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 statement.  The 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