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Thursday 25 April, 2013

Abu Dhabi Comm Bnk

1st Quarter Results

RNS Number : 2371D
Abu Dhabi Commercial Bank PJSC
25 April 2013
 



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

 

Review report and condensed consolidated interim financial  
information for the three month period ended March 31, 2013
 
 
 
http://www.rns-pdf.londonstockexchange.com/rns/2371D_-2013-4-25.pdf 

 

 


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

 

Review report and condensed consolidated interim financial information
for the three month period ended March 31, 2013

 

 

 

                                                                                                                                                                                                   Pages

 

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, 2013 and the related condensed consolidated interim statements of income, comprehensive income, changes in equity and cash flows for the three month period then ended. 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 is not prepared, in all material respects, in accordance with IAS 34.

 

PricewaterhouseCoopers

 

 

 

 

Jacques Fakhoury

Registration Auditor Number 379

April 25, 2013

 

 

 

 


Condensed consolidated interim statement of financial position

as at March 31, 2013

 



As at

As at



March 31

December 31



2013

          2012



(unaudited)

(audited)


Notes

AED'000

AED'000

ASSETS








Cash and balances with Central Banks

3

10,797,425  

9,337,874

Deposits and balances due from banks

4

14,873,916  

16,517,118

Trading securities

5

744,886

641,877

Derivative financial instruments

6

4,367,630   

4,993,226

Investment securities

7

19,462,990  

18,712,916

Loans and advances, net

8

124,378,213  

123,195,295

Investment properties

9

546,054

529,395

Other assets

10

3,902,501  

5,925,962

Property and equipment, net


834,886

849,934

Intangible assets


84,244

92,126



                          

                          

Total assets


179,992,745    

180,795,723



                          

                          

LIABILITIES








Due to banks

11

4,664,632

4,411,271

Derivative financial instruments

6

4,582,617   

4,768,338

Deposits from customers

12

111,055,988

109,216,925

Euro commercial paper

13

4,627,451

4,557,108

Borrowings

14

24,833,167

26,139,647

Other liabilities

15

4,738,107   

6,994,845



                          

                          

Total liabilities


154,501,962    

156,088,134



                          

                          

EQUITY








Share capital

16

5,595,597

5,595,597

Share premium


3,848,286

3,848,286

Other reserves

17

6,321,042

6,288,591

Retained earnings


5,247,438  

4,537,315

Capital notes

18

4,000,000

4,000,000



                          

                          

Equity attributable to equity holders of the Bank


25,012,363     

24,269,789

Non-controlling interests


478,420

437,800



                          

                          

Total equity


25,490,783    

24,707,589



                          

                          

Total liabilities and equity


179,992,745    

180,795,723



                          

                          

 

 

 

This condensed consolidated interim financial information were approved by the Board of Directors and authorised for issue on April 25, 2013.

 

 

 

 

                                                                                                                                                                                                                  

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, 2013

 


 

3 month period ended March 31


 

2013

2012(*)


Notes

AED'000

AED'000





Interest income

19

1,657,834  

1,838,624

Interest expense

20

(491,345)

(615,745)



                          

                          





Net interest income


1,166,489   

1,222,879



                          

                          

Income from Islamic financing


137,851

84,655

Islamic profit distribution


(45,288)

(76,837)



                          

                          





Net income from Islamic financing


92,563

7,818



                          

                          

Total net interest and Islamic financing income


1,259,052  

1,230,697





Net fees and commission income

21

214,893  

246,794

Net trading income

  22

125,871  

131,961

Other operating income

23

144,269

45,305



                          

                          

Operating income


1,744,085   

1,654,757





Operating expenses

24

(517,392)

(505,674)



                          

                          





Operating profit before impairment allowances


1,226,693

1,149,083





Impairment allowances

25

(321,679)  

(286,701)



                          

                          

Profit before taxation


905,014   

862,382





Overseas income tax expense


(2,030)

(1,624)



                          

                          





Net profit for the period


902,984   

860,758



                          

                          

Attributed to:




Equity holders of the Bank


829,499   

796,984

Non-controlling interests


73,485

63,774



                          

                          

Net profit for the period


902,984   

860,758



                          

                          





Basic earnings per share (AED)

26

0.13

0.12



                          

                          

Diluted earnings per share (AED)

26

0.13

0.12



                          

                          

 

 

 

(*) Amounts have been restated as explained in Note 2.1

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, 2013

 

 


3 month period ended March 31


2013

2012(*)


AED'000

AED'000

 

Net profit for the period

902,984  

     860,758

 

Items that may be reclassified subsequently to income statement:



Exchange difference arising on translation of foreign operations

2,357

9,055

Fair value changes on cash flow hedges on financial assets

(7,273)

2,588

Fair value changes on available for sale investments

22,894

273,460

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

(110)

2,431


                          

                         




Other comprehensive income for the period

17,868

287,534







Total comprehensive income for the period

920,852 

1,148,292


                          

                         

Attributed to:



Equity holders of the Bank

847,367  

1,084,518

Non-controlling interests

73,485

63,774


                          

                         




Total comprehensive income for the period

920,852  

1,148,292


                          

                          

 

 

 

(*) Amounts have been restated as explained in Note 2.1

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, 2013

 







Equity









attributable









to equity

  Non-



Share

Share

Other

Retained

Capital

holders of

controlling

Total


capital

premium

reserves

earnings

notes

the parent

   interests

equity


AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

 AED'000

AED'000










Balance at January 1, 2013

  5,595,597

  3,848,286

6,288,591

4,537,315

4,000,000

24,269,789

 437,800

   24,707,589

Net profit for the period

              -  

              -  

      -

829,499   

              -  

        829,499  

73,485

902,984  

Other comprehensive income for the period

              -  

              -  

17,868

-

              -  

         17,868

         -

17,868  

Other movements (Note 17)

-

-

14,583

-

-

14,583

-

14,583

Net decrease in non-controlling interests

-

-

-

-

-

-

(32,865)

(32,865)

Realised gain on treasury shares

-

-

-

624

-

624

-

624

Capital notes coupon paid (Note 18)

-

-

-

   (120,000)

-

    (120,000)

-

     (120,000)


                     

                     

                     

                     

                     

                        

                     

                        

Balance at March 31, 2013

  5,595,597

  3,848,286

6,321,042

5,247,438    

4,000,000

25,012,363    

478,420 

25,490,783   


                     

                     

                     

                     

                     

                        

                     

                        

 

 

Following the Annual General Meeting held on April 2, 2013, the Shareholders approved the distribution of proposed cash dividends of AED 1,398,620 thousand being 25% of the paid up share capital for the year 2012 (For the year 2011: AED 1,119,119 thousand) (Note 16). Of the approved cash dividends, 20% is ordinary dividend and 5% is special dividend.

 

 

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, 2013 (continued)

 







Equity









attributable









to equity

  Non-



Share

Share

Other

Retained

Capital

holders of

controlling

Total


capital

premium

reserves

earnings

notes

the parent

interests

equity


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  

4,919,896

3,708,227

 4,000,000

22,072,006

5,517

22,077,523  

Net profit for the period

-

-

-

796,984

-

796,984

63,774

860,758

Other comprehensive income for the period

-  

-  

287,534

-

-  

 287,534

-

287,534

Arising on consolidation of Fund subsidiaries

-

-

-

-

-

-

397,565

397,565

Other movements (Note 17)

-

-

(29,475)

-

-

(29,475)

-

      (29,475)

Realised gain on treasury shares

-

-

-

2

-

2

-

2

Net decrease in non-controlling interests

-

-

-

-

-

-

(12,604)

(12,604)

Capital notes coupon paid (Note 18)

-

-

-

(120,000)

-

(120,000)

-

(120,000)


                     

                     

                     

                     

                     

                       

                 

                       

Balance at March 31, 2012 (*)

5,595,597

3,848,286

5,177,955

4,385,213

4,000,000

23,007,051

454,252  

23,461,303


                     

                     

                     

                     

                     

                       

                 

                       

 

 

(*) Amounts have been restated as explained in Note 2.1

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, 2013

 




3 month period ended March 31




2013

2012(*)




AED'000

AED'000

OPERATING ACTIVITIES





Profit before taxation and non-controlling interests



905,014

862,382

Adjustments for:





Depreciation



31,959

32,787

Amortisation of intangible assets



7,882

7,882

Dividends received  (Note 23)



(11,958)

(7,767)

Impairment allowance on loans and advances, net (Note 8)



389,377

348,582

Recovery of doubtful loans and advances (Note 8)



(59,610)

(61,146)

Discount unwind (Note 8)



(34,141)

(31,937)

Impairment recoveries on investment securities (Note 25)



(8,088)

(735)

Net gains from trading securities (Note 22)



(76,036)

(69,869)

Ineffective portion of hedges - losses/(gain) (Note 6)



1,894

 (35,603)

Employees' incentive plan benefit expense (Note 17)



9,935

10,628




                           

                           






Operating profit before changes in operating assets and liabilities



1,156,228  

1,055,204

Increase in balance with Central Bank



(750,755)

-

(Increase)/decrease in due from banks



(5,802,597)

1,836,229

Decrease in net trading derivative financial instruments



75,553  

55,528

(Increase)/ decrease in loans and advances



(1,478,544)

637,769

Increase in other assets



(266,288)

(155,332)

Increase in due to banks



86,540  

320

Increase  in deposits from customers



1,864,372

3,635,806

Increase/(decrease) in other liabilities



51,358  

(837,882)




                           

                           






Cash (used in)/from operations



(5,064,133)

6,227,642

Overseas tax paid



(2,707)

-




                           

                           






Net cash (used in)/ from operations



(5,066,840)

6,227,642




                           

                           

INVESTING ACTIVITIES





Dividends received (Note 23)



11,958

7,767

Impairment recoveries on investment securities (Note 25)



8,088

735

Overseas tax paid, net



(8,929)

-

Net purchase of trading securities



(26,973)

(64,281)

Net proceeds from disposal of available for sale investment securities



425,768

168,404

Net purchase of available for sale securities



(1,209,070)

(1,747,907)

Additions to investment properties



(16,659)

(38,492)

Purchase of property and equipment, net



(16,911)

(15,658)




                           

                           






Net cash used in investing activities



(832,728)

(1,689,432)




                           

                           

FINANCING ACTIVITIES





Increase in Euro commercial paper



192,613

915,824

Net repayment of borrowings



(1,050,331)

(6,183,416)

Net proceeds from sale/ (purchase) of treasury shares by Funds subsidiaries (Note 2.1)



11,015

(1,068)

Shares buy back (Note 16)



(4,276)

-

Net movement in non-controlling interests



(40,715)

(15,888)

Capital notes coupon paid



(120,000)

(120,000)




                           

                           






Net cash used in financing activities



(1,011,694)

(5,404,548)




                           

                           






Net decrease in cash and cash equivalents



(6,911,262)

(866,338)






Cash and cash equivalents at the beginning of the period



19,180,314

19,261,633




                           

                           






Cash and cash equivalents at the end of the period



12,269,052  

18,395,295

 



                           

                           

 

 

(*) Amounts have been restated as explained in Note 2.1

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, 2013 (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

2013

     December 31

2012


(unaudited)

(audited)


AED'000

AED'000




Cash and balances with Central Banks

10,797,425

9,337,874

Deposits and balances due from banks

14,873,916

16,517,118

Due to banks

(4,664,632)

(4,411,271)


                            

                            


21,006,709

21,443,721

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

 

(9,131,943)

 

(2,571,339)




Add:  Due to banks - original maturity more than 3 months

394,286

307,932


                           

                          


12,269,052

19,180,314


                            

                           




 

 

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, 2013

 

1             Activities and areas of operations

 

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 fifty branches and three pay offices in the U.A.E., two branches in India, one offshore branch in Jersey and 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, 2012, 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, 2012.

 

For details of related party balances and transactions, refer to Note 36 in the consolidated financial statements for the year ended December 31, 2012. The related party balances and transactions for the quarter ended March 31, 2013 are similar in nature and magnitude. Note 8 provide the details of lending exposure to Government entities.

 

The results for the three month period ended March 31, 2013 are not necessary indicative of the results that may be expected for the financial year ending December 31, 2013.

 

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.

 

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, 2012.

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.1         Basis of preparation (continued)

 

Change in accounting policy

As stated in note 3.1 to the consolidated financial statements for the year ended December 31, 2012, the Bank early adopted IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, as well as the consequential amendments to IAS 28 Investments in Associates and to IAS 31 Joint Ventures (2011), with a date of initial application of January 1, 2012.  Accordingly, the comparative information for the quarter ended March 31, 2012 has been restated in these condensed interim financial information - see below.

Subsidiaries

As a result of the adoption of IFRS 10, the Bank has changed its accounting policy with respect to determining whether it has control over and consequently whether it consolidates its investees. IFRS 10 introduces a new control model that is applicable to all investees; among other things, it requires the consolidation of an investee if the Bank controls the investee on the basis of de facto circumstances.

In accordance with the transitional provisions of IFRS 10, the Bank re-assessed the control conclusion for its investees at 1 January 2012. As a consequence, the Bank has changed its control conclusion in respect of its investments in Al Nokhitha Fund, ADCB MSCI UAE Index Fund and Arabian Index Fund (the "Funds").

 

Although the Bank owns less than half of the units of these Funds, the management has determined that the Bank has de facto control over the Funds because it is exposed to significant variable returns from its involvement with the Funds and has power and rights given by the prospectus of the Funds to affect the amount of its returns. Accordingly, the Bank applied acquisition accounting to the investment at 1 January 2012, as if the investee had been consolidated from that date. Previously, two of the investments in the Funds were accounted for as associates using the equity method and one of the investments was accounted for as an available for sale investment using fair value accounting.

 

The following table summarises the adjustments made to the relevant line items of the Bank's condensed consolidated interim statement of financial position as at March 31, 2012 and its condensed consolidated interim statements of income and cash flows and earnings per share for the three month period ended March 31, 2012 as a result of the consolidation of the Funds.



 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.1         Basis of preparation (continued)

 

Change in accounting policy (continued)

 

Condensed consolidated interim statement of financial position (extract)

 




March 31, 2012



As previously stated

 

Adjustments

 

As restated




AED'000

AED'000

AED'000

Assets






Trading securities



86,864

536,978

623,842

Investment securities



16,948,168

(40,099)

16,908,069

Loans and advances, net



123,865,936

(12,936)

123,853,000

Other assets



10,667,447

5,275

10,672,722

Investment in associates



93,914

(93,914)

-





                        


Overall impact on total assets




395,304






                        


Liabilities






Deposits from customers



114,461,916

(6,592)

114,455,324

Other liabilities



11,548,449

(1,035)

11,547,414





                        


Overall impact on total liabilities




(7,627)






                       


Equity






Cumulative changes in fair value



(128,178)

(689)

(128,867)

Retained earnings



4,388,457

(3,244)

4,385,213

Treasury shares



-

(40,103)

(40,103)

Non-controlling interests



7,285

446,967

454,252





                        


Overall impact on equity




402,931






                        


 

Condensed consolidated interim income statement (extract)

 


Three month period ended March 31, 2012 (unaudited)


As previously stated (*)

Adjustments

for Funds consolidation

 

As restated


AED'000

AED'000

AED'000

Net interest and Islamic financing income

1,230,755

(58)

1,230,697

Net fees and commission income

249,059

(2,265)

246,794

Net trading income

66,434

65,527

131,961

Other operating income

37,548

7,757

45,305



                        


Overall impact on operating income


70,961


Operating expenses

(505,570)

(104)

(505,674)

Share of profit of associates

  12,097

(12,097)

-



                        


Overall impact on net profit


58,760




                        


Overall impact on net profit attributable to non-controlling interests


 

62,006




                        


 

(* )Adjusted for net hedge ineffectiveness reclassification from net trading income to net interest and Islamic

   financing income to match current period presentation.

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.1         Basis of preparation (continued)

 

Change in accounting policy (continued)

 

Condensed consolidated interim statement of cash flows (extract)

 


Three month period ended March 31, 2012 (unaudited)


As previously stated(*)

Adjustments

for Funds consolidation

 

As restated


AED'000

AED'000

AED'000

Net cash from operations

6,225,655

1,987

6,227,642

Net cash used in investing activity

(1,704,401)

14,969

(1,689,432)

Net cash used in financing activity

(5,387,592)

(16,956)

(5,404,548)



                        


Overall impact on cash and cash equivalents


-




                        


 

(*) Adjusted for Euro commercial paper reclassification (refer to note 18 to the consolidated financial statements for the year ended December 31, 2012) from operating activity to financing activity to match current period presentation.

 

Impact on Earnings per share (EPS)

 

The Funds consolidation had an immaterial impact on EPS for the three month period ended March 31, 2012.

 

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

 

2.2.1      New and revised IFRSs effective for accounting periods beginning January 1, 2013

 

There are no IFRSs or IFRIC interpretations that were effective for the first time for the financial year beginning January 1, 2013 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 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 32 Financial Instruments requires presentation to clarify certain aspects because of diversity in application of the requirements on offsetting, focused on four main areas:

·      the meaning of 'currently has a legally enforceable right of set-off'

·      the application of simultaneous realisation and settlement

·      the offsetting of collateral amounts

·      the unit of account for applying the offsetting requirements

 

These amendments will not have a material impact on the Bank's condensed consolidated interim financial information.

 

January 1, 2014

 

                          

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

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

(continued)

 

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

 

 

 

 

 

New Standards and amendments to Standards:

 

Effective for annual periods beginning on or after

 

Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements relate only to investment entities, therefore will not apply to the Bank.

 

January 1, 2014

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 consolidated financial statements in the initial period when they become mandatorily effective.  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 it becomes mandatorily effective.

 

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 (collectively referred to as "ADCB" or the "Bank").

 

Subsidiaries

 

Subsidiaries are entities controlled by the Bank. The Bank controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the condensed consolidated interim financial information from the date that control commences until the date that control ceases.

 

Special Purpose Entities

 

Special purpose entities (SPEs) are entities that are created to accomplish a narrow and well-defined objective such as the securitisation of particular assets, or the execution of a specific borrowing or lending transaction. An SPE is consolidated if, based on an evaluation of the substance of its relationship with the Bank, the Bank's power over the SPE, exposures or rights to variable returns from its involvement with the SPE and its ability to use its power over the SPE at inception and subsequently to affect the amount of its return, the Bank concludes that it controls the SPE.

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.3         Basis of consolidation (continued)

 

Special Purpose Entities (continued)

 

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.

 

Funds under management

 

The Bank manages and administers assets held in unit trusts on behalf of investors. The financial statements of these entities are not included in the condensed consolidated interim financial information except when the Bank controls the entity, as referred to above, or is the principal investor.

 

Loss of control

 

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 profit or loss. 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.

 

Transactions eliminated on consolidation

 

Intra-group balances, and income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated in preparing the condensed consolidated interim financial information. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

 

Joint arrangements

Joint arrangements are arrangements of which the Bank has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements' returns. They are classified and accounted for as follows:

 

Joint operation - when the Bank has rights to the assets, and obligations for the liabilities, relating to an arrangement, it accounts for each of its assets, liabilities and transactions, including its share of those held or incurred jointly, in relation to the joint operation.

Joint venture - when the Bank has rights only to the net assets of the arrangements, it accounts for its interest using the equity method, as for associates.

 

2.4         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, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4         Investment securities (continued)

 

Financial assets and liabilities designated at fair value through profit or loss (FVTPL)

 

Financial assets and liabilities are classified as at FVTPL when either held for trading or when designated as at FVTPL.

 

A financial asset or liability 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.

 

A financial asset or liability 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 for measuring assets or liabilities on a different basis; 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.

 

Financial assets and liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in condensed consolidated interim income statement. 

 

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.

 

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 in the condensed consolidated interim income statement is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the investments' original effective interest rate.

 

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.

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4         Investment securities (continued)

 

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 interim statement of comprehensive income 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. Where 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 value 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.

 

For an available-for-sale equity security, a subsequent decline in the fair value of the instrument is 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.

 

Where there is no further objective evidence of impairment, the decline in the fair value of the financial asset is recognised in the condensed consolidated interim statement of comprehensive income.

 

§ 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;

 

§ 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 interim statement of comprehensive income, accumulating in equity.

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

2             Summary of significant accounting policies (continued)

 

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 valuation based on fair value at the statement of financial position date. 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 in 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 condensed consolidated interim 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, 2013 (continued)

 

3             Cash and balances with Central Banks


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Cash on hand

414,967

552,773

Balances with Central Banks

1,008,419

666,128

Reserves maintained with Central Banks

6,123,284

5,618,973

Certificate of deposits with U.A.E. Central Bank

3,200,000

2,500,000

Reverse repo placements

50,755

-


                          

                          





10,797,425

9,337,874


                          

                          

 

 

The geographical concentration is as follows:


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

10,724,579

9,278,553

Outside the U.A.E.

72,846

59,321


                          

                          





10,797,425

9,337,874


                          

                          

 

4         Deposits and balances due from banks


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Nostro balances

161,215

243,079

Margin deposits

318,111

480,291

Time deposits

11,407,140  

12,757,803

Reverse repo placements

2,387,450

1,830,945

Murabaha placements

600,000

1,095,000

Wakala placements

-

110,000


                          

                          





14,873,916

16,517,118


                          

                          

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

4         Deposits and balances due from banks (continued)

 

The geographical concentration is as follows:


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

6,016,255

7,496,926

Outside the U.A.E.

8,857,661

9,020,192


                          

                          





14,873,916

16,517,118


                          

                          

 

The Bank hedges its foreign currency Reverse repo placements for foreign currency exchange rate risk using foreign exchange forward contracts and designates these instruments as cash flow hedges. The fair value of these swaps at March 31, 2013 was AED Nil (December 31, 2012 - positive fair value AED 7,252 thousand).

 

5             Trading securities

 

Quoted:

As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Bonds

169,334

117,070

Equity instruments

575,552

524,807


                          

                          





744,886

641,877


                          

                          

 

Bonds represent investments in Government and public sector bonds. Equity instruments are equities held by the funds accounted for as subsidiaries and are invested in U.A.E. and G.C.C. securities.

 

The fair value of trading investments is based on quoted market prices.

 

 

The geographical concentration is as follows:


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

521,311

454,690

Outside the U.A.E.

223,575

187,187


                          

                          





744,886

641,877


                          

                          



 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

6             Derivative financial instruments

 

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


     Fair values


Assets

Liabilities

As at March 31, 2013 (unaudited)

AED'000

AED'000




Derivatives held for trading:



Foreign exchange contracts

145,425  

133,290  

Interest rate and cross currency swaps

3,678,891

3,774,616

Options

183,909

150,145

Futures

1,315

-  

Commodity and energy swaps

2,791

2,723

Swaptions

9,619

9,619


                          

                          





4,021,950  

4,070,393  

Derivatives held as fair value hedges:



Interest rate and cross currency swaps

312,542   

463,429




Derivatives held as cash flow hedges:



Interest rate swaps

20,642

-

Forward foreign exchange contracts

12,496

48,795


                          

                          





4,367,630  

4,582,617   


                          

                          

 


     Fair values


Assets

Liabilities

As at December 31, 2012 (audited)

AED'000

AED'000




Derivatives held for trading:



Foreign exchange contracts

182,709

178,041

Interest rate and cross currency swaps

3,990,096

4,000,297

Options

193,652

162,315

Futures

1,262

-

Commodity and energy swaps

191

147

Swaptions

8,964

8,964


                          

                          





4,376,874

4,349,764

Derivatives held as fair value hedges:



Interest rate and cross currency swaps

458,069

406,575




Derivatives held as cash flow hedges:



Interest rate swaps

27,752

-

Forward foreign exchange contracts

130,531

11,999


                          

                          





4,993,226

4,768,338


                          

                          

 

The net hedge ineffectiveness losses relating to the fair value and cash flow hedges amounting to AED 1,894 thousand (March 31, 2012 - gains of AED 35,603 thousand) have been recognised in the condensed consolidated interim income statement.

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

7             Investment securities


As at March 31, 2013 (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:





Bonds - Government

2,712,909

1,168,675  

235,735

4,117,319  

Bonds - Public sector

5,337,709

454,578

918,844

6,711,131

Bonds - Banks and financial institutions

922,212

446,918

6,942,899

8,312,029

Bonds - Corporate

42,564

-

1,110

43,674

Equity instruments

429

-

-

429


                          

                         

                           

                              






Total quoted

9,015,823

2,070,171

8,098,588

19,184,582  


                          

                         

                           

                              

Unquoted:





Bonds - Banks and financial institutions

-

2,057

-

2,057

Equity instruments

204,912

-

682

205,594

Mutual funds

70,757

-

-

70,757


                          

                         

                           

                              

Total unquoted

275,669

2,057

682

278,408  


                          

                         

                           

                              






Total available for sale investments

9,291,492

2,072,228

8,099,270

19,462,990


                          

                         

                           

                              

 

 


As at December 31, 2012 (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:





Bonds - Government

2,604,477

1,236,175

246,697

4,087,349

Bonds - Public sector

5,082,037

453,951

923,606

6,459,594

Bonds - Banks and financial institutions

798,663

481,091

6,606,270

7,886,024

Bonds - Corporate

-

-

1,089

1,089

Equity instruments

424

-

-

424


                          

                         

                           

                              






Total quoted

8,485,601

2,171,217

7,777,662

18,434,480


                          

                         

                           

                              

Unquoted:





Bonds - Banks and financial institutions

-

2,057

-

2,057

Equity instruments

204,921

-

701

205,622

Mutual funds

70,757

-

-

70,757


                          

                         

                           

                              

Total unquoted

275,678

2,057

701

278,436


                          

                         

                           

                              






Total available for sale investments

8,761,279

2,173,274

7,778,363

18,712,916


                          

                         

                           

                              

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

7             Investment securities (continued)

 

The Bank hedges interest rate risk on certain fixed rate/ floating rate investments through interest rate swaps and designates these as fair value and cash flow hedges, respectively. The net negative fair value of these interest rate swaps at March 31, 2013 was AED 324,080 thousand (December 31, 2012 - net negative fair value AED 384,649 thousand). The hedge ineffectiveness gains and losses relating to these hedges were included in the condensed consolidated interim income statement.

 

The Bank entered into repurchase agreements and total return swap agreements whereby bonds were pledged and held by counterparties 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, 2013 (unaudited)

As at December 31, 2012 (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 financing

1,008,570

855,271

1,220,647

1,063,133


                            

                            

                            

                            

Further, the Bank pledged investment securities with fair value amounting to AED 1,906,263 thousand (December 31, 2012 - AED 1,651,988 thousand) as collateral against margin calls. The risks and rewards relating to the investments pledged remain with the Bank.

 

8             Loans and advances, net


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Overdrafts (Retail and Corporate)

5,657,507

5,775,020

Corporate loans

100,125,381  

101,206,881

Retail loans

12,629,273  

12,563,043

Credit cards

2,081,421  

2,076,531

Islamic financing

9,064,877

6,600,046

Other facilities

1,515,818

1,437,494


                            

                           





131,074,277  

129,659,015

Less: Allowance for impairment

(6,696,064)  

(6,463,720)


                            

                           





124,378,213   

123,195,295


                            

                           

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

8             Loans and advances, net (continued)

 

Islamic financing assets

 


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Murabaha

776,200

720,544

Ijara financing

4,887,642

2,622,091

Mudaraba

493,863

471,696

Salam

2,817,430

2,720,103

Others

89,742

65,612


                       

                       


9,064,877

6,600,046

Less: Allowance for impairment

(28,193)

  (29,247)


                       

                       


9,036,684

6,570,799


                       

                       

 

The Bank hedges certain variable rate loans and advances for interest rate risk using interest rate swaps and designates these instruments as cash flow hedges. The positive fair value of these swaps at March 31, 2013 was AED 18,258 thousand (December 31, 2012 - positive fair value of AED 13,499 thousand).

 

Movement of the individual and collective impairment allowance on loans and advances 

 


March 31, 2013 (unaudited)


December 31, 2012 (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,

4,207,137

2,256,583

6,463,720


3,652,804

2,059,072

5,711,876    

Charge for the period/year

137,234

252,143

389,377


1,676,510

197,613

1,874,123

Recoveries during the period/year

 

(59,610)

 

-

 

(59,610)


 

(183,015)

 

-

 

(183,015)


                      

                      

                      


                      

                      

                      

Net charge for the period/year

 

77,624

 

252,143

 

329,767


 

1,493,495

 

197,613

 

1,691,108

Discount unwind

(34,141)

-

 (34,141)


(129,920)

-

(129,920)

Net amounts written-off

(63,309)

-

(63,309)


(809,111)

-

(809,111)

Currency translation

-

27

27


(131)

(102)

(233)


                      

                      

                      


                      

                      

                      









Balance as at

4,187,311

2,508,753

6,696,064


4,207,137

2,256,583

6,463,720


                      

                      

                      


                      

                      

                      

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

8             Loans and advances, net (continued)

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






As at March 31, 2013 (unaudited)


As at December 31, 2012 (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

9,231

-

 9,231


10,803

-  

10,803

Energy

9,691,833

 440,989

 10,132,822


9,863,141

423,428

10,286,569

Trading

1,118,095

 112,212

 1,230,307


983,414

39,633

1,023,047

Development  & construction

20,182,496

 239,816

 20,422,312


20,005,790

267,207

20,272,997

Real estate investment

33,402,540

 67,980

 33,470,520


30,526,476

61,144

30,587,620

Transport

1,231,839

 493,594

 1,725,433


1,275,907

479,606

1,755,513

Personal - retail

18,036,578

10,043  

  18,046,621  


17,622,127

10,245

17,632,372

Personal - collateralised

10,745,363

  275,805  

  11,021,168  


11,914,549

281,010

12,195,559

Government

2,595,283

-

 2,595,283


3,149,773

-  

3,149,773

Financial institutions (*)

8,097,098

 1,699,801

 9,796,899


8,113,300

1,583,274

9,696,574

Manufacturing

1,510,570

  104,517  

1,615,087


1,408,454

103,717

1,512,171

Services

19,083,775

 1,924,819

 21,008,594


19,834,167

1,701,850

21,536,017


                          

                          

                          


                        

                          

                          










125,704,701

5,369,576

131,074,277


124,707,901

4,951,114

129,659,015


                                  

                                  



                               

                                  


   Less: Allowance for impairment

(6,696,064)




(6,463,720)




                          




                          









Total



124,378,213




123,195,295




                                 




                                  

 

(*) includes investment companies.

 

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, 2013 (unaudited)

As at December 31, 2012 (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, 2013 (continued)

 

9             Investment properties

 


 Completed

and in use

Under development

 

Total


AED'000

AED'000

AED'000





At January 1, 2012                             

207,811

189,101

396,912

Additions during the year

-

85,625

85,625

Transfer from property and equipment, net

182,530

-

182,530

Transfer to property and equipment, net

(106,836)

-

(106,836)

Decrease in fair value

(18,810)

(10,026)

(28,836)


                          

                          

                          





At January 1, 2013 (audited)                      

264,695

264,700

529,395

Additions during the period

-

16,659

16,659


                          

                          

                          





At March 31, 2013 (unaudited)

264,695

281,359

546,054


                          

                          

                          

 

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 date of valuation is December 31, 2012.

 

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.

 

10          Other assets

 


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Interest receivable

954,074

845,442

Withholding tax

57,516

45,880

Prepayments

74,576

59,766

Clearing receivables

958

1,148

Acceptances

2,438,689

4,738,044

Others

376,688

235,682


                        

                        





3,902,501

5,925,962


                        

                        

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

10          Other assets (continued)

 

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 is therefore recognised as a financial liability (Note 15) 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.

 

 

11          Due to banks

 


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Vostro balances

245,235

120,504

Margin deposits

168,303

351,054

Time deposits

4,251,094

3,939,713


                       

                       





4,664,632

4,411,271


                       

                       

 

The Bank hedges certain time deposits for interest rate and foreign currency exchange risk using cross currency swaps and designate these as fair value hedges. The fair value of these swaps at March 31, 2013 was AED Nil (December 31, 2012 - positive fair value of AED 186 thousand).

 

12          Deposits from customers


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000

By category



Current account deposits

32,041,093

29,330,632

Margin deposits

566,394

345,079

Savings deposits

3,153,332

2,826,423

Time deposits

55,300,569

61,420,946

Murabaha deposits

9,927,052

6,578,970

Long term government deposits

436,008

449,569

Other Islamic deposits

9,631,540

8,265,306


                             

                             





111,055,988

109,216,925


                             

                             

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

12          Deposits from customers (continued)

 

Other Islamic deposits include the following:

 


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Wadiah - demand deposits

434,770

332,735

Mudaraba savings and term deposits

5,465,457

4,950,458

Wakala deposits

3,731,313

2,982,113


                      

                      


9,631,540

8,265,306


                      

                      

 

The Bank hedges certain foreign currency time deposits foreign currency exchange risk using foreign exchange forward contracts and designates these as cash flow hedges. The net negative fair value of these swaps at March 31, 2013 was AED 12,052 thousand (December 31, 2012 - net positive fair value of AED 13,257 thousand).

 

13          Euro commercial paper

 

The Bank established a USD 4 billion Euro commercial paper programme (the ECP Programme) for the issuance of Euro commercial paper under the agreement dated June 5, 2007 with Banc of America Securities Limited.

 

The Bank hedges ECP for foreign currency exchange risk through foreign exchange forward contracts and designates these instruments as cash flow hedges. The net negative fair value of these hedge contracts at March 31, 2013 was AED 24,247 thousand (December 31, 2012: net positive fair value of AED 98,024 thousand).

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

14          Borrowings

 

The details of borrowings as at March 31, 2013 (unaudited) are as follows:

 





Within 1 year


1-3 years


3-5 years


Over 5 years


Total

Instrument


Currency


AED'000


AED'000


AED'000


AED'000


AED'000














Unsecured notes


Chinese Renminbi (CNH)


                         -  


                   -  


       173,580


                         -  


       173,580



Malaysian Ringitt (MYR)


                         -  


       871,027


   847,028


                         -  


    1,718,055



Swiss Franc (CHF)


                         -  


       575,706


       388,677


                         -  


       964,383



Turkish Lira (TRY)


                         -  


                   -  


         94,003


                         -  


         94,003



U.A.E. Dirham (AED)


         1,253,000


                   -  


       500,000


                         -  


    1,753,000



US Dollar (US$)


-  


3,663,005


2,737,587


624,410


    7,025,002





                     


                     


                     


                     


                    





 1,253,000


5,109,738


4,740,875


           624,410


 11,728,023














Syndicated loans


US Dollar (US$)


         1,469,200


                   -  


                   -  


                         -  


1,469,200














Islamic sukuk notes


US Dollar (US$)


                         -  


                   -  


     1,830,155  


                         -  


  1,830,155














Subordinated notes - floating rate


US Dollar (US$)


                         -  


                   -  


    1,057,651


-


        1,057,651

                                        - fixed rate


US Dollar (US$)


                         -  


                   -  


-   


2,717,242  


    2,717,242














Tier 2 Loan


U.A.E. Dirham (AED)


                         -  


2,629,908  


    -


                         -  


    2,629,908














Borrowings through repurchase agreements


US Dollar (US$)


         1,336,768


      620,738  


       -


                         -  


    1,957,506



U.A.E. Dirham (AED)


         1,255,995  


                   -  


                   -  


                         -  


    1,255,995  





                     


                     


                     


                     


                    





5,314,963


8,360,384


7,628,681


3,341,652


 24,645,680














Fair value adjustment on borrowings hedged










       187,487  













                    


























 24,833,167













                    














 

 

Included in borrowings is AED 16,822,420  thousand which have been hedged using interest rate and cross currency swaps. These swaps are designated as either fair value or cash flow hedges. The net positive fair value of these swaps at March 31, 2013 was AED 175,577 thousand.


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

14          Borrowings (continued)

 

The details of borrowings as at December 31, 2012 (audited) are as follows:

 





Within 1 year


1-3 years


3-5 years


Over 5 years


Total

Instrument


Currency


AED'000


AED'000


AED'000


AED'000


AED'000














Unsecured notes


Chinese Renminbi (CNH)


                         -  


                   -  


       173,580


                         -  


       173,580



Malaysian Ringitt (MYR)


                         -  


       871,027


   847,028


                         -  


    1,718,055



Swiss Franc (CHF)


                         -  


       575,705


       388,677


                         -  


       964,382



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


-


587,680


    4,260,680





                     


                     


                     


                     


                    





 1,253,000


5,119,732


2,003,288


           587,680


    8,963,700














Syndicated loans


US Dollar (US$)


         3,739,849


                   -  


                   -  


                         -  


    3,739,849














Islamic sukuk 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$)


         1,450,631


      620,737 


       -


                         -  


    2,071,368



U.A.E. Dirham (AED)


         1,349,995


                   -  


                   -  


                         -  


    1,349,995





                     


                     


                     


                     


                    





7,793,475


5,740,469


11,574,387


587,680


 25,696,011














Fair value adjustment on borrowings hedged










       443,636













                    


























 26,139,647













                    














 

Included in borrowings is AED 15,347,201 thousand which have been hedged using interest rate and cross currency swaps. These swaps are designated as either fair value or cash flow hedges. The net positive fair value of these swaps at December 31, 2012 was AED 450,212 thousand.


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

14          Borrowings (continued)

 

Interest on unsecured notes is payable quarterly, semi annually and annually in arrears and the contractual coupon rates as at March 31, 2013 (unaudited) are as follows: 

 

Currency

Within 1 year

1-3 years

3-5 years

Over 5 years






CNH

-

-

Fixed rate of 3.7% p.a. & 4.125% p. a

-

MYR

-

Fixed rate of 5.2%p.a

Fixed rate 4.3% & 5.35% p.a.

-

CHF

-

Fixed rate of 3.01% p.a.

 Quarterly coupons with 110 basis point over CHF  LIBOR

-

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.

Fixed rate of 2.5% p.a.

Fixed rate from 4.7% to  5.1% p.a.

 

Syndicated loans

 

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

 

Sukuk financing notes

 

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

 

Subordinated notes

 

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 29). This has been approved by the Central Bank of the U.A.E.

 

Subordinated fixed rate notes:

 

Interest on the subordinated fixed rate notes is payable half yearly in arrears at a coupon rate of 4.5% fixed. The subordinated fixed 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 2018 and thereafter are amortised at the rate of 20% per annum until 2023 for capital adequacy calculation (Note 29). This has been approved by the Central Bank of the U.A.E.

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

14          Borrowings (continued)

 

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 loans 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 loans qualify as Tier 2 capital and has been amortised, starting 2012, at the rate of 20 per annum until maturity for capital adequacy calculation (Note 29). This has been approved by the Central Bank of the U.A.E. During the period, the Bank has repaid Tier 2 loans of AED 4,000,000 thousand.

 

Borrowings through repurchase agreements

 

US$:                       Quarterly coupons in arrears with 300 basis points plus LIBOR.

                                Half yearly coupons in arrears with 86 to 300 basis points plus LIBOR.

 

AED:                      Quarterly coupons in arrears with 85 to 300 basis points plus EIBOR.

 

15          Other liabilities


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Interest payable

613,981

752,030

Recognised liability for defined benefit obligations

234,719

213,631

Accounts payable and other creditors

150,651

247,759

Clearing payables

529

955

Deferred income

282,732

229,392

Acceptances (Note 10)

2,438,689

4,738,044

Others

1,016,806

813,034


                        

                        





4,738,107

6,994,845


                        

                        

 

 

16          Share capital


Authorised

   Issued and fully paid



As at

As at



March 31

December 31



2013

2012



(unaudited)

(audited)


AED'000

AED'000

AED'000

 

Ordinary shares of AED 1 each

5,595,597

5,595,597

5,595,597


                     

                     

                     

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

16          Share capital (continued)

 

As at March 31, 2013, Abu Dhabi Investment Council held 58.083% (December 31, 2012: 58.083%) of the Bank's issued and fully paid up share capital.

 

Treasury shares

 

As at March 31, 2013, of the total issued shares of the Bank, its managed funds, now accounted for as subsidiaries, held 8,062 thousand shares (December 31, 2012 - 11,033 thousand shares).

 

During the period ended March 31, 2013, the Bank bought back 1,115,689 ordinary shares at a total consideration of AED 4,276 thousand - these shares are held as treasury shares at March 31, 2013. This buyback programme has been approved by the Securities & Commodities Authority and Central Bank of the U.A.E.

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

17          Other reserves (unaudited)

 

Reserves movement for the three month period ended March 31, 2013:

 



Employees'





Foreign






incentive





currency


Cumulative



Treasury

plan

Statutory

Legal

General

Contingency

translation

Hedge

changes in



shares

shares, net

reserve

reserve

reserve

reserve

reserve

reserve

fair values

Total


AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000












Balance at January 1, 2013

(30,937)

(96,256)

1,950,650

1,905,863

2,000,000

 150,000

     (34,333)

    26,756

      416,848

6,288,591

Exchange difference arising on translation of foreign operations

-

-

-

-

-

-

        2,357

-

-

     2,357

Fair value changes of cash flow hedges on financial assets

-

-

-

-

-

-

-

    (7,273)

-

       (7,273)

Fair value changes on available for sale investments

-

-

-

-

-

-

-

-

22,894

      22,894

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

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

(110)

 

 (110)


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Other comprehensive income/(loss) for the period

                -

                -

                -

-  

-  

-  

 2,357

(7,273)

22,784

17,868

Shares - vested portion

-

9,935

-

-

-

-

-

-

-

9,935

Buy back of own shares (Note 16)

(4,276)

-

-

-

-

-

-

-

-

(4,276)

Net movement in treasury shares held by funds

8,924

-

-

-

-

-

-

-

-

8,924


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Balance at March 31, 2013

 (26,289)

(86,321)

1,950,650

1,905,863

2,000,000

 150,000

       (31,976)

    19,483

        439,632

6,321,042


                         

                        

                     

                     

                    

                        

                        

                   

                       

                     



 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

17          Other reserves (unaudited) (continued)

 

Reserves movement for the three month period ended March 31, 2012:

 



Employees'





Foreign






incentive





currency


Cumulative



Treasury

plan

Statutory

Legal

General

Contingency

translation

Hedge

changes in



shares

shares, net

reserve

reserve

reserve

reserve

reserve

reserve

fair values

Total


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

-

(104,595)

1,677,069

1,632,282

2,000,000

 150,000

      (27,521)

     (2,581)

       (404,758)

4,919,896

Exchange difference arising on translation of foreign operations

-

-

-

-

-

-

9,055

-

-

      9,055

Fair value changes of cash flow hedges on financial assets

-

-

-

-

-

-

-

     2,588

-

       2,588

Fair value changes on available for sale investments

-

-

-

-

-

-

-

-

273,460

   273,460

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

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

2,431

 

2,431


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Other comprehensive income for the period

                -

                -

                -

-  

-  

-  

  9,055

2,588

275,891

287,534

Shares - vested portion

-

10,628

-

-

-

-

-

-

-

10,628

Treasury shares arising on consolidation of Funds

(40,103)

-

-

-

-

-

-

-

-

(40,103)


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Balance at March 31, 2012 (*)

(40,103)

(93,967)

1,677,069

1,632,282

2,000,000

 150,000

       (18,466)

    7

         (128,867)

5,177,955


                         

                        

                     

                     

                    

                        

                        

                   

                       

                     

 

 

(*) Amounts have been restated as explained in Note 2.1



 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

18          Capital notes

 

In February 2009, the Department of Finance, Government of Abu Dhabi subscribed to 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. Redemption is only at the option of the Bank. 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 the 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 Bank 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 Bank 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.

 

19          Interest income (unaudited)


3 month period ended March 31


2013

2012

 

AED'000

AED'000

 



Loans and advances to banks

50,965

75,310

Loans and advances to customers

1,478,334

1,647,862

Investment securities

128,535

115,452


                        

                        





1,657,834

1,838,624


                        

                        

 

20       Interest expense (unaudited)


3 month period ended March 31


2013

2012


AED'000

AED'000




Deposits from banks

5,431

2,508

Deposits from customers

301,032

480,631

Borrowings

184,882  

132,606  


                        

                        





491,345

615,745


                        

                        

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

21          Net fees and commission income (unaudited)


3 month period ended March 31


2013

2012

 

AED'000

AED'000

Fees and commission income






Retail banking fees

172,838

171,920

Corporate banking fees

72,551

81,196

Brokerage fees

2,047

1,327

Fees from trust and other fiduciary activities

23,641

13,374

Other fees

10,230

21,417


                        

                        




Total fees and commission income

281,307

289,234




Fees and commission expenses

(66,414)

(42,440)


                        

                        




Net fees and commission income

214,893

246,794


                        

                        

 

22          Net trading income (unaudited)

 


3 month period ended March 31


2013

2012


AED'000

AED'000


 

 

Net gains on dealing in derivatives

5,486

23,046

Net gains from dealing in foreign currencies

44,349

39,046

Net gains from trading securities

76,036

69,869


                        

                        


 

 


125,871

131,961


                        

                        

 

23          Other operating income (unaudited)


3 month period ended March 31


2013

2012


AED'000

AED'000


 

 

Gains/(losses) arising on retirement of hedges

97,280

-

Property management income

28,558

23,506

Rental income

4,495

4,665

Income from retirement of long term debt

1,973

6,399

Dividends received

11,958

7,767

Others

5

2,968


                        

                        


 

 


144,269

45,305


                        

                        

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

 

24          Operating expenses (unaudited)

 


3 month period ended March 31


2013

2012


AED'000

AED'000




Staff expenses

301,251

292,109

Depreciation

31,959

32,787

Amortisation of intangible assets

7,882

7,882

Others

176,300

172,896


                        

                        





517,392

505,674


                        

                        

 

25          Impairment allowances (unaudited)

 


3 month period ended March 31


2013

2012


AED'000

AED'000




Impairment allowance on loans and advances, net (Note 8)

329,767  

287,436

Impairment recoveries on investment securities

(8,088)

(735)


                        

                        





321,679

286,701


                        

                        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

26          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 and treasury shares arising on consolidation of funds.

 

 

 


3 month period ended March 31


2013

2012


 

 

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

 

829,499   

 

796,984     

Less: Capital notes coupon paid (AED'000)

(120,000)

(120,000)


                        

                        

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

 

709,499  

 

676,984


                        

                        




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

 

5,594,699

 

5,595,597

Less: Treasury shares arising on consolidation of funds (000's)

(9,335)

(14,318)

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

 

(34,256)

 

(57,527)


                        

                        

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

 

5,551,108

 

5,523,752

Add: Treasury shares arising on consolidation of funds (000's)

9,335

14,318

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

 

34,256

 

57,527


                        

                        




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

 

5,594,699

 

5,595,597


                        

                        

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

0.13

0.12


                        

                        

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

0.13

0.12


                        

                        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

27          Commitments and contingent liabilities

 

The Bank had the following commitments and contingent liabilities as at:


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000

Commitments on behalf of customers



Letters of credit

6,986,957

6,251,347

Guarantees

12,652,231

12,250,409

Commitments to extend credit - Revocable                              

7,199,760

6,744,165

Commitments to extend credit - Irrevocable

3,947,785

3,210,238

Others

55,095

55,095


                        

                        





30,841,828

28,511,254

Others



Commitments for future capital expenditure

113,992

131,885

Commitments to invest in investment securities

212,778

212,764


                        

                        





31,168,598

28,855,903


                        

                        

 

28          Operating Segments

 

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's Management Executive 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;

 

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

 

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

 

Investments and treasury -   comprises of central treasury operations, management of the Bank's investment portfolio and interest rate, currency and commodity derivative portfolio and Islamic financing. 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. and Abu Dhabi Commercial Engineering Services L.L.C., and rental income of ADCB.

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

28          Operating segments (continued)

 

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.

 

The following is an analysis of the Bank's revenue and results by operating segment for the three month period ended March 31, 2013 (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

 

520,705


 

337,646


 

369,404


 

 31,297


 

1,259,052











Non-interest income

217,022


97,128


132,418


38,465


485,033 











Operating expenses

(306,823)


(141,609)


(50,055)


(18,905)


(517,392)


---------                        


---------                     


---------                     


---------                      


------------------                      

Operating profit before impairment allowances

 

430,904


 

293,165


 

451,767


 

50,857


 

1,226,693











Impairment (allowances) /recoveries

 

(329,424)


 

(343)


 

8,088


 

-


 

(321,679)


---------                        


---------                     


------------------                     


------------------                       


------------------                       

Profit before taxation

101,480 


292,822


459,855


50,857


905,014 











Overseas income tax expense

-


(2,030)


-


-


(2,030)


---------                        


---------                     


------------------                     


------------------                       


------------------                       

Net profit for the period

101,480


290,792


459,855


50,857


902,984


                        


                      


                      


                       


                        

 

Capital expenditure









 

33,570










                        

As at March 31, 2013 (unaudited)










Segment assets

61,594,974  


68,719,068 


49,122,984  


555,719 


179,992,745    


                        


                        


                         


                       


                           

 

Segment liabilities

 

30,903,559 


 

48,095,595 


 

75,485,546


 

17,262


 

154,501,962   


                        


                        


                           


                       


                           

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

28          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

 

604,055


 

274,893


 

326,795


 

24,954


 

1,230,697











Non-interest income

230,708


112,819


47,860


32,673


424,060











Operating expenses

(323,251)


(130,379)


(35,855)


(16,189)


(505,674)


                    


---------                    


---------                    


---------                    


---------                       

Operating profit before impairment allowances

 

511,512


 

257,333


 

338,800


 

41,438


 

1,149,083











Impairment (allowances) /recoveries

 

(157,469)


 

(129,967)


 

  735


 

-


 

(286,701)


---------                    


---------                    


---------                    


---------                    


---------                       

Profit before taxation

354,043


127,366


339,535


41,438


862,382











Overseas income tax expense

-


(1,624)


-


-


(1,624)


---------                    


---------                    


---------                    


---------                    


---------                       

Net profit for the period

354,043


125,742


339,535


41,438


860,758


                     


                     


                     


                     


                       

Capital expenditure









54,150










                       

As at December 31, 2012 (audited)










Segment assets

60,847,483


70,449,477


48,958,232


540,531


180,795,723


                       


                      


                        


                          


                         

 

Segment liabilities

29,946,977


51,180,230


74,946,671


14,256


156,088,134


                       


                      


                        


                           


                         

 

 

 

 

 

 

 

(*) Amounts have been restated as explained in Note 2.1



 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

28          Operating segments (continued)

 

For the purpose of monitoring segment performance and allocating resources between segments, all assets and 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.

 


AED' 000


AED' 000


AED' 000


AED'000


AED' 000











External

1,062,384


679,213


(35,976)


38,464


1,744,085


                          


                       


                       


                       


                       











Inter-segment

(324,657)


(244,439)


537,798


31,298


-


                          


                       


                       


                       


                       

 

 

 


AED' 000


AED' 000


AED' 000


AED'000


AED' 000











External

1,210,977


518,065


(106,958)


32,673


1,654,757


                       


                       


                       


                       


                       











Inter-segment

(376,214)


(130,353)


481,613


24,954


-


                       


                       


                       


                       


                       

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

28          Operating segments (continued)

 

Geographical information

 

The Bank operates in two principal geographic areas i.e. 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 which represents the operations of the Bank that originates from its branches in India, Jersey and through its subsidiaries and associates outside U.A.E.. The Bank's operations and information about its segment assets (non-current assets) by geographical location are detailed as follows:

 


Domestic (unaudited)

 

International (unaudited)


3 month period ended   March 31

 

3 month period ended March 31


2013

2012

 

2013

2012


AED'000

AED'000


AED'000

AED'000

Income






Net interest and Islamic financing income

 

1,251,107

 

1,222,441


 

7,945

 

8,256


                       

                       


                       

                       







Non-interest income

480,699

422,314


4,334

1,746


                       

                       


                       

                       







 

 


 Domestic

 

International

Non-current assets

As at

As at

 

As at

As at


March 31

December 31


March 31

December 31


2013

2012


2013

2012


(unaudited)

(audited)


(unaudited)

(audited)


AED'000

AED'000


AED'000

AED'000


 

 

 

 

 

Investment properties

546,054

529,395


-

-


                       

                       

 

                       

                       

Property and equipment, net

829,310

844,256


5,576

5,678


                    

                    

 

                    

                    

Intangible assets

84,244

92,126


-

-


                       

                                                                      

 

                       

                       

 

 

 

 


Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

29          Capital adequacy and capital management

 

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


Basel II


As at

As at


March 31

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000

Tier 1 capital



Share capital (Note 16)

5,595,597

5,595,597

Share premium

3,848,286

3,848,286

Other reserves (Note 17)

5,881,410

5,871,743

Retained earnings

5,247,438  

4,537,315

Non-controlling interests in equity of subsidiaries

478,420

437,800

Capital notes (Note 18)

4,000,000

4,000,000

Less: Intangible assets

(84,244)

(92,126)

Less: Securitisation exposures

(27,547)

(27,547)


                            

                            





24,939,360   

24,171,068


                            

                            

Tier 2 capital



Collective impairment allowance on loans and advances,net

1,615,162

1,601,418

Cumulative changes in fair value (Note 17)

197,834

187,582

Tier 2 loan (Note 14)

1,570,474

5,293,965

Subordinated notes (Note 14)

3,390,571

670,286

Less: Securitisation exposures

(27,547)

(27,547)


                            

                            





6,746,494

7,725,704


                            

                            




Total regulatory capital

31,685,854

31,896,772


                            

                            

Risk-weighted assets:



Credit risk

129,212,924

128,113,458

Market risk

5,699,981

3,749,544

Operational risk

7,216,753

6,526,611


                            

                            




Total risk-weighted assets

142,129,658

138,389,613 


                            

                            




Total Capital adequacy ratio

22.29%

23.05%


                            

                            

Tier 1 ratio

17.55%

17.47%


                            

                            

Tier 2 ratio

4.74%

5.58%


                            

                            




The capital adequacy ratio was above the minimum requirement of 12% for March 31, 2013 (December 31, 2012 - 12%) stipulated by the Central Bank of the U.A.E.

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the three month period ended March 31, 2013 (continued)

 

29          Capital adequacy and capital management (continued)

 

As mentioned in statement of changes in equity, the Shareholders have approved the distribution of proposed cash dividends of AED 1,398,620 thousand being 25% of the paid up share capital for the year 2012. The capital adequacy ratios after taking into account the dividend appropriation will, however, be higher than the minimum capital adequacy ratio required by the Central Bank of the U.A.E..

 

30          Legal proceedings

 

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.

 

 


This information is provided by RNS
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