivable on sale of real estate

132,747  


16,376


21,787

Advances and deposits

 71,938  


62,416


90,321

Employee receivables

11,192  


7,443


12,195

Profit on sukuk receivable

20,232  


19,948


18,172

Lease rentals receivable

3,588


4,025


5,460

Goodwill and intangibles

70,523


45,187


30,675

Receivable from sale of investments

63,311


71,281


-

Tax receivable

8,710


7,327


6,107

Prepayments and other receivables

276,039


186,120


242,229

Less: Impairment allowance

(23,017)


(7,948)


(7,410)



 




 

 

1,046,358

 

  825,331


726,535  

 

* Subsequent to the period, the amounts due were significantly settled from subscriptions collected in  

client money accounts.

 

14   Term financing


30 June

2024

 

31 December 2023

 

30 June

2023


(reviewed)


(audited)


(reviewed)







Murabaha financing* (note 8)

1,738,485


1,880,910


1,716,001

Sukuk **

241,224


241,777


241,807

Ijarah financing

-


-


16,298

Other borrowings

1,639


1,620


1,600

 

 

 


 


 

1,981,348


2,124,307


1,975,706

*Murabaha financing comprise:

Short-term and medium-term facilities of US$ 1,727,513 thousand (31 December 2023: US$ 1,857,388 thousand) are secured by quoted sukuk of US$ 2,986,593 thousand (31 December 2023: US$ 2,762,506 thousand) and structured notes of US$ 437,723 thousand (31 December 2023: US$ 404,839 thousand).

 

** Sukuk

Represents outstanding unsecured sukuk certificates with a profit rate of 7.5% p.a. repayable by 2025. The outstanding sukuk also includes accrued profit of US$ 8,535 thousand.

 

 



 

 

15   OTHER LIABILITIES


 

 





30 June

2024

 

31 December 2023


30 June 2023

 

(reviewed)


(audited)


 (reviewed)

 






Investment banking payables*

97,676


173,297


352,981

Accounts Payables

94,423


48,724


70,523

Unclaimed dividends

4,447


2,312


3,154

Payables to equity-accounted investees

51,415


107,466


16,450

Other accrued expenses and payables

34,757


64,659


100,248

Deferred Income

10,525


32,240


16,804

Payables towards purchase of investments

56,477


63,068


25,675

Zakah and Charity Fund

12,517


6,331


6,751

Advance received from customers**

2,065


2,106


7,869

Employee related accruals

26,195


24,459


16,309

Mudaraba profit accrual

12,952


22,814


13,021

Provision for employees' leaving indemnities

716


580


309



 




 

404,165

 

548,056


630,094

 

*Represents amounts payable against assets acquired as part of investment banking deals along with payable for ongoing project related costs of the said SPVs. These payables on receipt of funds from investment banking receivables and underlying SPV's are usually settled within 12 months.

 

**Represents amount received in advance from the customers on account of real estate assets to be delivered by the Group.

 

 

16   QUASI EQUITY

 

30 June

2024

 

31 December 2023


30 June 2023

(reviewed)


(audited)


(reviewed)

   2,347,904   


2,312,153


994,540

   1,259,027   


1,138,853


1,164,840

3,606,931   

 

3,451,006


2,159,380

 

 

 

 

Financial institutions

Non-financial institutions and individuals

 

 

 

 

30 June

2024

 

31 December 2023


30 June 2023

(reviewed)


(audited)


(reviewed)

71,061


50,266


 46,416

80,321


75,310


76,711

2,506,596


2,202,334  


1,030,986

832,775


1,006,144


888,480

71,061


71,334


71,854

45,117


45,618


44,933  

 

 




3,606,931   

 

3,451,006


2,159,380

 

 

 

 

Balances with banks

CBB reserve account

Treasury portfolio

Financing contracts

Proprietary Investments

Investment in real estate

           

 

 

 

 

 

 

 

 

 

17   Impairment allowances, net

 

 

Six months ended


Three months ended

30 June 2024 (reviewed)

30 June 2023 (reviewed)


30 June 2024 (reviewed)

30 June 2023 (reviewed)

Expected credit loss on:






Bank balances

(39)

20


(36)

22

Treasury portfolio (note 8)

(1,343)

2,112


(365)

(1,907)

Financing assets, net (note 9)

3,866

6,757


1,492

8,448

 

 2,484

8,889


1,091

6,563

Impairment on proprietary investment (note 12)

1,052

(31)

 

518

(99)

Impairment on other receivables (note 13)

15,069

(1,906)

 

3,210

(148)


 

18,605

6,952


4,819

6,316

 

 

18   EARNINGS PER SHARE

 

The calculation of basic earnings per share has been based on the following profit attributable to the ordinary shareholders and weighted-average number of ordinary shares outstanding. The Group does not have any diluted potentially ordinary shares as of the reporting dates. Hence, the basic and diluted earnings per share is similar.

 

 

Six months ended


Three months ended

30 June 2024 (reviewed)

30 June 2023 (reviewed)


30 June 2024 (reviewed)

30 June 2023 (reviewed)

Profit attributable to shareholders of the Bank

60,747

54,616


33,612

30,609

Weighted Average number of shares outstanding during the period

3,558,268

3,528,590


3,599,595

3,547,177

Earnings per share






Basic and diluted earnings per share (US cents)

1.71

1.55


0.93

0.86

 

 

 

 

 

 

 

 

 

 

 

 



 

 

19   Related party transactions

 

The significant related party balances and transactions as at 30 June 2024 are given below:

 

 

Related parties as per FAS 1

Assets under management (including special purpose and other entities)

Total

30 June 2024 (reviewed)

Equity-accounted investees

Key management personnel

Significant shareholders / entities in which directors are interested

Assets






Treasury portfolio

-

-

-

69,969

69,969

Financing contracts

-

11,106  

227,652

17,368

256,126

Proprietary investments

940,382

-

6,058

9,355  

955,795  

Co-investments

 -  

 -  

 -  

 278,371

 278,371

Receivables and other assets

 98,022

 10,299

  199  

  305,611

414,131






 

Liabilities





 

Placements from financial, non-financial institutions and individuals

 -  

  4,536  

222,917

 -  

227,453

Current accounts

  2,851  

313  

112,446

18,995

134,605

Other liabilities

 51,419

 10,616

 -  

 97,676  

159,711






 

Quasi equity

   5,459   

4,796

117,967

14,780

143,002

 





 

Income





 

Investment banking

 726

 -  

 -  

 88,965

 89,691

Commercial banking





 

-   Income from financing

-

302

1,562

-

1,864

-   Less: Finance expense

 -  

 (135)

 (8,141)

 -  

 (8,276)

Treasury and proprietary investments

  16,793  

 -  

 -  

    40,063   

    56,856   

Less: Quasi equity

 (29)

 (119)

 (6,273)

 (8)

  (6,429)

Expenses





 

Operating expenses

 -  

 (345)

 -  

 (167)

 (512)

Staff Cost

 -  

 (6,452)

 (280)

 -  

 (6,732)

Finance Cost

 (12)

 -  

 -  

 (3,462)

 (3,474)

 



 

 

19   Related party transactions (continued)

 


Related parties as per FAS 1

Assets under management (including special purpose and other entities)

Total

31 December 2023 (audited)

Equity-accounted investees

Key management personnel

Significant shareholders / entities in which directors are interested

Assets






Treasury portfolio

-

-

-

70,546

70,546

Financing contracts

-

11,202

85,055

19,489

115,746

Proprietary investments

827,161

-

7,686

13,667

848,514

Co-investments

-

-

-

254,610

254,610

Receivables and prepayments

93,318

6,731

1,507

307,597

409,153







Liabilities






Placements from financial, non-financial institutions and individuals

-

5,602

8,622

-

14,224

Current accounts

2,971

16

29,233

19,122

51,342

Payables and accruals

107,466

7,196

-

173,297

287,959







Quasi equity

2,485

5,027

44,145

14,422

66,079

 

30 June 2023 (reviewed)






Income






Investment banking

-

-

-

81,851

81,851

Commercial banking






-   Income from financing

-

324

133

-

457

-   Less: Return to quasi equity

(24)

(117)

(2,653)

(8)

(2,802)

-   Less: Finance expense

-

(125)

(6,430)

-

(6,555)

Treasury and proprietary investments

17,251

-

403

3,536

21,190







Expenses






Operating expenses

(3)

(790)

-

(37)

(830)

Staff Cost

-

(5,670)

(347)

-

(6,017)

Finance Cost

-

-

-

(1,262)

(1,262)

 

 

 

 

 

 

 

 

 

 


NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

for the six months ended 30 June 2024                                                                                                                                                                                                                                                                                                             US$ 000's

 

20   Segment reporting

                                                                                                                                                                        

The Group is organised into business units based on their nature of operations and independent reporting entities and has three reportable operating segments namely investment banking, commercial banking and treasury and proprietary.

 

 

Investment banking

Commercial banking

Proprietary and treasury

Total

30 June 2024 (reviewed)





Segment revenue

 88,128

 65,188

 178,914

 332,230

Segment expenses

 (57,767)

 (47,089)

 (140,872)

 (245,728)

Impairment allowance

 -  

 (4,470)

 (14,135)

 (18,605)

Segment result

 30,361

 13,629

 23,907

 67,897

Segment assets

 230,676

 3,953,869

 6,704,069

 10,888,614

Segment liabilities

 146,605

 2,377,424

 3,607,023

 6,131,052

Quasi equity

 -  

 1,253,525

 2,353,406

 3,606,931

Other segment information




 

Proprietary investments (Equity-accounted investees)

 -  

 17,219

 125,591

 142,810

Commitments

 17,778

 104,114

 38,338

 160,230

                       


NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

for the six months ended 30 June 2024                                                                                                                                                                                                                                                                                              `                US$ 000's

 

20   Segment reporting (continued)

 

 


Investment banking

Commercial banking

Proprietary and treasury

Total

30 June 2023 (reviewed)





Segment revenue

90,517

41,242

84,455

216,214

Segment expenses

(62,510)

(24,469)

(65,094)

(152,073)

Impairment allowance

-

(2,857)

(4,095)

(6,952)

Segment result

28,007

13,916

15,266

57,189

31 December 2023 (audited)





Segment assets

278,056

3,985,192

 6,858,231

 11,121,479

Segment liabilities

208,859

 2,146,851

 4,240,401

6,596,111

Quasi equity

-

1,420,854

2,030,152

3,451,006

Other segment information





Proprietary investments (Equity-accounted investees)

-

8,656

128,734

137,390

Commitments

49,147

154,550

-

203,697

 

           


 

21   Commitments and contingencies

 

The commitments contracted in the normal course of business of the Group:

 


30 June

2024

(reviewed)


31 December 2023

(audited) 


30 June

2023

 (reviewed)



 




Undrawn commitments to extend finance

 97,080

 

113,873


126,804

Financial guarantees

 17,815

 

40,677


43,852

Capital commitment for infrastructure development projects

 

45,335

 

49,147


55,485



 





160,230

 

203,697


226,141

 

Performance obligations

During the ordinary course of business, the Group may enter performance obligations in respect of its infrastructure development projects. It is the usual practice of the Group to pass these performance obligations, wherever possible, on to the companies that own the projects. In the opinion of the management, no liabilities are expected to materialise on the Group at 30 June 2024 due to the performance of any of its projects.

 

Litigations, claims and contingencies

The Group has several claims and litigations filed against it in connection with projects promoted by the Bank in the past and with certain transactions. Further, claims against the Group entities also have been filed by former employees and customers. Based on the advice of the Bank's external legal counsel, the management is of the opinion that the Bank has strong grounds to successfully defend itself against these claims. Where applicable, appropriate provision has been made in the books of accounts. No further disclosures regarding contingent liabilities arising from any such claims are being made by the Bank as the directors of the Bank believe that such disclosures may be prejudicial to the Bank's legal position.

 

 

22   Financial instruments

 

Fair values

Fair value is an amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

Underlying the definition of fair value is a presumption that an enterprise is a going concern without any intention or need to liquidate, curtail materially the scale of its operations or undertake a transaction on adverse terms.

 



 

 

22   Financial instruments (continued)

 

Fair value hierarchy

The different levels have been defined as follows:

 

·    Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.

·    Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e.as prices) or indirectly (i.e., derived from prices).

·    Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

The following table shows the valuation techniques used in measuring fair values, as well as the significant unobservable inputs used:

 

Type

Valuation technique

Significant unobservable inputs

Inter-relationship between significant unobservable inputs and fair value measurement

Structured notes

Fair value of underlying reference portfolio adjusted for embedded derivatives that protect downside risk and cap upside potential over the period of the contract.

Credit risk of counterparty and volatility assumptions for time to maturity

Ability of the Group to hold the structure note to maturity and impact of the value of embedded derivatives (strike prices and barriers for coupon and principal).

 

Equity investments

 

Discounted cash flow

Marketability factor and Discount rate

Ability of Group to exit these investments and their impact on the overall value as these are unquoted investments.

 

The potential effect of change in assumptions used above would have the following effects.

 


30 June 2024 (reviewed)


30 June 2023 (reviewed)


Statement of Income

FVOCI


Statement of Income

FVOCI

Equity instruments- marketability factor (±10%)

±939

±33,118


±894

±21,753

Structure notes- impact in underlying value (±5%)

±21,886

-


 

±19,532

-

Derivative and Fund- impact in underlying value (±5%)

±1,362

-


±1,592

-

 



 

 

22   Financial instruments (continued)

 

The table below analyses the financial instruments carried at fair value, by valuation method.

 

30 June 2024 (reviewed)

Level 1

Level 2

Level 3

Total

i) Proprietary investments





Investment securities carried at fair value through:





-     statement of income

 21,208

 -  

 -  

 21,208

-     OCI

 20,035

 940,382

 60,598

 1,021,015


 41,243

 940,382

 60,598

 1,042,223

ii)  Treasury portfolio





Investment securities carried at fair value through:





-     statement of income

 -  

 464,966

 -  

 464,966

-     OCI

 824,424

 -  

 -  

 824,424


 824,424

 464,966

 -  

 1,289,390

iii) Co-investments




 

Investment securities carried at fair value through





-     OCI

 -  

 -  

 270,584

 270,584

-     statement of income

 -  

 -  

 9,393

 9,393


 -  

 -  

 279,977

 279,977







 855,725

 1,405,348

 340,575

 2,611,590

 

31 December 2023 (audited)

Level 1

Level 2

Level 3

Total


 

 

 

 

(i)        Proprietary investments





Investment securities carried at fair value through:





-     statement of income

17,194

-

-

17,194

-     OCI

-

827,012

64,045

891,057


17,194

827,012

64,045

908,251

(ii) Treasury portfolio





Investment securities carried at fair value through:





-     statement of income

-

434,133

-

434,133

-     OCI

817,626

-

-

817,626


817,626

434,133

-

1,251,759

iii)  Co-investments





Investment securities carried at fair value through OCI

-

-

247,048

 247,048

Investment securities carried at fair value through statement of income

-

-

9,168

9,168


-

-

256,216

256,216


 834,820

1,261,145

 320,261

 2,416,226



 

 

22   Financial instruments (continued)

 

The following table analyses the movement in Level 3 financial assets during the period:

 


30 June

2024


31 December 2023


 (reviewed)


 (audited)




At beginning of the period

320,261


197,944            

Disposals at carrying value

(5,771)

 

(3,682)

Purchases / reclassification

25,859


127,134

Fair value changes during the period

                   226      


(1,135)

At end of the period

340,575  


320,261

 

 

23   ACQUISITION OF SUBSIDIARIES

 

During the period, the Group acquired controlling stake in the below subsidiary.

 


% Stake acquired

Place of incorporation

Nature of activities

TEI Holdings

50.1%

Cayman Islands

Investment in market leading mobile commerce-based discount offering business in UAE

 

 

Identifiable assets acquired and liabilities assumed

 

Entity acquired was considered as a business. The fair value of assets, liabilities, equity interests have been reported on a provisional basis. If new information, obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date, identifies adjustments to the above amounts, or any additional provisions that existed at the acquisition date, then the acquisition accounting will be revised. Revisions to provisional acquisition accounting are required to be done on a retrospective basis.

 

 

 

 



 

 

23   ACQUISITION OF SUBSIDIARIES (continued)

 

The reported amounts below represent the adjusted acquisition carrying values of the acquired entities at the date of acquisition reported on a provisional basis as permitted by accounting standards.

 



2024




Intangible assets


2,803

Tangible assets


1,907

Receivables


33,262

Cash and bank balances


5,584




Total assets


43,456




Accruals and other liabilities


22,935




Total liabilities


22,935



 

Total net identifiable assets and liabilities (A)


20,521

 



2024




Consideration 


   35,534

Non-controlling interests recognised


12,287




Total consideration (B)


47,821

 

Goodwill (B-A)


27,300

 

 

 

 

 

 

 

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