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Tuesday 24 April, 2012

Abu Dhabi Comm Bnk

1st Quarter Results

RNS Number : 9908B
Abu Dhabi Commercial Bank PJSC
24 April 2012
 



ABU DHABI COMMERCIAL BANK P.J.S.C.

 

Review report and condensed consolidated interim financial  
information for the three month period ended March 31, 2012

 

http://www.rns-pdf.londonstockexchange.com/rns/9908B_-2012-4-24.pdf

 

 

 
Review report and condensed consolidated interim financial information
for the three month period ended March 31, 2012

 

 

                                                                                                                                                                                                 Page

 

 

Report on review of interim financial information                                                                                       1

 

 

 

Condensed consolidated interim statement of financial position                                                       2

 

 

 

Condensed consolidated interim income statement (unaudited)                                                          3

 

 

 

Condensed consolidated interim statement of comprehensive income (unaudited)                4

 

 

 

Condensed consolidated interim statement of changes in equity (unaudited)                       5 - 6

 

 

 

Condensed consolidated interim statement of cash flows (unaudited)                                       7 - 8

 

 

 

Notes to the condensed consolidated interim financial information                                      9 - 45

 


report on review of INTERIM

financial INFORMATION

 

 

To the Board of Directors of

Abu Dhabi Commercial Bank P.J.S.C.

Abu Dhabi, U.A.E.

 

Introduction

 

We have reviewed the accompanying condensed consolidated interim statement of financial position of Abu Dhabi Commercial Bank P.J.S.C. and its subsidiaries (together referred to as "the Bank") as of March 31, 2012 and the related condensed consolidated interim statements of income, comprehensive income, changes in equity and cash flows for the three month period then ended and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and presentation of this interim financial information in accordance with International Accounting Standard 34, "Interim Financial Reporting ("IAS 34")". Our responsibility is to express a conclusion on this interim financial information based on our review.

 

 

Scope of review

 

We conducted our review in accordance with 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 International Standards on Auditing 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 condensed consolidated interim financial information does not present fairly, in all material respects, the financial position of the Bank as at March 31, 2012, and of its financial performance and its cash flows for the three month period then ended in accordance with IAS 34.

 

PricewaterhouseCoopers

 

 

 

 

Jacques Fakhoury

Registration Auditor Number 379

April 24, 2012


Condensed consolidated interim statement of financial position

as at March 31, 2012



As at

March 31

2012

As at

December 31

 2011



(unaudited)

(audited)


Notes

AED'000

AED'000

ASSETS








Cash and balances with Central Banks

3

7,555,710

6,629,945

Deposits and balances due from banks

4

17,664,214

20,839,932

Trading securities

5

86,864

15,755

Loans and advances, net

6

123,865,936

124,754,737

Derivative financial instruments

7

4,532,816

4,844,764

Investment securities

8

16,948,168

15,052,103

Investments in associates

9

93,914

81,817

Investment properties

10

435,404

396,912

Other assets

11

10,667,447

10,021,494

Property and equipment, net


947,389

964,518

Intangible assets


115,771

123,653



                             

                             

Total assets


182,913,633

183,725,630



                             

                             

LIABILITIES








Due to Central Banks


7,220

48,100

Due to banks

12

3,580,779

3,090,386

Deposits from customers

13

114,461,916

109,887,477

Short and medium term borrowings

14

25,033,252

30,808,557

Derivative financial instruments

7

4,635,604

4,821,568

Long term borrowings

15

588,041

1,088,452

Other liabilities

16

11,548,449

11,903,567



                              

                             

Total liabilities


159,855,261

161,648,107



                             

                             

EQUITY








Share capital

17

5,595,597

5,595,597

Share premium

17

3,848,286

3,848,286

Statutory and legal reserves


3,309,351

3,309,351

General and contingency reserves


2,150,000

2,150,000

Employees' incentive plan shares, net


(93,967)

(104,595)

Foreign currency translation reserve


(18,466)

(27,521)

Hedge reserve


7

(2,581)

Cumulative changes in fair values


(128,178)

(404,758)

Retained earnings


4,388,457

3,708,227

Capital notes

18

4,000,000

4,000,000



                             

                             

Equity attributable to equity holders of the parent


23,051,087

22,072,006

Non-controlling interests


7,285

5,517



                             

                             

Total equity


23,058,372

22,077,523



                             

                             

Total liabilities and equity


182,913,633

183,725,630



                             

                             

 

 

 

_________________________                                      _________________________                                      _________________________

Eissa Al Suwaidi                                                  Ala'a Eraiqat                                                         Deepak Khullar

Chairman                                                              Chief Executive Officer                                       Chief Financial Officer

 

 

The accompanying notes form an integral part of this condensed consolidated interim financial information.


Condensed consolidated interim income statement (unaudited)

for the three month period ended March 31, 2012

 



3 months ended March 31


 

2012

2011


Notes

AED'000

AED'000





Interest income

19

1,827,866

1,816,196

Interest expense

20

(640,532)

(901,999)



                         

                        





Net interest income


1,187,334 

914,197



                         

                        

Income from Islamic financing


84,655

77,424

Islamic profit distribution


(76,837)

(65,941)



                         

                        





Net income from Islamic financing


7,818

11,483



                         

                        

Total net interest and Islamic financing income


1,195,152

925,680





Net fees and commission income

21

249,059

262,556

Net trading income

22

102,037

101,769

Other operating income


37,548

35,990



                         

                        

Operating income


1,583,796

1,325,995



                         

                        





Staff costs


(292,109)

(199,539)

Depreciation


(32,787)

(36,101)

Amortisation of intangible assets


(7,882)

(7,020)

Other operating expenses


(172,792)

(184,418)



                        

                        





Operating expenses


(505,570)  

(427,078)



                        

                        





Operating profit before impairment allowances


1,078,226

898,917

Impairment allowances on loans and advances, net

6

(287,436)

(325,499)

Other impairment release/(allowances)

23

735

(73,644)

Share of profit of associates

9

12,097

84,376



                         

                        

Profit before taxation


803,622

584,150





Overseas income tax expense


(1,624)

(1,590)



                         

                        





Net profit for the period


801,998

582,560



                         

                        

Attributed to:




Equity holders of the parent


800,230

574,400

Non-controlling interests


1,768

8,160



                         

                       





Net profit for the period


801,998

582,560



                          

                       





Basic earnings per share (AED)

24

0.12

0.09



                          

                       





Diluted earnings per share (AED)

24

0.12

0.09



                          

                       

    

 

The accompanying notes form an integral part of this condensed consolidated interim financial information.


Condensed consolidated interim statement of comprehensive income (unaudited)

for the three month period ended March 31, 2012

 


3 months ended March 31


2012

2011


AED'000

AED'000


 

 

Net profit for the period

801,998

582,560




Exchange difference arising on translation of foreign operations

9,055

102,786

Fair value changes on cash flow hedges on financial assets

2,588

-

Fair value changes on net investment in foreign operation hedges

-

(77,504)

Fair value changes on available for sale investments

273,460

(103,312)

Fair value changes reversed on disposal/impairment of available for sale investments

3,120

(94)

Share in other comprehensive income statement items of associate

-

(19,098)


                         

                        




Total comprehensive income for the period

1,090,221

485,338


                         

                        

Attributed to:



Equity holders of the parent

1,088,453

477,178

Non-controlling interests

1,768

8,160


                        

                       




Total comprehensive income for the period

1,090,221

485,338


                               

                              

 

 

The accompanying notes form an integral part of this condensed consolidated interim financial information.


Condensed consolidated interim statement of changes in equity (unaudited)

for the three month period ended March 31, 2012

 














Equity










Employees'

Foreign





attributable










incentive

currency


Cumulative



to equity

Non -



Share

Share

Statutory

Legal

General

Contingency

 plan

translation

Hedge

changes in

Retained

Capital

holders of

controlling

Total


Capital

premium

reserve

reserve

reserve

reserve

shares, net

reserve

reserve

fair values

earnings

notes

the parent

     interests

equity


AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

 AED'000

AED'000

















Balance at January 1, 2012

5,595,597

3,848,286

1,677,069

1,632,282

2,000,000

150,000

(104,595)

(27,521)

(2,581)

(404,758)

3,708,227

4,000,000

22,072,006

5,517

22,077,523


                      

                      

       _             

                     

                     

                  

                      

                      

                  

                      

                        

                     

                __       

                 

                       

Net profit for the period

-

-

-

-

-

-

-

-

-

-

800,230  

-

  800,230

1,768

801,998

Exchange difference arising on translation of foreign operations

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

9,055

 

-

 

-

 

-

 

-

 

9,055

 

-

 

9,055

Fair value changes on cash flow hedges on financial assets

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

2,588

 

-

 

-

 

-

 

2,588

 

-

 

2,588

Fair value changes on available

for sale investments

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

273,460

 

-

 

-

 

273,460

 

-

 

273,460

Fair value changes reversed on disposal/impairment of available  for sale investments

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

3,120

 

 

-

 

 

-

 

 

3,120

 

 

-

 

 

3,120


                      

                     

       _            

                    

                    

                 

                    

                 

                

                   

                        

                     

                __       

               

                     

Total comprehensive income for the period

-

-

-

-

-

-

-

9,055

2,588

276,580

800,230

 

-

 

1,088,453

1,768

1,090,221


                      

                     

       _            

                    

                    

                 

                    

                 

                

                   

                        

                     

                __       

               

                     

Capital notes coupon paid

-

-

-

-

-

-

-

-

-

-

(120,000)

-

(120,000)

-

(120,000)

Shares - vested portion

-

-

-

-

-

-

10,628

-

-

-

-

-

10,628

-

10,628


                      

                     

       _            

                     

                     

                   

                    

                 

                

                   

                        

                      

              _  _       

               

                       

Balance at March 31, 2012

5,595,597

3,848,286

1,677,069

1,632,282

2,000,000

150,000

(93,967)

(18,466)

7

(128,178)

4,388,457  

4,000,000

23,051,087  

7,285

23,058,372


                      

                      

                     

                     

                     

                   

                    

                 

                

                  

                       

                     

                          

                

                      

 

 

For the year ended December 31, 2011, the Board of Directors have proposed to pay cash dividends representing 20% of the paid up capital (Note 17).

 

 

The accompanying notes form an integral part of this condensed consolidated interim financial information.

 

 

 

 

 

 

 

Condensed consolidated interim statement of changes in equity (unaudited)

for the three month period ended March 31, 2012 (continued)

 

               














Mandatory

Equity









Employees'

Foreign






convertible

Attributable









incentive

currency


Cumulative




securities -

to equity

  Non-



Share

Statutory

Legal

General

Contingency

 plan

translation

Hedge

changes in

Other

Retained

Capital

equity

holders of

controlling

Total


capital

reserve

reserve

reserve

reserve

shares, net

reserve

reserve

fair values

reserve

earnings

notes

component

the parent

      interests

equity


AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

 AED'000

AED'000


















Balance at January 1, 2011

4,810,000

1,374,483

1,329,696

2,000,000

150,000

(36,677)

136,676

(537,904)

174,799

5,630

1,524,201

4,000,000

4,633,883

19,564,787

8,561

19,573,348


                     

                     

                              

                   

                 

                            

                  

                     

                 

                  

                   

                   

                   

                      

                     

                      


















Net profit for the period

-

-

-

-

-

-

-

-

-

-

574,400

-

-

574,400

8,160

582,560

Exchange difference arising on

translation of foreign operations

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

102,786

 

-

 

-

 

-

 

-

 

-

 

-

 

102,786

 

-

 

102,786

Fair value changes on net investment in foreign operation hedges

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(77,504)

 

-

 

-

 

-

 

-

 

-

 

(77,504)

 

-

 

(77,504)

Fair value changes on available

for sale investments

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(103,312)

 

-

 

-

 

-

 

-

 

(103,312)

 

-

 

(103,312)

Fair value changes reversed on disposal/impairment of available  for sale investments

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(94)

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(94)

 

 

-

 

 

(94)

Share in other comprehensive income  statement items of associate

-

-

-

-

-

-

763

-

(20,072)

211

-

-

-

(19,098)

-

(19,098)


                      

                     

                   

                   

                 

                             

                                

                     

                    

             

                   

                   

                   

                    

               

                      

Total comprehensive income/(loss) for the period

  the period

 

-

 

-

 

-

 

-

 

-

 

-

 

103,549

 

(77,504)

 

(123,478)

 

211

 

574,400

 

-

 

-

 

477,178

 

8,160

 

485,338


                      

                                      

                   

                   

                 

                   

                                

                     

                          

             

                   

                   

                   

                    

               

                      


















Capital notes coupon paid

-

-

-

-

-

-

-

-

-

-

(116,667)

-

-

(116,667)

 -

(116,667)

Shares granted

-

-

-

-

-

(60,800)

-

-

-

-

-

-

-

(60,800)

-

(60,800)

Shares - vested portion

-

-

-

-

-

9,245

-

-

-

-

-

-

-

9,245

-

9,245


                      

                   

                   

                   

                 

                

                 

                    

                  

             

                   

                   

                   

                      

                

                      

Balance at March 31, 2011

4,810,000

1,374,483

1,329,696

2,000,000

150,000

(88,232)

240,225

(615,408)

51,321

5,841

1,981,934

4,000,000

4,633,883

19,873,743

16,721

19,890,464


                     

                   

                   

                   

                

                 

                   

                      

                   

             

                    

                   

                   

                     

                

                     

 

 

The accompanying notes form an integral part of this condensed consolidated interim financial information.


Condensed consolidated interim statement of cash flows (unaudited)

for the three month period ended March 31, 2012

 



         3 months ended March 31



2012

2011



AED'000

AED'000

OPERATING ACTIVITIES




Profit before taxation and non-controlling interests


803,622

584,150





Adjustments for:




Depreciation on property and equipment


32,787

36,101

Amortisation of intangible assets


7,882

7,020

Dividends income


(10)

(3)

Impairment allowance on loans and advances


348,582

359,148

Recovery of doubtful loans and advances


(61,146)

(33,649)

Other impairment (release)/allowances


(735)

73,644

Realised and unrealised net gain from available for sale and trading securities


(4,396)

(3,152)

Share of profit of associates, net


(12,097)

(84,376)

Discount unwind


(31,937)

-

Imputed interest on mandatory convertible securities


-

(22,813)

Ineffective portion of hedges


(35,603)

(1,269)

Employees' incentive plan benefit expense


10,628

9,245



                       

                        





Operating profit before changes in operating assets and liabilities


1,057,577

924,046

Decrease/(increase) in due from banks


1,836,229

(579,550)

Decrease/(increase) in net trading derivative financial instruments


55,528

(2,823)

Decrease in loans and advances


633,302

1,382,733

(Increase)/decrease in other assets


(148,744)

68,686

Increase/(decrease) in due to banks


320

(1,235,104)

Increase in deposits from customers


4,552,163

3,032,849

(Decrease)/increase in other liabilities


(844,896)

335,429



                       

                        









Net cash from operations


7,141,479

3,926,266



                       

                        

INVESTING ACTIVITIES




Dividends received from associate


-

(328)

Dividends income


10

3

Purchase of available for sale investment securities


(1,747,907)

(2,365,569)

Net proceeds from disposal of available for sale investment securities


169,139

76,017

Purchase of trading securities


(285,076)

-

Net proceeds from disposal of trading securities


213,583

-

Additions to investment properties


(38,492)

(13,038)

Purchase of property and equipment, net


(15,658)

(23,655)



                       

                         





Net cash used in investing activities


(1,704,401)

(2,326,570)



                       

                         

FINANCING ACTIVITIES




Net repayment of short, medium and long term borrowings


(6,183,416)

(1,116,091)

Capital notes coupon paid


(120,000)

(116,667)

Purchase of employees' incentive plan shares


-

(60,800)



                       

                         





Net cash used in financing activities


(6,303,416)

(1,293,558)



                       

                         





Net (decrease)/increase in cash and cash equivalents


(866,338)

306,138





Cash and cash equivalents at the beginning of the period


19,261,633

16,676,284



                       

                        





Cash and cash equivalents at the end of the period


18,395,295

16,982,422



                       

                       

 

 

The accompanying notes form an integral part of this condensed consolidated interim financial information.


Condensed consolidated interim statement of cash flows (unaudited)

for the three month period ended March 31, 2012 (continued)

 

Cash and cash equivalents

 

Cash and cash equivalents included in the condensed consolidated interim statement of cash flows comprise the following statement of financial position amounts:

 


As at

As at


March 31

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Cash and balances with Central Banks

7,555,710

6,629,945

Deposits and balances due from banks

17,664,214

20,839,932

Due to Central Banks

(7,220)

(48,100)

Due to banks

(3,580,779)

(3,090,386)


                           

                            





21,631,925

24,331,391

Less:  Deposits and balances due from banks and cash and balances with Central Banks  - maturity more than  3 months

 

(3,673,336)

 

(5,509,565)

Add:  Due to banks - maturity more than 3 months

436,706

439,807


                         

                            





18,395,295

19,261,633


                                 

                                   

 

 

 

The accompanying notes form an integral part of this condensed consolidated interim financial information.


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012

 

1             General

 

Abu Dhabi Commercial Bank P.J.S.C. ("ADCB" or the "Bank") is a public joint stock company with limited liability incorporated in the Emirate of Abu Dhabi, United Arab Emirates (U.A.E.). ADCB is principally engaged in the business of retail banking, commercial banking and Islamic banking and provision of other financial services through its network of forty eight branches and four pay offices in the U.A.E., two branches in India and one Offshore branch in Jersey, its subsidiaries and associates.

 

The registered head office of ADCB is at Abu Dhabi Commercial Bank Head Office Building, Salam Street, plot C- 33, Sector E-11, P. O. Box 939, Abu Dhabi, U.A.E.

 

ADCB is registered as a public joint stock company in accordance with the U.A.E. Federal Commercial Companies Law No. (8) of 1984 (as amended).

 

2             Summary of significant accounting policies

 

2.1         Basis of preparation 

 

This condensed consolidated interim financial information has been prepared in accordance with IAS 34 "Interim Financial reporting".  It does not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Bank for the year ended December 31, 2011, which were prepared in accordance with International Financial Reporting Standards (IFRS) and  International Financial Reporting Interpretation Committee (IFRIC) Interpretations.

 

The same accounting policies, presentation and methods of computation have been followed in this condensed consolidated interim financial information as were applied in the preparation and presentation of the Bank's consolidated financial statements for the year ended December 31, 2011.

 

For details of related party balances and transactions, refer to Note 34 in the consolidated financial statements for the year ended December 31, 2011. The related party balances and transactions in 2012 are similar in nature and magnitude. Note 6 provides the details of lending exposure to Government entities.

 

The results for the three month period ended March 31, 2012 are not necessary indicative of the results that may be expected for the financial year ending December 31, 2012.

 

This condensed consolidated interim financial information is prepared and presented in United Arab Emirates Dirhams (AED) which is the Bank's functional and presentation currency and are rounded off to the nearest thousand ("000") unless otherwise indicated.

 

As required by the Securities and Commodities Authority of the U.A.E. ("SCA") Notification No. 2624/2008 dated October 12, 2008, accounting policies relating to investment securities and investment properties have been disclosed in the condensed consolidated interim financial information.

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.1         Basis of preparation (continued)

 

The preparation of the condensed consolidated interim financial information in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

The main areas of judgments, estimates and assumptions applied in the condensed consolidated interim financial information, including the key sources of estimation uncertainty were the same as those applied in the Bank's consolidated financial statements for the year ended December 31, 2011.

 

2.2         Application of new and revised International Financial Reporting Standards (IFRS)

 

2.2.1     New and revised IFRSs effective for accounting periods beginning January 1, 2012

 

There are no IFRSs or IFRIC interpretations that were effective for the first time for the financial year beginning January 1, 2012 that have had a material impact on Bank's condensed consolidated interim financial information.

 

2.2.2     Standards and Interpretations in issue not yet effective

 

The Bank has not early adopted the following new and revised IFRSs that have been issued but are not yet effective:

 

 

 

New Standards and amendments to Standards:

Effective for annual periods beginning on or after



Amendments to IAS 1, Presentation of Financial Statements - revise the way other comprehensive income is presented, with grouping of items on the basis of whether they are potentially reclassifiable to profit and loss subsequently.

July 1, 2012



Amendments to IAS 19, Employee Benefits - Amended Standard resulting from the Post-Employment Benefits and Termination Benefits projects, requiring recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, with all actuarial gains and losses recognized immediately through other comprehensive income.

January 1, 2013

 



IAS 27, Separate Financial Statements (revised 2011) and IAS 28, Investments in Associates and Joint Ventures (revised 2011) - Revision as required by IFRS 10 and IFRS 11.

 

The amendments to IAS 32, Financial Instruments: Presentation - The amendments clarify the offsetting criteria in IAS 32 to address inconsistencies in their application. An entity will have a legally enforceable right to set off only if it is non-contingent in nature and is enforceable in the normal course of business and in the event of default, insolvency or bankruptcy.

January 1, 2013

 

 

 

January 1, 2014

 

 



 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.2.2        Standards and Interpretations in issue but not yet effective (continued)

 

IFRS 10, Consolidated Financial Statements - Replaces the part of IAS 27 Consolidated and Separate Financial Statements related to consolidated financial statements and replaces SIC 12 Consolidation - Special Purpose Entities. Under IFRS 10 there is only one basis of consolidation, that is control, for which a new definition has been included.

January 1, 2013

 

IFRS 11, Joint Arrangements - Replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers. It deals with how a joint arrangement of which two or more parties have joint control should be classified and requires that joint ventures are accounted for using the equity method of accounting.

 

January 1, 2013

 

IFRS 12, Disclosure of Interests in Other Entities - Replaces the requirements previously included in IAS 27 - Consolidated and Separate Financial Statements, IAS 31 - Interests in Joint Ventures  and IAS 28 - Investments in Associates. In general, the disclosure requirements are more extensive than the current standards.

 

January 1, 2013

 

 

IFRS 13, Fair Value measurement - represents the completion of the joint project to establish a single source for the requirements on how to measure fair value under IFRS. The Standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and improving disclosure requirements for use across IFRSs.

 

January 1, 2013

 

 

IFRS 9, Financial Instruments: Classification and Measurement (intended as complete replacement for IAS 39)

 

January 1, 2015

 

 

Key requirements of IFRS 9 are described as follows:

 

IFRS 9 requires all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

 

Management anticipates that these IFRSs and amendments will be adopted in the initial period when they become mandatorily effective.  An initial assessment of the potential impact indicates that application of most of these standards is not expected to have significant impact on amounts reported in the financial statements, but it is expected that additional disclosures will be required. The Bank is yet to assess IFRS 9's full impact, particularly as the hedging and impairment aspects of IFRS 9 are still outstanding and intends to adopt IFRS 9 in the initial period when they become mandatorily effective.

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.3         Basis of consolidation

 

This condensed consolidated interim financial information incorporates the financial statements of Abu Dhabi Commercial Bank P.J.S.C. and its subsidiaries and the attributable share of the results and reserves of its associates (collectively referred to as the "ADCB" or the "Bank"). The entities controlled by the Bank have been treated as subsidiaries. Control is achieved when the Bank has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for the same reporting period as that of the Bank, using consistent accounting policies. All inter-company balances, income and expense items are eliminated on consolidation.

 

Changes in the Bank's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Bank's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Bank.

 

A Special Purpose Entity (SPE) is consolidated if, based on an evaluation of the substance of its relationship with the Bank and the SPE's risks and rewards, the Bank concludes that it controls the SPE.

 

The assessment of whether the Bank has control over an SPE is carried out at inception and normally no further reassessment of control is carried out in the absence of changes in the structure or terms of the SPE, or additional transactions between the Bank and the SPE except whenever there is a change in the substance of the relationship between the Bank and an SPE.

 

The Bank manages and administers assets held in unit trusts on behalf of investors without recourse to the assets. The financial statements of these entities are not included in this condensed consolidated financial information except when the Bank controls the entity.

 

Upon the loss of control, the Bank derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the condensed consolidated income statement. If the Bank retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or in accordance with the Bank's accounting policy for financial instruments depending on the level of influence retained.

 

This condensed consolidated interim financial information also includes the attributable share of the results and reserves of associates.

 

2.4         Trading and Investment securities

 

Investment securities are initially measured at fair value plus, in the case of investment securities not at fair value through profit or loss, incremental direct transaction costs, and subsequently accounted for depending on their classification as either held to maturity, fair value through profit or loss or available for sale.

 

Investment securities are classified into the following categories depending on the nature and purpose of the investment:

i)             Investments at fair value through profit or loss;

ii)           Available for sale and

iii)          Held-to-maturity investments.

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4       Trading and Investment securities (continued)

 

Investments designated at fair value through profit or loss (FVTPL)

 

Investments are classified as at FVTPL when either held for trading or when designated as at FVTPL.

 

An investment is classified as held for trading if:

 

§ It has been acquired principally for the purpose of selling it in the near term; or

§ On initial recognition it is part of a portfolio of identified financial instruments that the Bank manages together and has a recent actual pattern of short-term profit-taking; or

§ It is a derivative that is not designated and effective as a hedging instrument.

 

An investment other than held for trading may be designated as at FVTPL upon initial recognition if:

 

§ Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

§ It  forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Bank's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

§ It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

 

Investments at FVTPL are stated at fair value, with any gains or losses arising on re-measurement are recognised in condensed consolidated interim income statementThe fair values are based on current prices in active markets.

 

Held-to-maturity

 

Investments which have fixed or determinable payments with fixed maturities which the Bank has the positive intention and ability to hold to maturity, are classified as held to maturity investments.

 

Held-to-maturity investments are initially recognised at fair value plus any directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest rate method, less any impairment losses, with revenue recognised on an effective yield basis.

 

Amortised cost is calculated by taking into account any discount or premium on acquisition using an effective interest rate method. Any gain or loss on such investments is recognised in the condensed consolidated interim income statement when the investment is derecognised or impaired.

 

If there is objective evidence that an impairment on held-to-maturity investments carried at amortised cost has been incurred, the amount of impairment loss recognised is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the investments original effective interest rate, with the resulting impairment loss, if any, in the condensed consolidated interim income statement.

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4       Trading and Investment securities  (continued)

 

Held-to-maturity (continued)

 

Investments classified as held to maturity and not close to their maturity, cannot ordinarily be sold or reclassified without impacting the Bank's ability to use this classification and cannot be designated as a hedged item with respect to interest rate or prepayment risk, reflecting the longer-term nature of these investments.

 

Available for sale

 

Investments not classified as either "fair value through profit or loss" or "held to maturity" are classified as "available for sale". Available for sale assets are intended to be held for an indefinite period of time and may be sold in response to liquidity requirements or changes in interest rates, commodity prices or equity prices.

 

Available for sale investments are initially recognised at fair value plus any directly attributable transaction costs and are subsequently measured at fair value. The fair values of quoted financial assets in active markets are based on current prices. If the market for a financial asset is not active, and for unquoted securities, the Bank establishes fair value by using valuation techniques (e.g. recent arms length transactions, discounted cash flow analysis and other valuation techniques). Only in very rare cases where fair value cannot be measured reliably, investments are carried at cost and tested for impairment, if any.

 

Gains and losses arising from changes in fair value are recognised in the condensed consolidated comprehensive income statement and recorded in cumulative changes in fair value with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in the condensed consolidated interim income statement. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in equity in the cumulative changes in fair values is included in the condensed consolidated interim income statement for the period.

 

If an available for sale investment is impaired, the difference between the acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any previous impairment loss recognised in the condensed consolidated interim income statement, is removed from equity and recognised in the condensed consolidated interim income statement. Once an impairment loss has been recognised on an available for sale financial asset, the subsequent accounting treatment for changes in the fair value of that asset differs depending on the nature of the available-for-sale financial asset concerned:

 

For an available for sale debt security, a subsequent decline in the fair value of the instrument is recognised in the condensed consolidated interim income statement when there is further objective evidence of impairment as a result of further decreases in the estimated future cash flows of the financial asset.

 

Where there is no further objective evidence of impairment, the decline in the fair value of the financial asset is recognised directly in equity.

 

§ If the fair value of a debt security increases in a subsequent period, and the increase can be objectively related to an event occurring after the impairment loss was recognised in the condensed consolidated interim income statement, the impairment loss is reversed through the condensed consolidated interim income statement to the extent of the increase in fair value;

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4         Trading and Investment securities (continued)

 

Available for sale (continued)

 

§ For an available-for-sale equity security, all subsequent increases in the fair value of the instrument are treated as a revaluation and are recognised in condensed consolidated other comprehensive income statement, accumulating in equity. Subsequent decreases in the fair value of the available-for-sale equity security are recognised in the condensed consolidated interim income statement, to the extent that further cumulative impairment losses have been incurred in relation to the acquisition cost of the equity security.

 

Reclassifications

 

Reclassification is only permitted in rare circumstances and where the asset is no longer held for the purpose of selling in the short term. Reclassifications are accounted for at the fair value of the financial asset at the date of reclassification.

 

Derecognition of investment securities

 

The Bank derecognizes an investment security only when the contractual rights to the cash flows from the investment expire, or when it transfers the investment and substantially all the risks and rewards of ownership of the investment to another entity. If the Bank neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Bank recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Bank retains substantially all the risks and rewards of ownership of a transferred financial asset, the Bank continues to recognize the financial asset and also recognises a collateralized borrowing for the proceeds received.

 

2.5         Investment properties

 

Investment property is property held either to earn rental income or for capital appreciation or both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is reflected at fair value. The fair values are the estimated amounts for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller at an arm's length transaction. The fair value is determined on periodic basis by independent professional valuers. Fair value adjustments on investment property are included in the condensed consolidated interim income statement in the period in which these gains or losses arise.

 

Investment properties under development that are being constructed or developed for future use as investment property are measured initially at cost including all direct costs attributable to the design and construction of the property including related staff costs. Subsequent to initial recognition, investment properties under development are measured at fair value. Gains and losses arising from changes in the fair value of investment properties under development are included in the income statement in the period in which they arise. Upon completion of construction or development, such properties are transferred to investment properties.

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

3             Cash and balances with Central Banks

 


As at

As at


March 31

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Cash on hand

382,150

547,769

Balances with Central Banks (*)

5,273,560

5,082,176

Certificate of deposits with Central Bank

1,900,000

1,000,000


                        

                      





7,555,710

6,629,945


                               

                            

 

(*) Balances with Central Banks include reserve requirements of AED 5,084,733 thousand as at March 31, 2012 (December 31, 2011 - AED 5,053,934 thousand) with the Central Bank of the U.A.E.

 

The geographical concentration is as follows:


As at

As at


March 31

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

7,532,713

6,601,201

Outside the U.A.E.

22,997

28,744


                         

                      





7,555,710

6,629,945


                                

                            

 

4             Deposits and balances due from banks


As at

As at


March 31

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Current and demand deposits

190,472

257,728

Placements

15,053,742

17,592,265

Murabaha placements

2,360,000

2,249,000

Wakala placements

60,000

740,939


                          

                        





17,664,214

20,839,932


                                 

                               

 



 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

4             Deposits and balances due from banks (continued)

 

The geographical concentration is as follows:

               


As at

As at


March 31

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

12,705,991

12,798,544

Outside the U.A.E.

4,958,223

8,041,388


                         

                        





17,664,214

20,839,932


                                

                               

 

5             Trading securities

 


As at

As at


March 31

December 31


2012

2011


(unaudited)

(audited)


AED'000

AED'000




Quoted within the U.A.E.

79,254

15,755

Quoted outside the U.A.E.

7,610

-


                            

                          





86,864

15,755


                            

                          




 

 

Trading securities represent investments in public sector bonds. The fair value of these investments is based on quoted market prices. The bonds yield a fixed coupon rate in the range of 3.25% - 8% per annum.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

6             Loans and advances, net

 


As at

As at


March 31

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Overdrafts (Retail and Corporate)

9,764,851

9,949,513

Corporate loans

100,793,906

  101,565,326 

Retail loans

12,430,518

12,303,074

Credit cards

2,088,267

2,133,144 

Islamic financing

3,914,522

3,749,732

Other facilities

793,989

765,824 


                               

                              





129,786,053  

   130,466,613  

Less: Allowance for impairment

(5,920,117)

(5,711,876)


                               

                              





123,865,936   

124,754,737   


                                       

                                      

 

Islamic financing include the following:

 


As at

As at


March 31

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Murabaha

596,810

565,975

Ijara financing

663,858

   651,970

Mudaraba

214,208

154,578

Salam

2,386,016

2,324,991

Others

53,630

52,218


                          

                        





3,914,522

    3,749,732

Less: Allowance for impairment

(22,826)

(20,942)


                          

                        





3,891,696 

3,728,790


                                 

                               

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

6             Loans and advances, net (continued)

 

Movement of the individual and collective impairment allowance on loans and advances is as follows:

 


As at March 31, 2012 (unaudited)


As at December 31, 2011 (audited)


Individual

impairment

Collective

impairment

 

Total


Individual

Impairment

Collective

impairment

 

Total


AED'000

AED'000

AED'000


AED'000

AED'000

AED'000









At January 1

3,652,804

2,059,072

5,711,876


4,653,146

1,643,291

6,296,437

Charge for the period/year

335,029

13,553

348,582


1,886,939

416,167

2,303,106

Recoveries during the period/year

(61,146)

-

(61,146)


(220,746)

-

(220,746)


                        

                      

                      


                        

                       

                        

Net charge for the period/year

273,883

13,553

287,436


1,666,193 

416,167

2,082,360

Discount unwind

(31,937)

-

(31,937)


(177,216)

-

(177,216)

Net amounts written  off

(47,568)

-

(47,568)


(2,487,492)

-

(2,487,492)

Currency translation

219

 91

310


(1,827)

(386)

(2,213)


                         

                      

                      


                       

                      

                       









Balance at

3,847,401

2,072,716

5,920,117


3,652,804

2,059,072

5,711,876


                               

                            

                            


                             

                            

                             

 

The economic sector composition of the loans and advances portfolio is as follows:

 

 


As at March 31, 2012 (unaudited)


As at December 31, 2011 (audited)


Within the U.A.E.

Outside the U.A.E.

 

Total


Within the U.A.E.

Outside the U.A.E.

 

Total


AED'000

AED'000

AED'000


AED'000

AED'000

AED'000

Economic sector








Agriculture

8,766

-

8,766


9,084

-

9,084

Energy

10,099,810

357,492

10,457,302


10,840,212

362,316

11,202,528

Trading

907,976

27,164

935,140


794,618

15,080

809,698

Contractor finance

1,655,658  

70,069

1,725,727


1,555,354

64,902

1,620,256

Development &   construction

24,260,731

94,976

24,355,707


24,088,820

98,410

24,187,230

Real estate investment

12,321,168

149,732

12,470,900


12,364,945

191,045

12,555,990

Transport

2,109,177

498,896

2,608,073


2,136,234

512,684

2,648,918

Personal - retail

17,016,912

9,814

17,026,726


16,939,914

13,362

16,953,276

Personal - collateralised

14,856,209

327,042

15,183,251


15,360,649

370,741

15,731,390

Government

2,431,140

-

2,431,140


2,916,734

-  

2,916,734

Financial institutions (*)

8,219,424

1,284,739

9,504,163


7,837,634

1,315,783

9,153,417

Manufacturing

1,860,368

206,983

2,067,351


1,917,252

123,940

2,041,192

Services

28,825,387 

2,186,420

31,011,807


28,484,388

2,152,512

30,636,900


                          

                        

                          


                        

                      

                         










124,572,726

5,213,327

129,786,053


125,245,838

5,220,775

130,466,613


                                  

                               



                               

                            










Less: Allowance for impairment

(5,920,117)




(5,711,876)




                          




                             









Total



123,865,936




124,754,737




                                 




                                     

 

(*) includes investment companies.

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

6             Loans and advances, net (continued)

 

The Bank entered into repurchase agreements whereby loans are pledged and held by counter parties as collateral. The risks and rewards relating to the loans pledged will remain with the Bank. The following table reflects the carrying value of these loans and the associated financial liabilities:

 

 


As at March 31, 2012 (unaudited)

As at December 31, 2011 (audited)


  Carrying value of pledged

assets

Carrying  value of associated liabilities

Carrying value

of pledged

assets

Carrying  value of associated liabilities


AED'000

AED'000

AED'000

AED'000






Repurchase agreements

4,756,807

2,358,230

4,756,807

2,358,230


                      

                      

                      

                      

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

7             Derivative financial instruments

 

The fair values of derivative financial instruments held are set out below:


     Fair values


Assets

Liabilities

As at March 31, 2012 (unaudited)

AED'000

AED'000




Derivatives held for trading



Foreign exchange contracts

90,512

75,327

Interest rate and cross currency swaps

3,749,861

3,788,374

Options

160,902

169,173

Futures

3,917

-

Commodity and Energy swaps

123,639

123,159

Swaptions

6,383

6,383


                        

                         





4,135,214

4,162,416




Derivatives held as fair value hedges



Interest rate and cross currency swaps

394,382

473,188




Derivatives held as cash flow hedges



Interest rate swaps

11

-

Forward foreign exchange contracts

3,209

-


                        

                         





4,532,816

4,635,604


                        

                         

 


     Fair values


Assets

Liabilities

As at December 31, 2011 (audited)

AED'000

AED'000




Derivatives held for trading



Foreign exchange contracts

110,015

96,112

Interest rate and cross currency swaps

4,070,651

4,050,688

Options

166,578

173,714

Futures

354

227

Commodity and Energy swaps

23,067

21,835

Swaptions

5,903

5,666


                      

                       





4,376,568

4,348,242




Derivatives held as fair value hedges



Interest rate and cross currency swaps

468,196

444,350




Derivatives held as cash flow hedges



Interest rate swaps

-

2,714

Forward foreign exchange contracts

-

26,262


                      

                       





4,844,764

4,821,568


                      

                       

 

The net hedge ineffectiveness gains relating to the cash flow hedges amounting to AED 35,603 thousand (Three month period ended March 31, 2011 - gains of AED 1,269 thousand) have been recognised in the condensed consolidated interim income statement under "Net gains on dealing in derivatives" (Note 22).

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

8             Investment securities


As at March 31, 2012 (unaudited)


 U.A.E.

Other

G.C.C.

countries

Rest of

the world

Total


AED'000

AED'000

AED'000

AED'000

Available for sale investments





Quoted:





Floating rate notes (FRNs)

275,475

-

-

275,475

Collateralised debt obligations (CDOs)

-

-

21,697

21,697

Equity instruments

479

-

-

479

Bonds

4,929,265

862,637

6,948,734

12,740,636

Mutual funds

40,099

-

-

40,099

Government securities

2,225,730

1,145,454

239,996

3,611,180


                          

                        

                        

                            






Total Quoted

7,471,048

2,008,091

7,210,427

16,689,566


                          

                       

                        

                            






Unquoted:





Equity instruments

180,560

-

497

181,057

Mutual funds

77,545

-

-

77,545


                          

                       

                        

                           

Total Unquoted

258,105

-

497

258,602


                          

                       

                        

                           






Total available for sale investments

7,729,153

2,008,091

7,210,924

16,948,168


                                

                             

                               

                                   

 


As at December 31, 2011 (audited)


 U.A.E.

Other

G.C.C.

countries

Rest of

the world

Total


AED'000

AED'000

AED'000

AED'000

Available for sale investments





Quoted:





Floating rate notes (FRNs)

367,708

-

-

367,708

Collateralised debt obligations (CDOs)

-

-

44,194

44,194

Equity instruments

6,905

-

-

6,905

Bonds

4,641,033

857,742

5,605,453

11,104,228

Mutual funds

35,016

-

-

35,016

Government securities

1,847,763

1,141,628

241,639

3,231,030


                      

                     

                     

                       






Total Quoted

6,898,425

1,999,370

5,891,286

14,789,081


                      

                     

                     

                       

Unquoted:





Equity instruments

180,423

-

483

180,906

Mutual funds

82,116

-

-

82,116


                      

                     

                     

                       

Total Unquoted

262,539

-

483

263,022


                      

                     

                     

                       

Total available for sale investments

7,160,964

1,999,370

5,891,769

15,052,103


                            

                          

                           

                             

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

8             Investment securities (continued)

 

At March 31, 2012 quoted bond investments include bonds with fair value AED 4,839,049 thousand (December 31, 2011: AED 4,687,545 thousand) in public sector companies.

 

The Bank hedges interest rate risk on certain fixed rate investments through interest rate swaps and designates these as fair value hedges. The negative fair value of these interest rate swaps at March 31, 2012 was AED 468,863 thousand (December 31, 2011 - negative fair value of interest rate swaps AED 447,064 thousand). The hedge ineffectiveness gains and losses relating to these hedges were included in the condensed consolidated interim income statement under 'Net gains on dealing in derivatives' (Note 22).

 

The Bank enters into repurchase agreements whereby bonds are pledged and held by counter parties as collateral. The risks and rewards relating to the investments pledged remain with the Bank. The following table reflects the carrying value of these bonds and the associated financial liabilities:

 


As at March 31, 2012 (unaudited)

As at December 31, 2011 (audited)


 

  Fair value of

pledged assets

Carrying  value of associated liabilities

 

 Fair value of

pledged assets

Carrying  value of associated liabilities


AED'000

AED'000

AED'000

AED'000






Repurchase agreements

1,225,482

1,063,134

4,237,403

3,776,167


                      

                      

                      

                      

 

Further, the Bank has also pledged investment securities with fair value amounting to AED 1,069,730 thousand (December 31, 2011 - AED 1,110,902 thousand) as collateral against margin calls. The risks and rewards relating to the investments pledged will remain with the Bank.

 

 

 

  

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

9             Investments in associates

 

Name of associate


As at

As at



March 31

2012

(unaudited)

December 31

2011

(audited)



           AED'000

    AED'000





Al Nokhitha Fund                 


64,220

56,298

ADCB MSCI U.A.E. Index Fund


29,694

25,519



                  

                  





Carrying value


93,914

81,817



                        

                       

 

 

Details of Bank's investments in associates are as follows:

 


 

 

Name of associate

 

 

 

Principal activities

 

 

Country of incorporation

 

Ownership Interest

March 31

December 31

2012

   2011







(a)

Al Nokhitha Fund

Investing in Equities listed in Abu Dhabi Exchange, Dubai Financial Market and in any other recognised stock exchanges of the GCC countries.

U.A.E.

22%

21%

(b)

ADCB MSCI U.A.E. Index Fund

Investing in Equities listed in Abu Dhabi Exchange, Dubai Financial Market, Dubai International Financial Exchange determined by MSCI UAE Index ("Index Securities").

U.A.E.

28%

28%

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

9             Investments in associates (continued)

 

The latest available financial information in respect of the Bank's associates is as at and for the three month period ended March 31, 2012 for Al Nokhitha Fund and ADCB MSCI U.A.E. Index Fund as follows:

 

 


AED'000



Total assets

414,210

Total liabilities

14,523


                    



Net assets

399,687


                          



Bank's share in net assets of associates

93,914


                          



Total interest and other operating income

54,289


                          



Total profit for the period

52,726


                         



Bank's share in profit of associates

12,097


                         



 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

10          Investment properties

 


     Completed

and in use

Under development

 

Total


AED'000

AED'000

AED'000





As at January 1, 2011

215,609

73,583

289,192

Additions during the year

-

119,620

119,620

Decrease in fair value during the year

(7,798)

(4,102)

(11,900)


                       

                      

                       





As at January 1, 2012 (audited)                      

207,811

189,101

396,912

Additions during the period

-

38,492

38,492


                       

                      

                       





As at March 31, 2012 (unaudited)

207,811

227,593

435,404


                             

                             

                             

 

The fair value of the Bank's investment properties are estimated by reference to current market prices for similar properties, adjusted as necessary for condition and location, or by reference to recent transactions updated to reflect current economic conditions. Valuations are carried out by registered independent appraisers having an appropriate recognised professional qualification and recent experience in the location and category of the property being valued. Discounted cash flow techniques may be used to calculate fair value in certain situations where there have been no recent transactions using current external market inputs such as market rents and interest rates. The effective date of the last formal valuation is December 31, 2011.

 

The valuation methodologies considered by external valuers include:

 

a)    Direct Comparable method: This method seeks to determine the value of the property from transactions of comparable properties.

b)   Residual method: This method is used to assess the value of the property with a development potential where there is inadequate comparable evidence. This method is commonly used in the valuation of the site under development in the local market.

 

All investment properties of the Bank are located within the U.A.E.

 

 

 

 

  

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

11          Other assets

 


As at

As at


March 31

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Interest receivable

961,513

859,898

Withholding tax

32,581

87,311

Prepayments

106,006

71,336

Acceptances

9,269,032

8,771,823

Others

298,315

231,126


                          

                        


10,667,447

10,021,494


                                 

                              

 

Acceptances arise when the Bank is under an obligation to make payments against documents drawn under letters of credit. Acceptances specify the amount of money, the date, and the person to which the payment is due. After acceptance, the instrument becomes an unconditional liability (time draft) of the bank and are therefore recognised as a financial liability (Note 16) in the consolidated statement of financial position with a corresponding contractual right of reimbursement from the customer recognised as a financial asset. The Bank generally receives cash collateral against these acceptances.

 

12          Due to banks

 


As at

As at


March 31

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Current and demand deposits

726,489

574,271

Deposits - banks

2,854,290

2,516,115


                        

                      


3,580,779

3,090,386


                              

                            

 

 

 

The Bank hedges certain deposits from customers for interest rate and foreign currency exchange risk through cross currency swaps and designates these instruments as fair value hedges. The fair value of these cross currency swaps at March 31, 2012 was AED 19,158 thousand (December 31, 2011: the positive fair value of AED 22, 578 thousand).

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

13          Deposits from customers

 


As at

As at


March 31

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Call and demand deposits

25,883,171

24,274,344

Savings deposits

2,343,620

2,237,783

Time deposits

64,344,066

64,146,038

Murabaha deposits

8,338,950

9,201,851

Long term government deposits

449,569

458,940

Islamic deposits

11,470,064

8,851,869

Euro commercial papers

1,632,476

716,652


__________  ______

                            


114,461,916

109,887,477

 

The Euro commercial papers are issued globally with the majority issued in the United Kingdom and other countries of Europe.

 

Islamic product related deposits include the following:

 


As at

As at


March 31

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Product



Wadiah - demand deposits

344,444

437,980

Mudaraba savings and term deposits

3,976,950

3,653,439

Wakala deposits

7,148,670

4,760,450


                          

                       


11,470,064

8,851,869

 

 

 

The Bank hedges certain deposits from customers for interest rate and foreign currency exchange risk through cross currency swaps and designates these instruments as fair value hedges. The fair value of these cross currency swaps at March 31, 2012 was AED Nil (December 31, 2011: the positive fair value

of AED 7,198 thousand).


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

14          Short and medium term borrowings

 

The details of short and medium term borrowings as at March 31, 2012 (unaudited) are as follows:

 

Instrument

Currency

Within 1 year

1-3 years

 3-5 years

Total



AED'000

AED'000

AED'000

AED'000







Unsecured notes

Hong Kong Dollar (HKD)

94,333

-

-

94,333


Malaysian Ringitt (MYR)

-

-

871,027

871,027


South African Rand (ZAR)

51,299

-

-

51,299


Swiss Franc (CHF)

-

-

575,705

575,705


Turkish Lira (TRY)

-

-

94,003

94,003


U.A.E. Dirham (AED)

-

1,253,000

500,000

1,753,000


US Dollar (US$)

-

3,673,000

-

3,673,000



                        

                        

                        

                         









145,632

4,926,000

2,040,735

7,112,367







Syndicated loans

US Dollar (US$)

2,821,599

1,469,200

-

4,290,799


Euro (EUR)

328,015

-

-

328,015







Sukuk  financing notes

US Dollar (US$)

                         -

                         -

         1,836,500

    1,836,500







Subordinated floating rate notes

US Dollar (US$)

-

-

1,117,143

1,117,143







Tier 2 loan

U.A.E. Dirham (AED)

-

-

6,617,456

6,617,456







Borrowings through repurchase agreements

US Dollar (US$)

1,315,096

756,271

-

2,071,367


U.A.E. Dirham (AED)

1,250,995

99,000

-

1,349,995









                        

                        

                         

                         









5,861,337

7,250,471

11,611,834

24,723,642

Fair value adjustment on short and medium term borrowings being hedged

309,610






                         












25,033,252






                         

Included in short and medium term borrowings is AED 11,323,881 thousand which have been hedged using interest rate and cross currency swaps. These swaps are designated as fair value hedges. The positive fair value of these swaps at March 31, 2012 was AED 325,542 thousand.


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

14          Short and medium term borrowings (continued)

 

The details of short and medium term borrowings as at December 31, 2011 (audited) are as follows:

Instrument

Currency

Within 1 year

1-3 years

 3-5 years

Total



AED'000

AED'000

AED'000

AED'000

Unsecured notes

Australian Dollar (AUD)

                72,126

                   -  

                   -  

         72,126


Hong Kong Dollar (HKD)

                94,333

                   -  

                   -  

         94,333


Malaysian Ringitt (MYR)

-

-

       871,027

       871,027


Slovak Koruna (SKK)

              103,758

                   -  

                   -  

       103,758


South African Rand (ZAR)

                51,299

                   -  

                   -  

         51,299


Swiss Franc (CHF)

                         -  

                   -  

       575,705

       575,705


Turkish Lira (TRY)

                         -  

                   -  

         94,003

         94,003


U.A.E. Dirham (AED)

                         -  

    1,253,000

                   -  

    1,253,000


US Dollar (US$)

                         -  

    3,673,000

                   -  

    3,673,000



                        

                        

                         

                    









              321,516

    4,926,000

    1,540,735

    6,788,251







Syndicated loans

US Dollar (US$)

          3,789,801

    3,739,849

-   

    7,529,650


Euro (EUR)

328,015

                   -

-   

    328,015







Sukuk  financing notes

US Dollar (US$)

-

-

             1,836,500

    1,836,500







Subordinated floating rate notes

US Dollar (US$)

-

-

    1,172,789

    1,172,789







Tier 2 loan

U.A.E. Dirham (AED)

-

-

    6,617,456

    6,617,456







Borrowings through repurchase agreements

US Dollar (US$)

2,713,033

870,134

-  

3,583,167


U.A.E. Dirham (AED)

                  2,358,230

                   193,000

                   -  

              2,551,230



                         

                        

                          

                           









9,510,595

9,728,983

  11,167,480

30,407,058

Fair value adjustment on short and medium term borrowings being hedged




401,499






                          






30,808,557






                         

Included in short and medium term borrowings is AED 9,049,767 thousand which have been hedged using interest rate and cross currency swaps. These swaps are designated as fair value hedges. The positive fair value of these swaps at December 31, 2011 was AED 393,400 thousand.


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

14          Short and medium term borrowings (continued)

 

Interest on unsecured notes is payable quarterly and half yearly in arrears and the coupon rates as at March 31, 2012 (unaudited) are as follows: 

 

Currency

Within 1 year

1-3 years

3-5 years





HKD

3 months HIBOR offer rate plus 29 basis points

-

-

MYR

-

-

Fixed rate of 5.2% p.a.

ZAR

3 months JIBAR plus 41 basis points

-

-

CHF

-

-

Fixed rate of 3.01% p.a.

TRY

-

-

Fixed rate of 12.75% p.a.

AED

-

Fixed rate of 6% p.a.

Fixed rate of 6% p.a.

US$

-

Fixed rate of 4.75% p.a.

-

 

Syndicated loans

 

Interest on the syndicated loans are payable as follows:

 

US$ :                     Monthly coupons in arrears with 25 basis points to 125 basis points over LIBOR and quarterly coupons with 27.5 basis points to 55 basis points.

 

EUR :                    Quarterly coupons in arrears with 110 basis points over EURIBOR.

 

Sukuk financing notes

 

The Sukuk carries an expected profit rate of 4.07% per annum payable semi annually.

 

Subordinated floating rate notes

 

Interest on the subordinated floating rate notes is payable quarterly in arrears at a coupon rate of 110 basis points over 3 months LIBOR. The subordinated floating rate notes were obtained from financial institutions outside the U.A.E. and qualified as Tier 2 subordinated loan capital for the first 5 year period till 2011 and thereafter are amortised at the rate of 20% per annum until 2016 for capital adequacy calculation (Note 27). This has been approved by the Central Bank of the U.A.E.

 

Tier 2 loan

    

In March 2009, the Bank converted AED 6,617,456 thousand government deposits into Tier 2 qualifying loans. The Tier 2 qualifying loan will mature seven years from the date of the issue and interest is payable on a quarterly basis at a fixed rate of 4 percent per annum commencing March 31, 2009 for the first two years, 4.5 percent per annum for the third year, 5 percent per annum for the fourth year and 5.25 percent per annum for the remaining period.  The terms also provide that the Bank will have a call option to repay the loans partially or fully at the end of five years from the date of issue. For regulatory purposes, the loan qualifies as Tier 2 capital (Note 27).

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

14          Short and medium term borrowings (continued)

 

Borrowings through repurchase agreements

 

Interest on borrowings through repurchase agreements are payable in quarterly coupons in arrears with 115 to 300 basis points over 3 months LIBOR and EIBOR and half yearly coupons in arrears with 86 to 300 basis points over 6 months LIBOR.

 

15          Long term borrowings

 



As at

As at



March 31

December 31

Instrument

Currency

2012

2011



(unaudited)

(audited)



AED'000

AED'000





Unsecured notes

U.A.E. Dirham (AED)

-

500,000


Malaysian Ringitt (MYR)

473,706

473,706


US Dollar (US$)

73,460

73,460



547,166

1,047,166





Fair value adjustment on long term borrowings being hedged

40,875

41,286



                    

                     







588,041

1,088,452



                          

                          

 

Included in long term borrowings is AED 547,166 thousand (December 31, 2011 - AED 1,047,166 thousand) which have been hedged using interest rate and cross currency swaps. These swaps are designated as fair value hedges. The positive fair value of these swaps at March 31, 2012 was AED 45,368 thousand (December 31, 2011 was AED 44,421 thousand).

 

Interest on unsecured notes is payable half yearly in arrears and the coupon rates as at March 31, 2012 (unaudited) are as follows: 

 

 

Currency

Over 5 years



MYR

Fixed rate of 5.35% p.a.

US$

Fixed rate of 5.3875% p.a.

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

16          Other liabilities

 


As at

As at


March 31

December 31


2012

2011


(unaudited)

(audited)


AED'000

AED'000




Interest payable

898,757

931,026

Employees' end of service benefits

187,389

179,824

Accounts payable and other creditors

136,379

973,519

Clearing payables

425

238

Deferred income

195,364

171,805

Acceptances (Note 11)

9,269,032

8,771,823

Others

861,103

875,332


                          

                        





11,548,449

11,903,567


                                

                              

 

 

17          Share capital

 


Authorised

   Issued and fully paid



As at

As at



March 31

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000

AED'000

Ordinary shares of AED 1 each

5,595,597

5,595,597

5,595,597


                             

                             

                           

 

 

 


March 31, 2012 (unaudited)


December 31, 2011 (audited)


Number of

shares

 

AED'000


Number of

shares

 

AED'000







As of January 1

5,595,597,381

5,595,597


4,810,000,000

4,810,000

Shares issued on conversion of mandatory convertible securities

 

-

 

-


 

785,597,381

 

785,597


                                 

                          


                             

                          







As at

5,595,597,381

5,595,597


5,595,597,381

5,595,597


                                          

                                


                                     

                                

 

In April 2011, the mandatory convertible securities ("MCS") with a nominal value of AED 4,800,000 thousand were converted into ordinary equity shares of the Bank. On conversion, 785,597,381 equity shares were issued at the conversion price of AED 6.11 per share. The difference between the nominal value of the shares and conversion price resulted in share premium. 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

17          Share capital (continued)

 

Reconciliation of share premium is as follows:


AED' 000



Nominal value of MCS

4,800,000

Less: Nominal value of shares issued on conversion of MCS

(785,597)


                           

Share premium

4,014,403



Less: Mandatory convertible securities - liability component

(144,482)

Less: Issue expenses of MCS

(21,635)


                           

Balance of share premium

3,848,286


                                  

 

As at March 31, 2012, Abu Dhabi Investment Council held 58.08% (December 31, 2011:  58.08 %) of the Bank's issued and fully paid up share capital.

 

Proposed dividend

 

For the year ended December 31, 2011, the Board of Directors have proposed to pay cash dividends of AED 1,119,119 thousand representing 20% of the paid up capital (December 31, 2010 : AED Nil).  This is subject to the approval of the shareholders in the Annual General Meeting.

 

18          Capital notes

 

In February 2009, the Department of Finance, Government of Abu Dhabi subscribed for ADCB's Tier I regulatory capital notes with a principal amount of AED 4 billion (the "Notes").

 

The Notes are non-voting, non-cumulative perpetual securities for which there is no fixed redemption date. The Notes are direct, unsecured, subordinated obligations of the Bank and rank pari passu without any preference among themselves and the rights and claims of the Note holders will be subordinated to the claims of Senior Creditors. The Notes bear interest at the rate of 6% per annum payable semi-annually until February 2014, and a floating interest rate of 6 month EIBOR plus 2.3% per annum thereafter. However the Bank may at its sole discretion elect not to make a coupon payment. The Note holders do not have a right to claim the coupon and an election by the Bank not to service coupon is not considered an event of default. In addition, there are certain circumstances under which the Bank is prohibited from making a coupon payment on a relevant coupon payment date ("Non-Payment Event"). 

 

If the Bank makes a non-payment election or a non-payment event occurs, then the Issuer will not (a) declare or pay any distribution or dividend or (b) redeem, purchase, cancel, reduce or otherwise acquire any of the share capital or any securities of the Issuer ranking pari passu with or junior to the Notes except securities, the term of which stipulate a mandatory redemption or conversion into equity, in each case unless or until two consecutive coupon payments have been paid in full.

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

19          Interest income (unaudited)


3 months ended March 31


 


2012

2011


AED'000

AED'000


 

 

Loans and advances to banks

75,367

64,766

Loans and advances to customers

1,647,862

1,698,491

Investment securities

104,637

52,939


                        

                       





1,827,866

1,816,196


                        

                       

 

20          Interest expense (unaudited)

 


3 months ended March 31


 


2012

2011


AED'000

AED'000


 

 

Deposits from banks

2,508

4,575

Deposits from customers

480,631  

685,261

Debt securities issued and subordinated liabilities

117,224

110,882

Interest on mandatory convertible securities and long term notes

40,169

101,281


                       

                    





640,532

901,999


                      

                    

 

21          Net fees and commission income (unaudited)

 


3 months ended March 31


 


2012

2011


AED'000

AED'000


 

 

Fees and commission income






Retail banking fees

171,920

186,197

Corporate banking fees

81,196

82,392

Brokerage fees

1,327

1,232

Fees from trust and other fiduciary activities

15,639

12,706

Other fees

21,417

12,349


                        

                      




Total fees and commission income

291,499

294,876

Fees and commission expenses

(42,440)

(32,320)


                        

                      




Net fees and commission income

249,059

262,556


                        

                      

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

22          Net trading income (unaudited)

 


3 months ended March 31


 


2012

2011


AED'000

AED'000


 

 




Net gains on dealing in derivatives

58,647

62,177

Net gains from dealing in foreign currencies

38,994

36,440

Net gains/(losses) from trading and investment securities

4,396

3,152


                    

                  


102,037

 

101,769


                    

                  

 

 

23          Other impairment (release)/allowances (unaudited)

 


3 months ended March 31


 


2012

2011


AED'000

AED'000


 

 




Impairment (release)/allowance on investment securities

(735)

3,673

Impairment allowance on credit default swaps

-

69,971


                

                 


(735)

73,644


                

                 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

24          Earnings per share (unaudited)

 

Basic and diluted earnings per share

 

The calculation of basic earnings per share is based on the net profit attributable to equity holders of the Bank and the weighted average number of equity shares outstanding. Diluted earnings per share is calculated by adjusting the weighted average number of equity  shares outstanding for the dilutive effects of potential equity shares held on account of employees' incentive plan.

 

 


3 months ended March 31


 


2012

2011


 

 

Net profit for the period attributable to the equity holders of the Bank (AED'000)

800,230

574,400

Add: Interest on Mandatory Convertible Securities (MCS) for the period (AED'000) 

-

20,738

Less: Capital notes coupon paid (AED'000)

(120,000)

(116,667)


                          

                        




Net adjusted profit for the period attributable to the equity holders of the Bank (AED'000) (a)

680,230

478,471


                          

                        




Weighted average number of shares in issue throughout the period (000's)

5,595,597

4,810,000

Add: Weighted average number of shares resulting from conversion of MCS

 (000's)

 

-

 

785,597

Less: Weighted average number of shares   held on account of Employees' incentive   plan (000's)

 

(57,527)

 

(35,080)


                          

                        

Weighted average number of equity shares used for calculating basic earnings per share (000's) (b)

 

5,538,070

 

5,560,517

Add: Weighted average number of shares  held on account of Employees' incentive   plan (000's)

 

57,527

 

35,080


                          

                        




Weighted average number of equity shares used for calculating diluted earnings per share (000's) (c)

 

5,595,597

 

5,595,597


                          

                        

Basic earnings per share (AED) (a)/(b)

0.12

0.09


                         

                        

Diluted earnings per share (AED) (a)/(c)

0.12

0.09


                         

                       

 

 

 

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

25          Commitments and contingent liabilities

 

The Bank had the following commitments and contingent liabilities at:

 


March 31

December 31


2012

2011


(unaudited)

(audited)


AED'000

AED'000

Commitments on behalf of customers



Letters of credit

2,906,349

4,049,791

Guarantees

9,542,226

9,806,027

Commitments to extend credit - Revocable                                   

6,182,918

6,313,900

Commitments to extend credit - Irrevocable

5,394,322

5,688,356

Others

55,095

55,095


                          

                        





24,080,910

25,913,169

Others



Commitments for future capital expenditure

215,393

274,887

Commitments to invest in investment securities

230,009

230,009


                         

                        





24,526,312

26,418,065


                                

                               

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

26          Operating segments

 

Effective April 1, 2011, the Bank introduced property management as a separate operating segment. This includes real estate and property management activities which on an aggregated basis meets the reporting threshold as a separate operating component and the results are reviewed regularly by the Bank's chief operating decision maker. Prior to April 1, 2011, these activities were included in corporate support along with other activities. The residual balance in corporate support after reclassification of real estate and property management activities is allocated to other operating segments in proportion to the segmental assets and prior period results have been reclassified to meet the new reporting requirement.

 

The Bank has four reportable segments, as described below, which are the Bank's strategic divisions. The strategic divisions offer different products and services, and are managed separately based on the Bank's management and internal reporting structure. For each of the strategic divisions, the Bank Management Committee reviews internal management reports on at least a quarterly basis.

 

 

The following summary describes the operations in each of the Bank's reportable segments:

 

Wholesale banking  -               comprises of business banking, cash management, trade finance, corporate finance, investment banking, Indian operations, infrastructure and strategic client operations. It includes loans, deposits and other transactions and balances with corporate customers.

 

 

Consumer banking  -                comprises of consumer, retail, wealth management and Islamic operations. It includes loans, deposits and other transactions and balances with retail customers and corporate and private accounts of high networth individuals and funds management activities.

 

 

Investments and treasury - comprises of central treasury operations, management of the Bank's investment portfolio and interest rate, currency and commodity derivative portfolio. Investments and treasury undertakes the Bank's funding and centralized risk management activities through borrowings, issues of debt securities, use of derivatives for risk management and investing in liquid assets such as short-term placements and corporate and government debt securities and trading and corporate finance activities.

 

 

Property management -         comprises of real estate management and engineering service operations of subsidiaries - Abu Dhabi Commercial Properties L.L.C., Abu Dhabi Commercial Engineering Services L.L.C., ADCB Real Estate Fund operations and rental income.

 

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Management Executive Committee. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter- segment pricing is determined on an arm's length basis.

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

26          Operating segments (continued)

 

The following is an analysis of the Bank's revenue and results by operating segment for the three month period ended March 31, 2012 (unaudited):

 


 

Consumer banking


 

Wholesale

banking


Investments and

treasury


 

Property management


 

 

Total


AED' 000


AED' 000


AED' 000


AED'000


AED' 000











Net interest and Islamic financing income

 

604,112


 

274,893


 

291,193


 

24,954


 

1,195,152











Non-interest income

159,690


112,819


83,462


32,673


388,644











Operating expenses

(323,147)


(130,379)


(35,855)


(16,189)


(505,570)


---------______________________


---------______________________


---------______________________


---------______________________


---------______________________

Operating profit before impairment allowances

 

440,655


 

257,333


 

338,800


 

41,438


 

1,078,226











Impairment allowances on loans and advances, net

 

(157,469)


 

(129,967)


 

-


 

-


 

(287,436)











Other impairment release

-


-


735


-


735











Share of profit of associates

12,097


-


-


-


12,097


---------______________________


---------______________________


---------______________________


---------______________________


---------______________________

Profit before taxation

295,283


127,366


339,535


41,438


803,622











Overseas income tax expense

-


(1,624)


-


-


(1,624)


---------______________________


---------______________________


---------______________________


---------______________________


---------______________________

Net profit for the period

295,283


125,742


339,535


41,438


801,998


                           


                           


                           


                           


                            

Capital expenditure









54,150










                            

As at March 31, 2012 (unaudited)










Segment assets

64,073,407


71,498,635


46,896,317


445,274


182,913,633


                                  


                               


                                 


                                    


                                 

Segment liabilities

31,294,646


55,060,849


72,608,018


891,748


159,855,261


                                  


                               


                                 


                                    


                                 

 

 

 

 

 

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

26          Operating segments (continued)

 

The following is an analysis of the Bank's revenue and results by operating segment for the three month period ended March 31, 2011 (unaudited):

 

 


Consumer banking


Wholesale

banking


Investments and treasury


Property management


 

Total


AED' 000


AED' 000


AED' 000


AED'000


AED' 000










Net interest and Islamic financing income


 

238,826


 

139,040

 

 

 

25,606

 

 

 

925,680










Non-interest income


106,584


75,252


33,947


400,315










Operating expenses


(86,608)


(31,016)


(16,844)


(427,078)



-------                     


---------                          


---------                          


                        

Operating profit before impairment allowances

 

414,130


 

258,802


 

183,276


 

42,709

 

 

 

898,917










Impairment allowances on loans and advances, net

 

(278,815)


 

(46,684)


 

-

 

 

 

-


 

(325,499)










Other impairment allowances


-


(73,644)


-


(73,644)











Share of (loss)/profit of associates


93,265


-


-


84,376



--------                      


                          


                          


                       

Profit before taxation


305,383


109,632


42,709


584,150










Overseas income tax expense

-


(1,590)


-


-


(1,590)



---------                       


                          


                          


---------                       

Net profit for the period


303,793


109,632


42,709


582,560



                             


                                


                                 


                                

Capital expenditure









36,693









                                

As at December 31, 2011 (audited)









Segment assets


71,728,699


47,161,658


404,930


183,725,630



                              


                                 


                                


                                

Segment liabilities


50,886,621


82,073,228


873,493


161,648,107



                              


                                 


                                


                                

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

26          Operating segments (continued)

 

For the purpose of monitoring segment performance and allocating resources between segments:

 

·     all assets are allocated to reportable segments.

·      all liabilities are allocated to reportable segments.

 

Other disclosures

 

The following is the analysis of the total operating income of each segment between income from external parties and inter-segment.

 

 

Three month period ended March 31, 2012 (unaudited)

 

Consumer banking


 

Wholesale

banking

 

 

Investments and treasury


 

Property management


 

 

Total


 

AED' 000


 

AED' 000


 

AED' 000


 

AED'000


 

AED' 000

 

External

 

1,140,016


 

518,065


 

(106,958)


 

32,673


 

1,583,796


                            


                           


                              


                        


                          

 

Inter-segment

 

(376,214)


 

(130,353)


 

481,613


 

24,954


 

-


                            


                             


                              


                        


                          

Three month period ended March 31, 2011 (unaudited)










 

External

1,169,173


390,085


(266,717)


33,454


1,325,995


                            


                        


                              


                      


                            

 

Inter-segment

(462,433)


(44,675)


481,009


26,099


-


                            


                          


                           


                       


                            

 

 

 

 

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

26          Operating segments (continued)

 

Geographical information

 

The Bank operates in two principal geographic areas that are Domestic and International. The United Arab Emirates is designated as Domestic area which represents the operations of the Bank that originates from the U.A.E. branches and subsidiaries; and International area represents the operations of the Bank that originates from its branches in India and through its subsidiaries and associate outside U.A.E. The Bank's operations and information about its segment assets (non-current assets excluding investments in associates and other financial instruments) by geographical location are detailed as follows:

 


Domestic (unaudited)

 

International (unaudited)


3 months ended

 

3 months ended


March 31

2012

March 31

 2011

 

March 31

2012

March 31

 2011


AED'000

AED'000


AED'000

AED'000


 

 

 

 

 

Income












Net interest and Islamic financing income

1,186,896

919,872


8,256

5,808


                            

                            


                            

                            

Non-interest income

386,898

400,298


  1,746

17


                            

                            


                            

                            

Share of profit/(loss) of associates

12,097

(8,889)


-

93,265


                            

                            


                            

                            







 


Domestic

 

International

 

Non-current assets

As at

March 31

As at

December 31


As at

March 31

As at

December 31


2012

2011


2012

2011


(unaudited)

(audited)


(unaudited)

(audited)


AED'000

AED'000


AED'000

AED'000


 

 

 

 

 

Investment properties

435,404

396,912


-

-


                            

                            

 

                            

                            

Property and equipment, net

940,691

958,491


6,698

6,027


                            

                                                                          

 

                            

                            

Intangible assets

115,771

123,653


-

-


                            

                          

 

                            

                            

               

 

 

 

 

 

 

 



 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

27          Capital adequacy

 

The ratio calculated in accordance with Basel II is as follows:


Basel II


As at

As at


March 31, 2012

December 31 2011


(unaudited)

(audited)


AED'000

AED'000

Tier 1 capital



Share capital

5,595,597

5,595,597

Share premium

3,848,286

3,848,286

Statutory and legal reserves

3,309,351

3,309,351

General and contingency reserves

2,150,000

2,150,000

Employees' incentive plan shares, net

(93,967)

(104,595)

Foreign currency translation reserve

(18,466)

(27,521)

Retained earnings and other reserves

4,260,286

3,300,888

Non-controlling interests in equity of subsidiaries

7,285

5,517

Capital notes (Note 18)

4,000,000

4,000,000

Less: Investment in associates (50%)

(46,957)

(40,909)

Less: Intangible assets

(115,771)

(123,653)

Less: Securitization exposures (due to rating migration)

(38,396)

(38,350)


                             

                           





22,857,248

21,874,611


                            

                           

Tier 2 capital



Collective impairment allowance on loans and advances

1,608,564

1,621,328

Tier 2 loan (Note 14)

6,617,456

6,617,456

Subordinated floating rate notes (Note 14)

893,714

938,231

Less: Investment in associates (50%)

(46,957)

(40,908)

Less: Securitization exposures (due to rating migration)

(38,396)

(38,350)


                            

                          





9,034,381

9,097,757


                            

                          




Total regulatory capital

31,891,629

30,972,368


                           

                          

Risk-weighted assets:



Credit risk

128,685,135

129,706,214

Market risk

2,340,180

2,103,768

Operational risk

6,526,611

5,805,137


                           

                           




Total risk-weighted assets

137,551,926

137,615,119


                           

                           




Total Capital adequacy ratio

23.19%

22.51%


                           

                           

Tier 1 ratio

16.62%

15.90%


                           

                           

Tier 2 ratio

6.57%

6.61%


                          

                           

 

The capital adequacy ratio was above the minimum requirement of 12% for March 31, 2012 (December 31, 2011 - 12%) stipulated by the U.A.E. Central Bank.

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2012 (continued)

 

27          Capital adequacy (continued)

 

As mentioned in Note 17, the Board of Directors has proposed to pay cash dividends of AED 1,119,119 thousand for the year ended December 31, 2011. The capital adequacy ratios after taking into account the dividend appropriation will, however, be higher than the minimum capital adequacy ratio required by the

 UAE Central Bank.

28          Legal proceeding

 

The Bank is involved in various legal proceedings and claims arising in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, management does not believe that these matters will have a material adverse effect on the Bank's condensed consolidated interim financial information if disposed unfavorably. 

 

29          Approval of financial statements

 

This condensed consolidated interim financial information was approved by the Board of Directors and authorised for issue on April 24, 2012.

 

 

 

 

 


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