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Tuesday 30 July, 2013

Abu Dhabi Comm Bnk

2nd Quarter Results

RNS Number : 4731K
Abu Dhabi Commercial Bank PJSC
30 July 2013
 



 

 

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

 

Review report and condensed consolidated interim financial  
information for the six month period ended June 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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

 

Review report and condensed consolidated interim financial information
for the six month period ended June 30, 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 June 30, 2013 and the related condensed consolidated interim statements of income, comprehensive income, changes in equity and cash flows for the six 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

July 30, 2013

 

 

 

 


Condensed consolidated interim statement of financial position

as at June 30, 2013

 



As at

As at



June 30

December 31



2013

          2012



(unaudited)

(audited)


Notes

AED'000

AED'000

ASSETS








Cash and balances with Central Banks

3

10,683,195

9,337,874

Deposits and balances due from banks

4

11,076,703  

16,517,118

Trading securities

5

613,503

641,877

Derivative financial instruments

6

4,042,679   

4,993,226

Investment securities

7

19,246,686  

18,712,916

Loans and advances, net

8

125,410,349  

123,195,295

Investment properties

9

546,543

529,395

Other assets

10

2,945,741  

5,925,962

Property and equipment, net


811,387

849,934

Intangible assets


76,362

92,126



                          

                          

Total assets


175,453,148    

180,795,723



                          

                          

LIABILITIES








Due to Central Bank


10,100

-  

Due to banks

11

4,881,489  

4,411,271

Derivative financial instruments

6

4,481,236

4,768,338

Deposits from customers

12

111,398,949

109,216,925

Euro commercial paper

13

4,993,184

4,557,108

Borrowings

14

21,942,219

26,139,647

Other liabilities

15

4,132,047   

6,994,845



                          

                          

Total liabilities


151,839,224    

156,088,134



                          

                          

EQUITY








Share capital

16

5,595,597

5,595,597

Share premium


3,848,286

3,848,286

Other reserves, net of treasury shares

17

4,938,145

6,288,591

Retained earnings


4,718,547  

4,537,315

Capital notes

18

4,000,000

4,000,000



                          

                          

Equity attributable to equity holders of the Bank


23,100,575     

24,269,789

Non-controlling interests


513,349

437,800



                          

                          

Total equity


23,613,924   

24,707,589



                          

                          

Total liabilities and equity


175,453,148    

180,795,723



                          

                          

 

 

 

This condensed consolidated interim financial information were approved by the Board of Directors and authorised for issue on July 30, 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 six month period ended June 30, 2013

 


 

3 month period ended June 30


6 month period ended June 30


 

2013

2012(*)

 

2013

2012(*)


Notes

AED'000

AED'000

 

AED'000

AED'000








Interest income

19

1,718,485   

1,965,222 


3,376,319

3,803,846

Interest expense

20

(372,332)

(595,775)


(863,677)

(1,211,520)



                        

                        


                        

                        








Net interest income


1,346,153   

1,369,447  


2,512,642

2,592,326



                        

                        


                        

                        

Income from Islamic financing


146,835

76,874


284,686

161,529

Islamic profit distribution


(32,344)

(72,288)


(77,632)

(149,125)



                        

                        


                        

                        








Net income from Islamic financing


114,491

4,586


207,054

12,404



                        

                        


                        

                        

Total net interest and Islamic

financing income


 

1,460,644

 

1,374,033 


 

2,719,696

 

2,604,730








Net fees and commission income

21

258,951   

267,742 


473,844

514,536

Net trading income

22

172,769   

29,966


298,640

161,927

Other operating income

23

99,017

55,157


243,286

100,462



                        

                        


                        

                        

Operating income


1,991,381    

1,726,898  


3,735,466

3,381,655








Operating expenses

24

(565,492)

(537,190)


(1,082,884)

(1,042,864)



                        

                        


                        

                        








Operating profit before

impairment allowances


 

1,425,889

 

1,189,708


 

2,652,582

 

2,338,791








Impairment allowances

25

(506,821) 

(492,024) 


(828,500)

(778,725)



                        

                        


                       

                        

Profit before taxation


919,068

697,684  


1,824,082

1,560,066








Overseas income tax expense


(1,569)

(2,621)


(3,599)

(4,245)



                        

                        


                        

                        








Net profit for the period


917,499    

695,063  


1,820,483

1,555,821



                        

                       


                        

                        

Attributed to:







Equity holders of the Bank


868,525    

725,308  


1,698,024

1,522,292

Non-controlling interests


48,974

(30,245)


122,459

33,529



                        

                        


                        

                        

Net profit for the period


917,499    

695,063  


1,820,483

1,555,821



                        

                        


                        

                        

Basic earnings per share (AED)

26

0.16

0.13


0.29

0.25



                     

                        


                        

                        

Diluted earnings per share (AED)

26

0.16

0.13


0.29

0.25



                        

                        


                        

                        

 

(*) 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 six month period ended June 30, 2013

 


3 month period ended June 30


6 month period ended June 30


2013

2012(*)


2013

2012(*)


AED'000

AED'000

 

AED'000

AED'000

Net profit for the period

917,499

695,063


1,820,483

1,555,821







Items that may be reclassified subsequently to income statement:






Exchange difference arising on translation of foreign operations

(19,164)

(18,474)


(16,807)

(9,419)

Fair value changes on cash flow hedges on financial assets

(2,318)

3,550


(9,591)

6,138

Fair value changes on available for sale investments

(214,235)

101,419


(191,341)

374,879

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

(5,432)

4,323


(5,542)

6,754


                          

                          


                         

                         

Other comprehensive (loss)/income for the period

 

(241,149)

 

90,818


 

(223,281)

 

378,352


                          

                          


                         

                         







Total comprehensive income for the period

676,350  

785,881


1,597,202

1,934,173


                          

                          


                         

                         

Attributed to:






Equity holders of the Bank

627,376   

816,126


1,474,743

1,900,644

Non-controlling interests

48,974

(30,245)


122,459

33,529


                          

                          


                         

                         







Total comprehensive income for the period

676,350  

785,881


1,597,202  

1,934,173


                          

                          


                          

                          

 

 

 

(*) 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 six month period ended June 30, 2013

 




Other



Equity






reserves,



attributable






net of 



to equity

  Non-



Share

Share

treasury

Retained

Capital

holders of

controlling

Total


capital

premium

shares

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

              -  

              -  

      -

1,698,024   

              -  

1,698,024 

122,459

1,820,483  

Other comprehensive loss for the period

              -  

              -  

(223,281)

-

              -  

(223,281)

         -

(223,281) 

Other movements (Note 17)

-

-

(1,127,165)

-

-

(1,127,165)

-

(1,127,165)

Net decrease in non-controlling interests

-

-

-

-

-

-

(46,910)

(46,910)

Dividend paid to shareholders, net

-

-

-

(1,397,983)

-

(1,397,983)

-

(1,397,983)

Realised gain on treasury shares

-

-

-

1,191

-

1,191

-

1,191

Capital notes coupon paid (Note 18)

-

-

-

(120,000)

-

(120,000)

-

(120,000)


                     

                     

                     

                     

                     

                        

                     

                        

Balance at June 30, 2013

  5,595,597

  3,848,286

4,938,145

4,718,547

4,000,000

23,100,575

513,349

23,613,924


                     

                     

                     

                     

                     

                        

                     

                        

 

 

 

 

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 six month period ended June 30, 2013 (continued)

 




Other



Equity






reserves,



attributable






net of



to equity

  Non-



Share

Share

treasury

Retained

Capital

holders of

controlling

Total


capital

premium

shares

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

-

-

-

1,522,292

-

1,522,292

33,529

1,555,821

Other comprehensive income for the period

-  

-  

378,352

-

-  

378,352 

-

378,352

Arising on consolidation of Fund subsidiaries

-

-

-

-

-

-

397,565

397,565

Other movements (Note 17)

-

-

(54,855)

-

-

(54,855)

-

      (54,855)

Realised gain on treasury shares

-

-

-

40

-

40

-

40

Dividend paid to shareholders, net

-

-

-

(1,118,308)

-

(1,118,308)

-

(1,118,308)

Net decrease in non-controlling interests

-

-

-

-

-

-

(18,022)

 (18,022)

Capital notes coupon paid (Note 18)

-

-

-

(120,000)

-

(120,000)

-

(120,000)


                     

                     

                     

                     

                     

                       

                 

                       

Balance at June 30, 2012 (*)

5,595,597

3,848,286

5,243,393

3,992,251

4,000,000

22,679,527

418,589 

23,098,116


                     

                     

                     

                     

                     

                       

                 

                       

 

 

(*) 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 six month period ended June 30, 2013

 




6 month period ended June 30




2013

2012(*)




AED'000

AED'000

OPERATING ACTIVITIES





Profit before taxation



1,824,082

1,560,066

Adjustments for:





Depreciation



64,935  

65,431

Amortisation of intangible assets



15,764  

15,764

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



966,255 

859,654

 

Discount unwind (Note 8)



(68,282)

(63,874)

 

Impairment (recoveries)/allowance on investment securities (Note 25)



(26,663)

8,020

 

Impairment allowance on property and equipment, net (Note 25)



-

21,337

 

Net gains from disposal of available for sale securities (Note 23)



(34,526)

(5,736)

 

Net gains from trading securities (Note 22)



(152,319)

(33,090)

 

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



3,807  

(26,441)

 

Employees' incentive plan benefit expense (Note 17)



19,871  

25,844

 




                           

                           






Operating profit before changes in operating assets and liabilities



2,612,924

2,426,975

Increase in due from banks



(6,834,591)

(3,276,183)

Decrease in net trading derivative financial instruments



92,314

90,450

Net proceeds from disposal of trading securities



180,693 

6,143

(Increase)/ decrease in loans and advances



(3,113,027)

487,933

Increase in other assets



(83,892)

(130,354)

Increase/(decrease) in due to banks



49,173    

(321,464)

Increase  in deposits from customers



2,218,572 

2,061,530

Increase/(decrease) in other liabilities



248,352  

(1,170,696)




                           

                           






Cash (used in)/from operations



(4,629,482)

174,334

Directors' remuneration paid



(5,375)

-

Overseas tax paid



(4,611)

-




                           

                           






Net cash (used in)/ from operations



(4,639,468) 

174,334




                           

                           

INVESTING ACTIVITIES





Impairment recoveries on investment securities (Note 25)



26,663 

1,923

Overseas tax paid, net



        (57,457)

-

Net proceeds from disposal of available for sale investment securities



1,894,965

385,908

Net purchase of available for sale securities



(2,755,247)

(3,196,107)

Additions to investment properties



(17,148)

(74,404)

Purchase of property and equipment, net



(26,388)

(69,356)




                           

                           






Net cash used in investing activities



(934,612)

(2,952,036)




                           

                           

FINANCING ACTIVITIES





Increase in Euro commercial paper



531,167 

3,150,185

Proceeds from borrowings



7,084,076

556,971

Repayment of borrowings



(10,698,693)

(6,183,416)

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



14,785

(1,558)

Dividends paid to shareholders, net



(1,397,983)

(1,118,308)

Shares buy back (Note 16)



(1,158,220)

-

Net movement in non-controlling interests



(49,320)

(18,093)

Purchase of employees' incentive plan shares



-

(40,000)

Capital notes coupon paid



(120,000)

(120,000)




                           

                           






Net cash used in financing activities



(5,794,188)

(3,774,219)




                           

                           






Net decrease in cash and cash equivalents



(11,368,268)

(6,551,921)






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



7,812,046   

12,709,712

 



                           

                           


Operating activities includes dividends income and interest income on available for sale investment securities.

(*) 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 six month period ended June 30, 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


June 30

2013

     December 31

2012


(unaudited)

(audited)


AED'000

AED'000




Cash and balances with Central Banks

10,683,195

9,337,874

Deposits and balances due from banks

11,076,703

16,517,118

Due to Central Bank

(10,100)

-

Due to banks

     (4,881,489)

(4,411,271)


                            

                            


16,868,309

21,443,721

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

 

(9,413,182)

 

(2,571,339)




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

356,919

307,932


                           

                          


7,812,046

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 six month period ended June 30, 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.

 

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 June 30, 2013 are similar in nature and magnitude. Note 8 provide the details of lending exposure to Government entities.

 

The results for the three and six month periods ended June 30, 2013 are not necessarily 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 six month period ended June 30, 2013 (continued)

 

2             Summary of significant accounting policies (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 six and three month periods ended June 30, 2012 have been restated in this condensed interim financial information - see below.

Subsidiaries

As a result of the adoption of IFRS 10, the Bank 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 January 1, 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 June 30, 2012 and its condensed consolidated interim statements of income and cash flows and earnings per share for the six  month period ended June 30, 2012 as a result of the consolidation of the Funds.



 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 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)

 


As at June 30, 2012 (unaudited)


As previously stated

 

Adjustments

 

As restated


AED'000

AED'000

AED'000

Assets




Trading securities

56,868

464,550

521,418

Investment securities

18,259,166

(36,205)

18,222,961

Other assets

9,212,519

3,314

9,215,833

Investment in associates

89,323

(89,323)

-



                        


Overall impact on total assets


342,336




                        


Liabilities




Deposits from customers

111,247,360

(20,438)

111,226,922

Other liabilities

9,812,272

(810)

9,811,462



                        


Overall impact on total liabilities


(21,248)




                       


Equity




Cumulative changes in fair value 

(26,330)

3,205

(23,125)

Retained earnings

4,002,620

(10,369)

3,992,251

Treasury shares

-

(40,699)

(40,699)

Non-controlling interests

7,142

411,447

418,589



                        


Overall impact on equity


363,584




                        


 

Condensed consolidated interim income statement (extract)

 


Six month period ended June 30, 2012 (unaudited)


As previously stated (*)

Adjustments

for Funds consolidation

 

As restated


AED'000

AED'000

AED'000

Net interest and Islamic financing income

2,604,865

(135)

2,604,730

Net fees and commission income

518,981

(4,445)

514,536

Net trading income

144,664

17,263

161,927

Other operating income

84,583

15,879

100,462  



                        


Overall impact on operating income


28,562


Operating expenses

(1,042,492)

(372)

(1,042,864)

Share of profit of associates

7,506

(7,506)

-



                        


Overall impact on net profit

1,535,137

20,684

1,555,821



                        


Overall impact on net profit attributable to non-controlling interests

 

1,625

 

31,904

 

33,529



                        


 

(* )Hedge ineffectiveness and gains on sale of available for sale investments reclassified from net trading income to net interest and Islamic financing income and other operating income respectively to match current period presentation.

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 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)

 


Six month period ended June 30, 2012 (unaudited)


As previously stated(*)

Adjustments

for Funds consolidation

 

As restated


AED'000

AED'000

AED'000

Net cash from operations

171,154

3,180

174,334

Net cash used in investing activity

(2,967,696)

15,660

(2,952,036)

Net cash used in financing activity

(3,755,379)

(18,840)

(3,774,219)



                        


Overall impact on cash and cash equivalents


-




                        


 

(*)To match with current period presentation the following have been reclassified:

- Euro commercial paper (refer to note 18 to the consolidated financial statements for the year ended December 31, 2012) from operating activity to financing activity; and

- Net purchase of trading securities and dividend received from investment activities to operating activities.

 

Impact on Earnings per share (EPS)

 

The Funds consolidation had an immaterial impact on EPS for the six month period ended June 30 2013.

 

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

 

Other than the impact of early adoption of IFRS 10 set out in Note 2.1, there are no other 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 six month period ended June 30, 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 because 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 six month period ended June 30, 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 six month period ended June 30, 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 six month period ended June 30, 2013 (continued)

 

2             Summary of significant accounting policies (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 six month period ended June 30, 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.

 

3             Cash and balances with Central Banks


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Cash on hand

398,310

552,773

Balances with Central Banks

1,243,882

666,128

Reserves maintained with Central Banks

6,519,370

5,618,973

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

2,500,000

2,500,000

Reverse repo placements

21,633

-


                          

                          





10,683,195

9,337,874


                          

                          

 

 

The geographical concentration is as follows:


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

10,628,592

9,278,553

Outside the U.A.E.

54,603

59,321


                          

                          





10,683,195

9,337,874


                          

                          



 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

4         Deposits and balances due from banks


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Nostro balances

566,908  

243,079

Margin deposits

172,555  

480,291

Time deposits

9,487,240   

12,757,803

Reverse repo placements

-    

1,830,945

Murabaha placements

850,000  

1,095,000

Wakala placements

-  

110,000


                          

                          





11,076,703

16,517,118


                          

                          

 

 

The geographical concentration is as follows:


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

4,175,003

7,496,926

Outside the U.A.E.

6,901,700

9,020,192


                          

                          





11,076,703

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 June 30, 2013 was AED Nil (December 31, 2012 - positive fair value AED 7,252 thousand).

 

5             Trading securities

 

Quoted:

As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Bonds

4,569

117,070

Equity instruments

608,934

524,807


                          

                          





613,503

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 mainly invested in U.A.E. and G.C.C. securities.

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

5             Trading securities (continued)

 

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

 

The geographical concentration is as follows:


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

425,804

454,690

Outside the U.A.E.

187,699

187,187


                          

                          





613,503

641,877


                          

                          

 

6             Derivative financial instruments

 

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


     Fair values


Assets

Liabilities

As at  June 30, 2013 (unaudited)

AED'000

AED'000




Derivatives held for trading:



Foreign exchange contracts

340,804

350,783

Interest rate and cross currency swaps

3,275,865

3,248,935

Options

31,002

153,696

Futures

1,237

4,056

Commodity and energy swaps

8,074

7,898

Swaptions

68,844

25,660


                          

                          





3,725,826

3,791,028

Derivatives held as fair value hedges:



Interest rate and cross currency swaps

280,258

651,698




Derivatives held as cash flow hedges:



Interest rate swaps

20,928

2,483

Forward foreign exchange contracts

15,667

36,027


                          

                          





4,042,679 

4,481,236 


                          

                          



 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

6             Derivative financial instruments (continued)

 


     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 3,807 thousand (June 30, 2012 - gains of AED 26,441 thousand) have been recognised in the condensed consolidated interim income statement.

 

 

7             Investment securities


As at June 30, 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

2,571,306

1,403,419

233,073

4,207,798

Bonds - Public sector

5,272,556

447,718

908,977

6,629,251

Bonds - Banks and financial institutions

1,455,146

605,301

6,017,635

8,078,082

Bonds - Corporate

41,078

-  

1,107

42,185

Equity instruments

712

-  

-  

712


                          

                         

                         

                              






Total quoted

9,340,798

2,456,438

7,160,792

18,958,028  


                          

                         

                         

                              

Unquoted:





Bonds - Banks and financial institutions

-  

-  

32

32

Equity instruments

210,615

-  

692

211,307

Mutual funds

77,319

-  

-  

77,319


                          

                         

                         

                              

Total unquoted

287,934

-

724

288,658  


                          

                         

                         

                              






Total available for sale investments

9,628,732

2,456,438

7,161,516

19,246,686


                          

                         

                         

                              

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

7             Investment securities (continued)

 


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


                          

                         

                           

                              

 

 

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 June 30, 2013 was AED 237,405 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 June 30, 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

839,665

721,745

1,220,647

1,063,133


                            

                            

                            

                            

Further, the Bank pledged investment securities with fair value amounting to AED 1,961,512 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.

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

8             Loans and advances, net


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Overdrafts (Retail and Corporate)

5,113,452

5,775,020

Corporate loans

99,966,469

101,206,881

Retail loans

12,664,372

12,563,043

Credit cards

2,275,291

2,076,531

Islamic financing (see below)

9,843,682

6,600,046

Other facilities

2,278,472

1,437,494


                            

                           





 132,141,738   

129,659,015

Less: Allowance for impairment

(6,731,389)  

(6,463,720)


                            

                           





125,410,349    

123,195,295


                            

                           

 

Islamic financing assets


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Murabaha

834,301

720,544

Ijara financing

5,395,107

2,622,091

Mudaraba

488,045

471,696

Salam

3,037,765

2,720,103

Others

88,464

65,612


                       

                       


9,843,682

6,600,046

Less: Allowance for impairment

(26,755)

  (29,247)


                       

                       


9,816,927

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 June 30, 2013 was AED 20,928 thousand (December 31, 2012 - positive fair value of AED 13,499 thousand).

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

8             Loans and advances, net (continued)

 

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

 


June 30, 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

701,471

264,784

966,255


1,676,510

197,613

1,874,123

 

Recoveries during the period/year

 

(111,092)

 

-  

 

 (111,092)


 

(183,015)

 

-

 

(183,015)

 


                      

                      

                      


                      

                      

                      

 

Net charge for the period/year

 

590,379

 

264,784

 

855,163


 

1,493,495

 

197,613

 

1,691,108

 

Discount unwind

(68,282)

-  

(68,282)


(129,920)

-

(129,920)

 

Net amounts written-off, net

(519,022)

-  

(519,022)


(809,111)

-

(809,111)

 

Currency translation

 

-  

 

(190)

 

(190)


 

(131)

 

(102)

 

(233)

 


                      

                      

                      


                      

                      

                      

 









 

Balance as at

4,210,212

2,521,177

6,731,389


4,207,137

2,256,583

6,463,720

 


                      

                      

                      


                      

                      

                      

 









 

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


 









 


As at June 30, 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

8,727

-  

8,727


10,803

-  

10,803

Energy

9,712,979

336,828

10,049,807


9,863,141

423,428

10,286,569

Trading

1,194,667

149,351

  1,344,018 


983,414

39,633

1,023,047

Development  & construction

 

19,615,900

 

310,329

 

19,926,229


 

20,005,790

 

267,207

20,272,997

Real estate investment

 

34,035,220

 

68,434 

 

34,103,654


 

30,526,476

 

61,144

30,587,620

Transport

1,246,782

481,093

1,727,875


1,275,907

479,606

1,755,513

Personal - retail

19,210,581

13,860

19,224,441


17,622,127

10,245

17,632,372

Personal - collateralised

 

10,086,322

 

286,480

 

10,372,802


 

11,914,549

 

281,010

 

12,195,559

Government

2,269,649

-  

2,269,649


3,149,773

-  

3,149,773

Financial institutions (*)

 

8,118,010

 

2,180,868

 

10,298,878


 

8,113,300

 

1,583,274

9,696,574

Manufacturing

2,404,028

100,140

2,504,168


1,408,454

103,717

1,512,171

Services

18,442,070

1,869,420

20,311,490


19,834,167

1,701,850

21,536,017


                           

                      

                      


                       

                    

                       










126,344,935

5,796,803

132,141,738


124,707,901

4,951,114

129,659,015


                           

                     



                        

                   









Less: Allowance for impairment


(6,731,389)




(6,463,720)




                           




                       

Total



125,410,349




123,195,295




                           




                        

(*) includes investment companies.

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

8             Loans and advances, net (continued)

 

The Bank entered into repurchase agreements whereby loans are pledged and held by counter parties as collateral. The risks and rewards relating to the loans pledged will remain with the Bank.

 

The following table reflects the carrying value of these loans and the associated financial liabilities:

 


As at June 30, 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


                            

                            

                            

                            

 

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

-

17,148

17,148

Transfer to completed property on completion of construction

 

281,848

 

(281,848)

 

-


                          

                          

                          





At June 30, 2013 (unaudited)

546,543

-

546,543


                          

                          

                          

 

The fair value of the Bank's investment properties is 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 the last valuation was 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.

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

10          Other assets

As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Interest receivable

903,184

845,442

Withholding tax

104,244

45,880

Prepayments

83,028

59,766

Clearing receivables

-

1,148

Acceptances

1,615,462

4,738,044

Others

239,823

235,682


                        

                        


2,945,741

5,925,962


                        

                        

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


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Vostro balances

231,048

120,504

Margin deposits

183,961

351,054

Time deposits

4,466,480

3,939,713


                       

                       


4,881,489

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 June 30, 2013 was AED Nil (December 31, 2012 - positive fair value of AED 186 thousand).

 

12          Deposits from customers


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000

By category



Current account deposits

35,505,979

29,330,632

Margin deposits

354,881

345,079

Savings deposits

3,369,126

2,826,423

Time deposits

52,816,033

61,420,946

Murabaha deposits

9,465,701

6,578,970

Long term government deposits

436,008

449,569

Other Islamic deposits (see below)

9,451,221

8,265,306


                             

                             


111,398,949

109,216,925


                             

                             

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

12          Deposits from customers (continued)

 

Other Islamic deposits include the following:


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Current account deposits

1,544,115

1,184,523

Margin deposits

7,706

7,675

Mudaraba savings deposits

2,885,003

2,284,227

Mudaraba term deposits

2,055,377

1,806,767

Wakala deposits

2,959,020

2,982,114


                      

                      


9,451,221

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 June 30, 2013 was AED 23,292 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 positive fair value of these hedge contracts at June 30, 2013 was AED 2,932 thousand (December 31, 2012: net positive fair value of AED 98,024 thousand).

 

 


Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

14          Borrowings

 

The details of borrowings as at June 30, 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$)


-  


3,664,603


2,736,812


624,410


7,025,825





                     


                     


                     


                     


                    





1,253,000


5,205,339


4,646,097


624,410


11,728,846














Islamic sukuk notes


US Dollar (US$)


-  


-  


1,830,623


-  


1,830,623














Subordinated notes - floating rate


US Dollar (US$)


-  


1,057,817


-  


-  


1,057,817

                                        - fixed rate


US Dollar (US$)


-  


-  


-       


3,813,940


3,813,940



Swiss Franc (CHF)


-  


-  


-  


570,194


570,194














Borrowings through repurchase agreements


US Dollar (US$)


1,743,002


179,977


-  


-  


1,922,979



U.A.E. Dirham (AED)


1,156,995


-  


-  


-  


1,156,995





                     


                     


                     


                     


                    





4,152,997


6,443,133


6,476,720


5,008,544


22,081,394














Fair value adjustment on borrowings hedged










       (139,175) 













                    


























 21,942,219













                    














 

 

Included in borrowings is AED 16,690,603 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 June 30, 2013 was AED 136,518 thousand.


Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 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 six month period ended June 30, 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 June 30, 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.

 

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 and the contractual coupon rates as at June 30, 2013 (unaudited) are as follows:

 

Currency

Over 5 years

USD

Fixed rate 4.5% to 3.125%

CHF

Fixed rate 1.875% with 1 basis point over coupon



 

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. Subordinated notes of AED 1,666,713 thousand mature in 2023 but are callable after 5 years from the issuance date at the option of the Bank.

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 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 were to mature seven years from the date of the issue and interest was 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 provided that the Bank had 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 qualified as Tier 2 capital and were being amortised, starting 2012, at the rate of 20% per annum until maturity for capital adequacy calculation (Note 29).

 

The Bank repaid the entire amount of the Tier 2 loan in the first half of 2013.

 

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 basis points plus EIBOR.

 

The Bank has undrawn borrowing floating rate facilities of AED 1,469,200 thousand (December 31, 2012 - AED Nil), expiring within one year.   

 

15          Other liabilities


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000




Interest payable

433,726

752,030

Recognised liability for defined benefit obligations

227,817

213,631

Accounts payable and other creditors

186,944

247,759

Clearing payables

370

955

Deferred income

308,359

229,392

Acceptances (Note 10)

1,615,462

4,738,044

Others

1,359,369

813,034


                        

                        





4,132,047

6,994,845


                        

                        

 

16          Share capital


Authorised

   Issued and fully paid



As at

As at



June 30

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 six month period ended June 30, 2013 (continued)

 

16          Share capital (continued)

 

As at June 30, 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 June 30, 2013, of the total issued shares of the Bank, its managed funds, now accounted for as subsidiaries, held 7,312 thousand shares (December 31, 2012 - 11,033 thousand shares).

 

During the period ended June 30, 2013, the Bank bought back 262,981,483 ordinary shares at a total consideration of AED 1,158,220 thousand - these shares are held as treasury shares at June 30, 2013. This buyback programme has been approved by the Securities & Commodities Authority and Central Bank of the U.A.E.

 

Subsequent to the reporting date, the Bank further bought back 77,620,129 ordinary shares at a total consideration of AED 377,753 thousand.

 


Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

17          Other reserves, net of treasury shares (unaudited)

 

Reserves movement for the six month period ended June 30, 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

-

-

-

-

-

-

(16,807)

-

-

(16,807)

Fair value changes on cash flow hedges on financial assets

-

-

-

-

-

-

-

(9,591)

-

(9,591)

Fair value changes on available for sale investments

-

-

-

-

-

-

-


(191,341)

(191,341)

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

-

-

-

-

-

-

-

 

-

 

(5,542)

 

(5,542)


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Other comprehensive loss for the period

                -

                -

                -

-  

-  

-  

(16,807)

(9,591)

(196,883)

(223,281)

Shares - vested portion

-

19,871

-

-

-

-

-

-

-

19,871

Buy back of own shares (Note 16)

(1,158,220)

-

-

-

-

-

-

-

-

(1,158,220)

Net movement in treasury shares held by funds

11,184

-

-

-

-

-

-

-

-

11,184


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Balance at June 30, 2013

(1,177,973)

(76,385)

1,950,650

1,905,863

2,000,000

 150,000

        (51,140)

17,165

219,965

4,938,145


                         

                        

                     

                     

                    

                        

                        

                   

                       

                     



 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

17          Other reserves, net of treasury shares (unaudited) (continued)

 

Reserves movement for the six month period ended June 30, 2012:

 



Employees'





Foreign






incentive





currency


Cumulative



Treasury

plan

Statutory

Legal

General

Contingency

translation

Hedge

changes in



shares

shares, net

reserve

reserve

reserve

reserve

reserve

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

-

-

-

-

-

-

(9,419)

-

-

      (9,419)

Fair value changes on cash flow hedges on financial assets

-

-

-

-

-

-

-

     6,138

-

        6,138

Fair value changes on available for sale investments

-

-

-

-

-

-

-

-

374,879

    374,879

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

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

6,754

 

6,754


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Other comprehensive (loss)/income for the period

                -

                -

                -

-  

-  

-  

(9,419)

6,138

381,633

378,352

Shares purchased

-

(40,000)

-

-

-

-

-

-

-

(40,000)

Shares - vested portion

-

25,844

-

-

-

-

-

-

-

25,844

Treasury shares arising on consolidation of Funds

(40,699)

-

-

-

-

-

-

-

-

(40,699)


                         

                        

                     

                     

                     

                         

                       

                   

                       

                     

Balance at June 30, 2012 (*)

(40,699)

(118,751)

1,677,069

1,632,282

2,000,000

 150,000

       (36,940)

3,557

          (23,125)

5,243,393


                         

                        

                     

                     

                    

                        

                        

                   

                       

                     

 

 

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



 


Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 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 June 30

 

6 month period ended June 30


2013

2012

 

2013

2012


AED'000

AED'000

 

AED'000

 AED'000


 

 

 

 

 

Loans and advances to banks

44,744

58,524


95,709

133,834

Loans and advances to customers

1,569,202

1,787,730


3,047,536

3,435,592

Investment securities

104,539

118,968


233,074

234,420


                      

                     


                       

                     








1,718,485

1,965,222


3,376,319

3,803,846


                       

                     


                          

                     

 

 

20          Interest expense (unaudited)

 


3 month period ended June 30

 

6 month period ended June 30


2013

2012

 

2013

2012


AED'000

AED'000

 

AED'000

AED'000


 

 

 

 

 

Deposits from banks

7,221

3,461


12,652

5,969

Deposits from customers and euro commercial paper

 

241,948

 

432,698


 

542,980

 

913,329

Borrowings

123,163

159,616


308,045

292,222


                     

                   


                     

                      








372,332

595,775


863,677

1,211,520


                     

                   


                      

                      

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

21          Net fees and commission income (unaudited)

 


3 month period ended June 30

 

6 month period ended June 30


2013

2012

 

2013

2012


AED'000

AED'000

 

AED'000

    AED'000


 

 

 

 

 

Fees and commission income












Retail banking fees

206,586

173,001


379,424

344,921

Corporate banking fees

79,105

117,635


151,656

198,831

Brokerage fees

4,357

851


6,404

2,178

Fees from trust and other fiduciary activities

30,870

19,341


54,511

32,715

Other fees

11,124

6,327


21,354

27,744


                   

                    


                    

                   







Total fees and commission income

332,042

317,155


613,349

606,389

Fees and commission expenses

(73,091)

(49,413)


(139,505)

(91,853)


                    

                   


                     

                    







Net fees and commission income

258,951

267,742


473,844

514,536


                     

                   


                     

                   

 

 

22          Net trading income (unaudited)

 


3 month period ended June 30

 

6 month period ended June 30


2013

2012

 

2013

2012


AED'000

AED'000


AED'000

AED'000

Net gains on dealing in derivatives

32,504

27,398


37,990

50,444

Net gains from dealing in foreign currencies

63,982

39,347


108,331

78,393

Net gains/(losses) from trading securities

76,283

(36,779)


152,319

33,090


                  

                 


                  

                 








172,769

29,966


298,640

161,927


                  

                  


                   

                  

 

23          Other operating income (unaudited)

 


3 month period ended June 30

 

6 month period ended June 30


2013

2012

 

2013

2012


AED'000

AED'000


AED'000

AED'000

Gains/(losses) arising on retirement of hedges

5,808

-


103,088

-

Net gains from investment securities

34,526

5,736


34,526

5,736

Property management income

29,352

30,880


57,910

54,386

Rental income

6,994

3,650


11,489

8,315

Income from retirement of long term debt

-  

-


1,973

6,399

Dividends received

17,783

8,121


29,741

15,888

Others

4,554

6,770


4,559

9,738


                

                 


                  

                 








99,017

55,157


243,286

100,462


                  

                  


                    

                  

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

24          Operating expenses (unaudited)

 


3 month period ended June 30

 

6 month period ended June 30


2013

2012

 

2013

2012


AED'000

AED'000


AED'000

AED'000

Staff expenses

317,711

308,319


618,962

600,428

Depreciation

32,976

        32,644


64,935

65,431

Amortisation of intangible assets

7,882

           7,882


15,764

15,764

Others

206,923 

188,345


383,223

361,241


                

                 


                  

                 








565,492

537,190


1,082,884

1,042,864


                  

                  


                    

                  

 

25          Impairment allowances (unaudited)

 


3 month period ended June 30

 

6 month period ended June 30


2013

2012

 

2013

2012


AED'000

AED'000


AED'000

AED'000

Impairment allowance on loan advances, net

(Note 8)

 

525,396

 

461,932


 

855,163

 

749,368

Impairment (recoveries)/allowance on investment securities

 

(18,575)

 

8,755


 

(26,663)

 

8,020

Impairment allowance on property and equipment, net

 

-  

 

21,337


 

-  

 

21,337


                

                 


                  

                 








506,821

492,024


828,500

778,725


                  

                  


                    

                  

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 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 June 30

 

6 month period ended June 30


2013

2012(*)

 

2013

2012(*)

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

 

868,525

 

725,308


 

1,698,024

 

1,522,292

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)

 

868,525

 

725,308


                  1,578,024

 

1,402,292


                      

                     


                    

                     

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

 

5,595,597

 

5,595,597


 

5,595,597

 

5,595,597

Less: Treasury shares arising on buy back (000's)                                 

(173,774)

-  


(87,814)

-  

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

 

(7,674)

 

(14,451)


 

(8,500)     

 

(14,384)

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

 

(30,201)

 

(59,575)

 

 

 

(34,125)

 

(58,551)


                      

                  


                  

                  

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

 

5,383,948

 

5,521,571


 

5,465,158

 

5,552,662

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

 

7,674

 

14,451


 

8,500

 

14,384

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

 

30,201

 

59,575


 

34,125

 

58,551


                     

                  


                  

                  

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

 

5,421,823

 

5,595,597


 

5,507,783

 

5,595,597


                       

                 


                      

                  

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

0.16

0.13


0.29

0.25


             

            


            

           

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

0.16

           0.13


0.29

    0.25


           

           


           

          

 

 

 

(*) Restated as explained in Note 2.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

27          Commitments and contingent liabilities

 

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


As at

As at


June 30

December 31


2013

2012


(unaudited)

(audited)


AED'000

AED'000

Commitments on behalf of customers



Letters of credit

8,068,023

6,251,347

Guarantees

12,694,436

12,250,409

Commitments to extend credit - Revocable                              

7,751,774

6,744,165

Commitments to extend credit - Irrevocable

4,471,553

3,210,238

Others

-  

55,095


                        

                        





32,985,786

28,511,254

Others



Commitments for future capital expenditure

183,305

131,885

Commitments to invest in investment securities

68,289

212,764


                        

                        





33,237,380

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 six month period ended June 30, 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 six month period ended June 30, 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

 

1,056,534


 

776,465


 

825,029


 

61,668 


 

2,719,696

Non-interest income

449,085


204,476


283,451


78,758


1,015,770

Operating expenses

(657,062)


(287,850)


(93,383)


(44,589)


 (1,082,884)


                    


                    


                    


                    


                    

Operating profit before impairment

allowances

 

848,557


 

693,091


 

1,015,097


 

95,837


 

2,652,582

Impairment (allowances)/ recoveries

(801,902)


(53,261)


26,663


-


(828,500)


                    


                   


                    


                    


                    

Profit before income tax expense

46,655


639,830


1,041,760


95,837


1,824,082

Overseas income tax expense

-


(3,599)


-


-


(3,599)


                    


                    


                    


                    


                    

Net profit for the period

46,655


636,231


1,041,760


95,837


1,820,483


==========


==========


==========


==========


==========

Capital expenditure









43,536










==========











As at June 30, 2013 (unaudited)










Segment assets

58,989,416


71,434,824


44,470,793


558,115


175,453,148


=============


=============


============


==========


=============

Segment liabilities

32,213,826


40,901,455


78,319,006


404,937


151,839,224


=============


=============


============


===========


=============


              

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the six month period ended June 30, 2013 (continued)

 

28          Operating segments (continued)

 

The following is an analysis of the Bank's revenue and results by operating segment for the six month period ended June 30, 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

 

1,199,549


 

725,287


 

621,832


 

58,062   


 

2,604,730

Non-interest income

345,415   


250,434


101,715


79,361


776,925

Operating expenses

(664,352)


(265,095)


(78,587)


(34,830)


(1,042,864)


                    


                    


                    


                    


                    

Operating profit before impairment

allowances

 

880,612


 

710,626


 

644,960


 

102,593


 

2,338,791

Impairment allowances

(472,746)


(276,413)


(8,229)


(21,337)


(778,725)


                    


                   


                    


                    


                    

Profit before income tax expense

407,866


434,213


636,731


81,256


1,560,066

Overseas income tax expense

-  


(4,245)


-  


-  


(4,245)


                    


                    


                    


                    


                    

Net profit for the period

407,866


429,968


636,731


81,256


1,555,821


==========


==========


==========


==========


==========

Capital expenditure









143,760










==========

As at December 31, 2012 (unaudited)










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 six month period ended June 30, 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 June 30, 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

 

535,829


 

438,819


 

455,625


 

30,371   


 

1,460,644

Non-interest income

232,063


107,348


151,033


40,293


530,737

Operating expenses

(350,239)


(146,241)


(43,328)


(25,684)


(565,492)


                    


                    


                    


                    


                    

Operating profit before impairment

allowances

 

417,653


 

399,926


 

563,330


 

44,980


 

1,425,889

Impairment (allowances)/recoveries

(472,478)


(52,918)


18,575


-


(506,821)


                    


                   


                    


                    


                    

Profit before income tax expense

(54,825)


347,008


581,905


44,980


919,068

Overseas income tax expense

-


(1,569)


-


-


(1,569)


                    


                    


                    


                    


                    

Net profit for the period

(54,825)


345,439


581,905


44,980


917,499


==========


==========


==========


==========


==========

Capital expenditure









9,966










==========

 

The following is an analysis of the Bank's revenue and results by operating segment for the three month period ended June 30, 2012 (unaudited):

 



 

Wholesale

banking


Investments and

treasury (*)


 

Property management


 

 

Total


AED' 000


AED' 000


AED' 000


AED' 000


AED' 000

Net interest and Islamic financing

income

 

595,494


 

450,394


 

295,037


 

33,108    


 

1,374,033

Non-interest income

114,707


137,615


53,855


46,688


352,865

Operating expenses

(341,101)


(134,716)


(42,732)


(18,641)


(537,190)


                    


                    


                    


                    


                    

Operating profit before impairment

allowances

 

369,100


 

453,293


 

306,160


 

61,155


 

1,189,708

Impairment allowances

(315,277)


(146,446)


(8,964)


(21,337)


(492,024)


                    


                   


                    


                    


                    

Profit before income tax expense

53,823


306,847


297,196


39,818


697,684

Overseas income tax expense

-  


(2,621)


-  


-  


(2,621)


                    


                    


                    


                    


                    

Net profit for the period

53,823


304,226


297,196


39,818


695,063


==========


==========


==========


==========


==========

Capital expenditure









89,610