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Thursday 01 November, 2012

Abu Dhabi Comm Bnk

3rd Quarter Results

RNS Number : 0955Q
Abu Dhabi Commercial Bank PJSC
01 November 2012
 



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

 

Review report and condensed consolidated interim financial  
information for the nine month period ended September 30, 2012

 


 
Review report and condensed consolidated interim financial information
for the nine month period ended September 30, 2012

 

 

                                                                                                                                                 Page

 

 

Report on review of interim financial information                                                                                       1

 

 

 

Condensed consolidated interim statement of financial position                                                       2

 

 

 

Condensed consolidated interim income statement (unaudited)                                                    3 - 4

 

 

 

Condensed consolidated interim statement of comprehensive income (unaudited)                5

 

 

 

Condensed consolidated interim statement of changes in equity (unaudited)                       6 - 7

 

 

 

Condensed consolidated interim statement of cash flows (unaudited)                                       8 - 9

 

 

 

Notes to the condensed consolidated interim financial information                                   10 - 49

 


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 September 30, 2012 and the related condensed consolidated interim statements of income, comprehensive income, changes in equity and cash flows for the nine 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

November 1, 2012


Condensed consolidated interim statement of financial position

as at September 30, 2012



As at

September 30

2012

As at

December 31

 2011



(unaudited)

(audited)


Notes

AED'000

AED'000

ASSETS








Cash and balances with Central Banks

3

7,984,720

6,629,945

Deposits and balances due from banks

4

15,820,544

20,839,932

Trading securities

5

34,769

15,755

Loans and advances, net

6

       123,777,062

124,754,737

Derivative financial instruments

7

5,326,955

4,844,764

Investment securities

8

18,966,700

15,052,103

Investment in associates

9

97,925

81,817

Investment properties

10

                     661,667

396,912

Other assets

11

8,367,667

10,021,494

Property and equipment, net


                     752,619

964,518

Intangible assets


100,008

123,653



                           

                           

Total assets


181,890,636

183,725,630



                           

                           

LIABILITIES








Due to Central Banks


-

48,100

Due to banks

12

4,273,448

3,090,386

Euro commercial paper

13

4,512,831

716,652

Deposits from customers

14

108,988,191

109,170,825

Short and medium term borrowings

15

25,406,995

30,808,557

Derivative financial instruments

7

5,105,871

4,821,568

Long term borrowings

16

897,679

1,088,452

Other liabilities

17

9,189,984

11,903,567



                           

                           

Total liabilities


158,374,999

161,648,107



                           

                           

EQUITY








Share capital

18

5,595,597

5,595,597

Share premium

18

3,848,286

3,848,286

Statutory and legal reserves


3,309,351

3,309,351

General and contingency reserves


2,150,000

2,150,000

Employees' incentive plan shares, net


(106,871)

(104,595)

Foreign currency translation reserve


(26,729)

(27,521)

Hedge reserve


18,228

(2,581)

Cumulative changes in fair values


248,154

(404,758)

Retained earnings


4,476,823

3,708,227

Capital notes

19

4,000,000

4,000,000



                          

                          

Equity attributable to equity holders of the parent


23,512,839

22,072,006

Non-controlling interests


2,798

5,517



                           

                           

Total equity


23,515,637

22,077,523



                            

                           

Total liabilities and equity


181,890,636

183,725,630



                            

                           

 

 

 

 

_________________________                      _______________________                          _____________________

Eissa Al Suwaidi                                                  Ala'a Eraiqat                                                         Deepak Khullar

Chairman                                                              Chief Executive Officer                                       Chief Financial Officer

 

 

 

 

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


Condensed consolidated interim income statement (unaudited)

for the nine month period ended September 30, 2012

 



       3 months ended September 30

9 months ended September 30


 

2012

2011

2012

2011


Notes

AED'000

AED'000

AED'000

AED'000







Interest income

  20

1,875,112

1,874,579

5,669,804

5,447,938

Interest expense

21

(571,359)

(575,921)

(1,800,031)

(2,245,128)



                      

                     

                        

                       







Net interest income


1,303,753

1,298,658

3,869,773

3,202,810



                      

                     

                        

                       

Income from Islamic financing


87,130

93,954

248,659

259,724

Islamic profit distribution


(60,023)

(57,634)

(209,148)

(166,227)



                      

                     

                       

                       







Net income from Islamic financing


27,107

36,320

39,511

93,497



                     

                     

                       

                       

Total net interest and Islamic financing income


1,330,860

1,334,978

3,909,284

3,296,307







Net fees and commission income

22

213,664

205,820

732,645

715,363

Net trading income

23

49,580

116,099

226,421

322,531

Other operating income


37,702

42,052

116,549

112,597



                     

                     

                    

                      

Operating income


1,631,806

1,698,949

4,984,899

4,446,798



                     

                     

                     

                      







Staff costs


(299,084)

(300,174)

(899,512)

(815,017)

Depreciation


(31,786)

(40,209)

(97,217)

(113,186)

Amortisation of intangible assets


(7,881)

(7,020)

(23,645)

(21,060)

Other operating expenses


(177,561)

(180,853)

(538,430)

(566,080)



                      

                     

                        

                      







Operating expenses


(516,312)

(528,256)

(1,558,804)

(1,515,343)



                      

                     

                         

                      







Operating profit before impairment

allowances


1,115,494

1,170,693

3,426,095

2,931,455

Impairment allowance on loans and advances, net

 

         6

 

(529,719)

 

(542,903)

 

(1,279,087)

 

(1,606,596)

Other impairment release/(allowances)

      24

746

29,042

(28,611)

(241,198)

Share of  profit/(loss) of associates

         9

8,602

(8,285)

16,108

167,565

Net gain on sale of investment in

associate

 

 

-

-

 

-

 

1,314,315



                      

                      

                       

                       

Profit before taxation


595,123

648,547

2,134,505

2,565,541







Overseas income tax credit /(expense)


253

(35,372)

(3,992)

(34,400)



                     

                      

                    

                       







Net profit for the period


595,376

613,175

2,130,513

2,531,141



                     

                     

                      

                       


 

 

 

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

 

 

 

 

 

 

 

 

Condensed consolidated interim income statement (unaudited)

for the nine month period ended September 30, 2012 (continued)

 



3 months ended September 30

9 months ended September 30


 

2012

2011

2012

2011


Notes

AED'000

AED'000

AED'000

AED'000

Attributed to:






Equity holders of the parent


594,203

607,566

2,127,715

2,516,909

Non-controlling interests


1,173

5,609

2,798

14,232



                  

                    

                  

                     







Net profit for the period


595,376

613,175

2,130,513

2,531,141



                    

                     

                     

                     







 

Basic earnings per share (AED)

 

25

 

0.09

 

0.09

 

0.34

 

0.42



                    

                     

                     

                     

 

Diluted earnings per share (AED)

 

25

 

0.08

 

0.09

 

0.34

 

0.41



                    

                     

                     

                     

 

 

 

 

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


Condensed consolidated interim statement of comprehensive income (unaudited)

for the nine month period ended September 30, 2012

 


3 months ended September 30

9 months ended September 30


2012

2011

2012

2011


AED'000

AED'000

AED'000

AED'000


 

 

 

 

Net profit for the period

595,376

613,175

2,130,513

2,531,141






Exchange difference arising on translation of

foreign operations

10,211

(9,713)

792

51,694

Fair value changes on cash flow hedges on

 financial assets

14,671

(119)

20,809

445

Fair value changes on net investment in foreign

operation hedges

-

-

-

(66,561)

Fair value changes on available for sale

investments

275,265

(335,172)

650,144

(495,177)

Fair value changes reversed on disposal/

impairment of available for sale investments

(781)

-

2,768

(129)

Share in other comprehensive income statement

items of associate

-

-

-

(19,098)

Reversal of related reserve balances on disposal

of associate

-

-

-

399,309

Reversal of share in other comprehensive income

statement items of associate on disposal of

associate

-

-

-

(59,050)


                     

                      

                      

                       






Total comprehensive income for the period

894,742

268,171

2,805,026

2,342,574


                     

                      

                     

                       

Attributed to:





Equity holders of the parent

893,569

262,562

2,802,228

2,328,342

Non-controlling interests

1,173

5,609

2,798

14,232


                      

                      

                     

                      






Total comprehensive income for the period

894,742

268,171

2,805,026

2,342,574


                      

                      

                     

                      

 

 

 

 

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 nine month period ended September 30, 2012

 














Equity










Employees'

Foreign





attributable










incentive

currency


Cumulative



to equity

Non -



Share

Share

Statutory

Legal

General

Contingency

 plan

translation

Hedge

changes in

Retained

Capital

holders of

controlling

Total


Capital

premium

reserve

reserve

reserve

reserve

shares, net

reserve

reserve

fair values

earnings

notes

the parent

     interests

equity


AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

 AED'000

AED'000

















Balance at January 1, 2012

5,595,597

3,848,286

1,677,069

1,632,282

2,000,000

150,000

(104,595)

(27,521)

(2,581)

(404,758)

3,708,227

4,000,000

22,072,006

5,517

22,077,523


                      

                      

       _             

                     

                     

                  

                      

                      

                  

                      

                        

                     

               __       

                 

                       

Net profit for the period

-

-

-

-

-

-

-

-

-

-

2,127,715

-

2,127,715

2,798

2,130,513

Exchange difference arising on translation of foreign operations

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

792

 

-

 

-

 

-

 

-

792

 

-

792

Fair value changes on cash flow hedges on financial assets

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

20,809

 

-

 

-

 

-

20,809

 

-

20,809

Fair value changes on available

for sale investments

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

650,144

 

-

 

-

650,144

 

-

650,144

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

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

2,768

 

 

-

 

 

-

2,768

 

 

-

2,768


                      

                     

       _            

                    

                    

                 

                    

                 

                

                   

                        

                     

            __       

               

                     

Total comprehensive  income for the period

-

-

-

-

-

-

-

792

20,809

652,912

2,127,715

 

-

 

2,802,228

2,798

2,805,026


                      

                     

       _            

                    

                    

                 

                    

                 

                

                   

                        

                     

                __       

               

                     

 

Dividends paid to  equity holders of the parent (Note 18)

 

-

-

-

-

-

-

-

-

-

-

(1,119,119)

-

(1,119,119)

-

(1,119,119)

 

Dividends paid to non-controlling interests

 

-

-

-

-

-

-

-

-

-

-

-

-

-

(5,517)

(5,517)

Capital notes coupon paid

-

-

-

-

-

-

-

-

-

-

(240,000)

-

(240,000)

-

(240,000)

Shares purchased

-

-

-

-

-

-

(40,000)

-

-

-

-

-

(40,000)

-

(40,000)

Shares - vested portion

-

-

-

-

-

-

37,724

-

-

-

-

-

37,724

-

37,724


                      

                     

       _            

                     

                     

                   

                    

                 

                

                   

                        

                      

                      

              

                       

Balance at September 30, 2012

5,595,597

3,848,286

1,677,069

1,632,282

2,000,000

150,000

(106,871)

(26,729)

18,228

248,154

4,476,823

4,000,000

23,512,839

2,798

23,515,637


                      

                      

                     

                     

                     

                   

                    

                 

                

                  

                       

                     

                      

                

                        

 

 

 

 

 

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 nine month period ended September 30, 2012 (continued)

 

 















Mandatory

Equity










Employees'

Foreign






convertible

attributable










incentive

currency


Cumulative




securities -

to equity

Non -



Share

Share

Statutory

Legal

General

Contingency

 plan

translation

Hedge

changes in

Other

Retained

Capital

equity

holders of

controlling

Total


capital

premium

reserve

reserve

reserve

reserve

shares, net

reserve

reserve

fair values

reserve

earnings

notes

component

the parent

      interests

equity


AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

AED'000

 AED'000

AED'000



















Balance at January 1, 2011

4,810,000

-

1,374,483

1,329,696

2,000,000

150,000

(36,677)

136,676

(537,904)

174,799

5,630

1,524,201

4,000,000

4,633,883

19,564,787

8,561

19,573,348


                    

                

       _          

                   

                   

                

                

                

       

                

              

                    

                   

                

             __     

                

                    



















Net profit for the period

-

-

-

-

-

-

-

-

-

-

-

2,516,909

-

-

2,516,909

14,232

2,531,141

Exchange difference arising on

translation of foreign operations

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

51,694

 

-

 

-

 

-

 

-

 

-

 

-

 

51,694

 

 

-

 

51,694

Fair value changes on cash flow

 hedges on financial assets

 

-

 

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

-

 

445

 

 

-

 

-

 

-

 

-

 

-

 

445

 

 

-

 

445

 

Fair value changes on net investment in foreign operation hedges

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(66,561)

 

 

-

 

-

 

-

 

-

 

-

 

(66,561)

 

 

-

 

(66,561)

 

Fair value changes on available for sale investments

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(495,177)

 

 

-

 

-

 

-

 

-

 

(495,177)

 

 

-

 

(495,177)

 

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

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(129)

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(129)

 

 

 

-

 

 

(129)

 

Share in other comprehensive income statement items of

associate

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

763

 

 

 

-

 

 

(20,072)

 

 

 

211

 

 

-

 

 

-

 

 

-

 

 

(19,098)

 

 

 

-

 

 

(19,098)

 

Reversal of related reserve balances on disposal of associate

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(205,156)

 

 

604,465

 

 

-

 

-

 

-

 

-

 

-

 

399,309

 

 

-

 

399,309

 

Reversal of share in other comprehensive income statement items of associate on disposal of associate

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(53,209)

 

 

 

 

(5,841)

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(59,050)

 

 

 

 

-

 

 

 

(59,050)

 


                

                

                

                

                

                

                

           

              

                    

____   _    

             

                

                

                     

                

                     

Total comprehensive  (loss) / profit  for the period

  the period

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(152,699)

 

 

538,349

 

 

(568,587)

 

 

(5,630)

 

 

2,516,909

 

 

-

 

-

 

2,328,342

 

 

14,232

 

 

2,342,574

 


                

                               

                

                

                

                

                

            

             

                    

         

            

                

                

                     

                

                     



















Dividends paid to non-controlling interests

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(22,290)

 

(22,290)

Shares issued on conversion of MCS (Note 18)

 

785,597

 

 

3,848,286

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(4,633,883)

 

-

 

-

 

-

Capital notes coupon paid

-

-

-

-

-

-

-

-

-

-

-

(236,667)

-

-

(236,667)

 -

(236,667)

Shares purchased

-

-

-

-

-

-

(100,800)

-

-

-

-

-

-

-

(100,800)

-

(100,800)

Shares - vested portion

-

-

-

-

-

-

28,131

-

-

-

-

-

-

-

28,131

-

28,131


                    

                    

                    

                  

                    

                    

                

                    

        _     

              _    

             

             

                    

                    

                   

             

                      



















Balance at September 30, 2011

5,595,597

3,848,286

1,374,483

1,329,696

2,000,000

150,000

(109,346)

(16,023)

445

(393,788)

-

3,804,443

4,000,000

-

21,583,793

503

21,584,296


                    

                    

                    

                  

                    

                    

               

                    

                

                    

             

               

                    

                    

                   

            

                      

           

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


Condensed consolidated interim statement of cash flows (unaudited)

for the nine month period ended September 30, 2012

 



9 months ended September 30



2012

2011



AED'000

AED'000

OPERATING ACTIVITIES




Profit before tax and non-controlling interests


2,134,505

2,565,541

Adjustments for:




Depreciation      


97,217

113,186

Amortisation of intangible assets


23,645

21,060

Dividends income


(3,510)

(8,668)

Impairment allowance on loans and advances


1,425,055

1,787,804

Recovery of doubtful loans and advances


(145,968)

(181,208)

Discount unwind


(96,897)

(146,334)

Loss on credit default swaps


-

195,688

Impairment allowance on investment securities


7,274

45,510

Impairment allowance on property and  equipment, net


21,337

-

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


(29,973)

(30,145)

Share of profit of associates, net


(16,108)

(167,565)

Imputed interest on mandatory convertible securities


-

(29,131)

Net gain on sale of investment in associate


-

(1,314,315)

Ineffective portion of hedges


(35,803)

(35,779)

Employees' incentive plan benefit expense


37,724

28,131



                       

                       





Operating profit before changes in operating assets and liabilities


3,418,498

2,843,775

Increase in balance with Central Bank


(750,000)

(750,000)

Increase in due from banks


(897,666)

(488,888)

Decrease/(increase) in net trading derivative financial instruments


23,721

(42,282)

Increase in loans and advances


(204,515)

(2,898,480)

Decrease/(increase) in other assets


590,297

(161,182)

Increase in due to banks


905,317

188,411

(Decrease)/increase  in deposits from customers


(294,240)

2,053,559

Decrease in other liabilities


(1,653,252)

(526,059)



                        

                       





Cash from operations


1,138,160

218,854

Board of Directors' remuneration paid


-

(5,250)



                        

                       





Net cash from operations


1,138,160

213,604



                         

                       

INVESTING ACTIVITIES




Net proceeds from disposal of associate


-

7,111,817

Dividends received from associate


-

36,697

Dividends income


3,510

8,668

Recovery of investment securities written off


2,668

-

Purchase of available for sale investment securities


(3,863,272)

(8,731,567)

Net proceeds from disposal of available for sale investment securities


689,658

1,840,532

Net purchase of trading securities


(13,941)

-

Additions to investment properties


(82,225)

(78,196)

Purchase of property and equipment, net


(89,185)

(80,181)



                         

                       





Net cash (used in)/from investing activities


(3,352,787)

107,770



                         

                       

FINANCING ACTIVITIES




Increase in Euro commercial paper


3,796,179

-

Net (repayment of)/increase in short and medium term borrowings


(5,739,442)

1,308,872

Dividends paid to non-controlling interests


(5,517)

(22,290)

Dividends paid to equity holders of the parent


(1,119,119)

-

Capital notes coupon paid


(240,000)

(236,667)

Purchase of employees' incentive plan shares


(40,000)

(100,800)



                        

                       





Net cash (used in)/ generated from financing activities


(3,347,899)

949,115



                        

                       





Net (decrease)/increase in cash and cash equivalents


(5,562,526)

1,270,489





Cash and cash equivalents at the beginning of the period


19,261,633

16,676,284



                        

                       





Cash and cash equivalents at the end of the period


13,699,107

17,946,773

 


                        

                        

 

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


Condensed consolidated interim statement of cash flows (unaudited)

for the nine month period ended September 30, 2012 (continued)

 

Cash and cash equivalents

 

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

 


As at

As at


September 30

2012

     December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Cash and balances with Central Banks

7,984,720

6,629,945

Deposits and balances due from banks

15,820,544

20,839,932

Due to Central Banks

-

(48,100)

Due to banks

(4,273,448)

(3,090,386)


                            

                            


19,531,816

24,331,391

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

 

(7,157,231)

 

(5,509,565)




Add:  Due to banks - maturity more than 3 months

1,324,522

439,807


                           

                          


13,699,107

19,261,633


                                  

                                 




 

 

 

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


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012

 

1             General

 

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

 

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

 

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

 

2             Summary of significant accounting policies

 

2.1         Basis of preparation 

 

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

 

The same accounting policies, presentation and methods of computation have been followed in this condensed consolidated interim financial information as were applied in the preparation and presentation of the Bank's consolidated financial statements for the year ended December 31, 2011 except for notes 6, 13 and 14 where certain items have been reclassified from the Bank's prior year financial statements to conform to the current period's presentation and improve the transparency of certain line items.

 

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

 

The results for the three and nine month periods ended September 30, 2012 are not necessary indicative of the results that may be expected for the financial year ending December 31, 2012.

 

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

 

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

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.1         Basis of preparation (continued)

 

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

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

 

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

 

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

 

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

 

2.2.2     Standards and Interpretations in issue not yet effective

 

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

 

 

 

 

New Standards and amendments to Standards:

 

Effective for annual periods beginning on or after



Amendments to disclosure requirements in IFRS 7 Financial Instruments: Disclosures - requires information about all recognised financial instruments that are set off in accordance with paragraph 42 of IAS 32 Financial Instruments: Presentation. The amendments also require disclosure of information about recognised financial instruments subject to enforceable master netting arrangements and similar agreements even if they are not set off under IAS 32.

January 1, 2013



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

January 1, 2013

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

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

Annual Improvements 2009-2011 Cycle made amendments to the following standards:

-       IFRS 1 - Permit the repeated application of IFRS 1, borrowing costs on certain qualifying assets, requiring an entity to measure government loans with a below market rate of interest at fair value on initial recognition

-       IAS 1 - Clarification of the requirements for comparative information

-       IAS 16 - Classification of servicing equipment

-       IAS 32 - Clarify that tax effect of a distribution to holders of equity instruments should be accounted for in accordance with IAS 12 Income Taxes

-       IAS 34 - Clarify interim reporting of segment information for total assets in order to enhance consistency with the requirements in IFRS 8 Operating Segments

January 1, 2013

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

 

January 1, 2013

 

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

 

January 1, 2013

 

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

 

January 1, 2013

 

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

 

January 1, 2013

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

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

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

 

January 1, 2013

 

 

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

 

January 1, 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 initial period when they become mandatorily effective.  An initial assessment of the potential impact indicates that application of most of these standards is not expected to have significant impact on amounts reported in the financial statements, but it is expected that additional disclosures will be required. The Bank is yet to assess IFRS 9's full impact, particularly as the hedging and impairment aspects of IFRS 9 are still outstanding and intends to adopt IFRS 9 in the initial period when they become mandatorily effective.

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.3         Basis of consolidation

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.4         Trading and Investment securities

 

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

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

i)             Investments at fair value through profit or loss;

ii)           Available for sale; and

iii)          Held-to-maturity investments.

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4       Trading and Investment securities (continued)

 

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

 

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

 

An investment is classified as held for trading if:

 

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

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

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

 

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

 

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

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

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

 

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

 

Held-to-maturity

 

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

 

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

 

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

 

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

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4       Trading and Investment securities  (continued)

 

Held-to-maturity (continued)

 

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

 

Available for sale

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

2             Summary of significant accounting policies (continued)

 

2.4         Trading and Investment securities (continued)

 

Available for sale (continued)

 

§   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 other comprehensive income statement, accumulating in equity. Subsequent decreases in the fair value of the available-for-sale equity security are recognised in the condensed consolidated interim income statement, to the extent that further cumulative impairment losses have been incurred in relation to the acquisition cost of the equity security.

 

Reclassifications

 

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

 

Derecognition of investment securities

 

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

 

2.5         Investment properties

 

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

 

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

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

3             Cash and balances with Central Banks

 


As at

As at


September 30

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Cash on hand

355,642

547,769

Balances with Central Banks (*)

5,879,078

5,082,176

Certificate of deposits with Central Bank

1,750,000

1,000,000


                        

                      





7,984,720

6,629,945


                               

                            

 

(*) Balances with Central Banks include reserve requirements of AED 5,438,925 thousand as at September 30, 2012 (December 31, 2011 - AED 5,082,176 thousand) with the Central Banks.

 

The geographical concentration is as follows:

 


As at

As at


September 30

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

7,961,279

6,601,201

Outside the U.A.E.

23,441

28,744


                         

                      





7,984,720

6,629,945


                                

                            

 

 

4             Deposits and balances due from banks

 


As at

As at


September 30

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Current and demand deposits

174,943

257,728

Placements

13,750,601

17,592,265

Murabaha placements

1,845,000

2,249,000

Wakala placements

50,000

740,939


                          

                        





15,820,544

20,839,932


                                 

                               

 

 

 

 



 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

4             Deposits and balances due from banks (continued)

 

The geographical concentration is as follows:

 


As at

As at


September 30

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Within the U.A.E.

6,836,460

12,798,544

Outside the U.A.E.

8,984,084

8,041,388


                         

                        





15,820,544

20,839,932


                                

                               

 

               

 

 

5         Trading securities

 


As at

As at


September 30

December 31


2012

2011


(unaudited)

(audited)


AED'000

AED'000




Quoted within the U.A.E.

30,894

15,755

Quoted outside the U.A.E.

3,875

-


                    

                    





34,769

15,755


                          

                          




Trading securities represent investments in public sector bonds. The fair value of these investments is based on quoted market prices. The bonds yield a fixed coupon rate in the range of 5.75% - 8.5% per annum.

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

6             Loans and advances, net

 


As at

As at


September 30

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Overdrafts (Retail and Corporate)

8,818,427

9,949,513

Corporate loans

100,206,676

  101,565,326 

Retail loans

12,727,350

12,303,074

Credit cards

2,107,838

2,133,144 

Islamic financing

4,277,576

3,749,732

Other facilities

2,114,176

765,824 


                               

                              





130,252,043

   130,466,613  

Less: Allowance for impairment

(6,474,981)

(5,711,876)


                               

                              





123,777,062

124,754,737   


                                       

                                      

 

 

Islamic financing balances include the following:

 


As at

As at


September 30

2012

December 31

2011


(unaudited)

(audited)


AED'000

AED'000




Murabaha

676,824

565,975

Ijara financing

698,167

   651,970  

Mudaraba

207,498

154,578

Salam

2,630,930

2,324,991  

Others

64,157

52,218 


                          

                        





4,277,576

    3,749,732   

Less: Allowance for impairment

(20,058)

(20,942) 


                          

                        





4,257,518

3,728,790    


                                 

                               

 

The Bank hedges certain variable rate loans and advances for interest rate risk through interest rate swaps and designates these instruments as cash flow hedges. The positive fair value of these hedge contracts at September 30, 2012 was AED 18,044 thousand (December 31, 2011: AED Nil).


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

6             Loans and advances, net (continued)

 

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

 


As at September 30, 2012 (unaudited)


As at December 31, 2011 (audited)


Individual

impairment

Collective

impairment

 

Total


Individual

Impairment

Collective

impairment

 

Total


AED'000

AED'000

AED'000


AED'000

AED'000

AED'000









At January 1

3,652,804

2,059,072

5,711,876    


4,653,146

1,643,291

6,296,437

Charge for the period/year

1,269,962

155,093

1,425,055


1,886,939    

416,167  

2,303,106    

Net recoveries during the period/year

 

(145,968)

 

-

 

(145,968)


 

(220,746)

 

-

 

(220,746)


                        

                      

                      


                        

                       

                        

Net charge for the period/year

1,123,994

155,093

1,279,087


1,666,193 

416,167

2,082,360

Discount unwind

(96,897)

-

(96,897)


(177,216)

-

(177,216)

Net amounts written  off

(419,112)

-

(419,112)


(2,487,492)

-

(2,487,492)

Currency translation

19

8

27


(1,827)

(386)

(2,213)


                         

                      

                      


                       

                      

                       









Balance at

4,260,808

2,214,173

6,474,981


3,652,804

2,059,072

5,711,876    


                                

                            

                            


                             

                            

                             

 

 

 

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

 


As at September 30, 2012 (unaudited)


As at December 31, 2011 (audited)


Within the U.A.E.

Outside the U.A.E.

 

Total


Within the U.A.E.

Outside the U.A.E.

 

Total


AED'000

AED'000

AED'000


AED'000

AED'000

AED'000

Industry  sector








Agriculture

11,222

-  

11,222


9,084

-

9,084

Energy

9,915,591

349,313

10,264,904


10,864,758

362,316

11,227,074

Trading

1,725,749

14,155

1,739,904


846,973

15,080

862,053

Development  & construction

24,225,269

347,437

24,572,706


28,580,804

224,245

28,805,049

Real estate investment

25,147,278

41,449

25,188,727


19,716,776

191,045

19,907,821

Transport

1,294,184

475,978

1,770,162


1,365,925

512,684

1,878,609

Personal - retail

17,740,478

15,220

17,755,698


16,939,914

13,362

16,953,276

Personal - collateralised

13,254,077

304,060

13,558,137


16,190,310

370,741

16,561,051

Government

1,898,575

-  

1,898,575


2,855,458

-  

2,855,458

Financial institutions (*)

7,953,131

1,625,350

9,578,481


7,681,348

1,315,783

8,997,131

Manufacturing

1,915,754

128,176

2,043,930


2,124,486

123,940

2,248,426

Services

20,128,607

1,740,990

21,869,597


18,009,069

2,152,512

20,161,581


                          

                        

                          


                        

                      

                         










125,209,915

5,042,128

130,252,043


125,184,905

5,281,708

130,466,613


                                  

                               



                               

                            










Less: Allowance for impairment

(6,474,981)




(5,711,876)




                          




                             









Total



123,777,062




124,754,737




                                 




                                     

 

(*) includes investment companies.  

 

During the period, industry sector composition was revisited for certain loans and advances based on the purpose of use and main line of business of the borrower. Accordingly, industry sector of these loans and advances were reclassified for prior year financial statements to conform to the current period's presentation. Also, the management has decided to consolidate Contractor finance with Development & construction as both the industry sector carries the same risk profile.

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

6             Loans and advances, net (continued)

 

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

 


As at September 30, 2012 (unaudited)

As at December 31, 2011 (audited)


  Carrying value of pledged

assets

Carrying  value of associated liabilities

Carrying value

of pledged

assets

Carrying  value of associated liabilities


AED'000

AED'000

AED'000

AED'000






Repurchase agreements

4,756,807

2,358,230

4,756,807

2,358,230


                      

                      

                      

                      

 

 

 

           

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

7             Derivative financial instruments

 

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

 


     Fair values


Assets

Liabilities

As at September 30, 2012 (unaudited)

AED'000

AED'000




Derivatives held for trading:



Foreign exchange contracts

95,208

87,126

Interest rate and cross currency swaps

4,305,454

4,330,210

Options

204,817

169,970

Futures

2,255

-

Commodity and energy swaps

5,784

5,649

Swaptions

2,245

7,480


                        

                         





4,615,763

4,600,435




Derivatives held as fair value hedges:



Interest rate and cross currency swaps

589,520

495,997




Derivatives held as cash flow hedges:



Interest rate swaps

19,696

-

Forward foreign exchange contracts

101,976

9,439


                        

                         





5,326,955

5,105,871


                        

                         

 


     Fair values


Assets

Liabilities

As at December 31, 2011 (audited)

AED'000

AED'000




Derivatives held for trading:



Foreign exchange contracts

110,015

96,112

Interest rate and cross currency swaps

4,070,651

4,050,688

Options

166,578

173,714

Futures

354

227

Commodity and energy swaps

23,067

21,835

Swaptions

5,903

5,666


                      

                       





4,376,568

4,348,242




Derivatives held as fair value hedges:



Interest rate and cross currency swaps

468,196

444,350




Derivatives held as cash flow hedges:



Interest rate swaps

-

2,714

Forward foreign exchange contracts

-

26,262


                      

                       





4,844,764

4,821,568


                      

                       

 

 

The net hedge ineffectiveness gains relating to the fair value and cash flow hedges amounting to AED 35,803 thousand (Nine month period ended September 30, 2011 - net gains of AED 35,779 thousand) have been recognised in the condensed consolidated interim income statement under " Net gains on dealing in derivatives"(Note 23).

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

8             Investment securities

 


As at September 30, 2012 (unaudited)


 U.A.E.

Other

G.C.C.

countries

Rest of

the world

Total


AED'000

AED'000

AED'000

AED'000

Available for sale investments





Quoted:





Floating rate notes (FRNs)

275,475

-

-

275,475

Equity instruments

406

-

-

406

Bonds

5,754,257

707,253

7,978,786

14,440,296

Mutual funds

37,513

-

-

37,513

Government securities

2,498,942

1,031,828

413,946

3,944,716


                       

                      

                      

                       

Total Quoted

8,566,593

1,739,081

8,392,732

18,698,406


                       

                     

                      

                        

Unquoted:





Equity instruments

179,980

-

684

180,664

Mutual funds

87,630

-

-

87,630


                    

                       

                  

                       

Total Unquoted

267,610

-

684

268,294


                     

                     

                   

                       






Total available for sale investments

8,834,203

1,739,081

8,393,416

18,966,700


                           

                           

                           

                               

 

 


As at December 31, 2011 (audited)


 U.A.E.

Other

G.C.C.

countries

Rest of

the world

Total


AED'000

AED'000

AED'000

AED'000

Available for sale investments





Quoted:





Floating rate notes (FRNs)

367,708

-

-

367,708

Collateralised debt obligations (CDOs)

-

-

44,194

44,194

Equity instruments

6,905

-

-

6,905

Bonds

4,641,033

857,742

5,605,453

11,104,228

Mutual funds

35,016

-

-

35,016

Government securities

1,847,763

1,141,628

241,639

3,231,030


                      

                     

                     

                       

Total Quoted

6,898,425

1,999,370

5,891,286

14,789,081


                      

                     

                     

                       

Unquoted:





Equity instruments

180,423

-

483

180,906

Mutual funds

82,116

-

-

82,116


                      

                     

                     

                       

Total Unquoted

262,539

-

483

263,022


                      

                     

                     

                       

Total available for sale investments

7,160,964

1,999,370

5,891,769

15,052,103


                            

                          

                           

                             

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

8             Investment securities (continued)

 

At September 30, 2012 quoted bond investments include bonds with fair value AED 5,203,710 thousand (December 31, 2011: AED 4,687,545 thousand) in public sector companies.

 

The Bank hedges interest rate risk on investments through interest rate swaps and designates these either as fair value or cash flow hedges. The negative fair value of these interest rate swaps at September 30, 2012 was AED 494,346 thousand (December 31, 2011: negative fair value of AED 447,064 thousand). The hedge ineffectiveness gains and losses relating to these hedges are included in the condensed consolidated interim income statement under 'Net gains on dealing in derivatives' (Note 23).

 

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

 


As at September 30, 2012 (unaudited)

As at December 31, 2011 (audited)


 

  Fair value of

pledged assets

Carrying  value of associated liabilities

 

 Fair value of

pledged assets

Carrying  value of associated liabilities


AED'000

AED'000

AED'000

AED'000






Repurchase agreements

1,226,650

1,063,132

4,237,403

3,776,167


                      

                      

                      

                      

 

Further, the Bank has also pledged investment securities with fair value amounting to AED 1,179,463 thousand (December 31, 2011 - AED 1,110,902 thousand) as collateral against margin calls. The risks and rewards relating to the investments pledged will remain with the Bank.

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

9             Investment in associates

 

Name of associate


As at

As at



September 30

2012

(unaudited)

December 31

2011

(audited)



           AED'000

    AED'000





Al Nokhitha Fund                 


67,197

56,298

ADCB MSCI U.A.E. Index Fund


30,728  

25,519



                  

                  





Carrying value


97,925

81,817



                        

                       

 

 

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

 


 

 

 

Name of associate

 

 

 

Principal activities

 

 

Country of incorporation

 

Ownership Interest

September 30

December 31

2012

   2011







(a)

Al Nokhitha Fund

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

U.A.E.

22%

21%

(b)

ADCB MSCI U.A.E. Index Fund

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

U.A.E.

29%

28%

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

9             Investment in associates (continued)

 

The latest available financial information in respect of the Bank's associates is as at and for the nine month period ended September 30, 2012 for Al Nokhitha Fund and ADCB MSCI U.A.E. Index Fund as follows:

 


AED'000



Total assets

410,123

Total liabilities

(1,765)


                    



Net assets

408,358


                          



Bank's share in net assets of associates

97,925


                          



Total interest and other operating income

75,595


                          



Total profit for the period

70,642


                         



Bank's share in profit of associates

16,108


                         



 

 

 

 


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

10          Investment properties

 


     Completed

and in use

Under development

 

Total


AED'000

AED'000

AED'000





As at January 1, 2011

215,609

73,583

289,192

Additions during the year

-

119,620

119,620

Decrease in fair value during the year

(7,798)

(4,102)

(11,900)


                       

                      

                       





As at January 1, 2012 (audited)                      

207,811

189,101

396,912

Additions during the period

-

82,225

82,225

Transfer from property and equipment

182,530

-

182,530


                       

                      

                       





As at September 30, 2012 (unaudited)

390,341

271,326

661,667


                             

                             

                             

 

 

The fair value of the Bank's investment properties are estimated by reference to current market prices for similar properties, adjusted as necessary for condition and location, or by reference to recent transactions updated to reflect current economic conditions. Valuations are carried out by registered independent appraisers having an appropriate recognised professional qualification and recent experience in the location and category of the property being valued. Discounted cash flow techniques may be used to calculate fair value in certain situations where there have been no recent transactions using current external market inputs such as market rents and interest rates. The effective date of the last formal valuation is June 30, 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.

 

During the period, the Bank has transferred a part of its property from property and equipment, net, to investment properties following a change in the use of the property. Accordingly, AED 182,530 thousand which represents the fair value of the property on the date of such change in use has been transferred from property and equipment, net. This transaction being a non-cash transaction has not been reflected in the consolidated statement of cash flows.

 

The difference between the carrying value of the transferred property and its fair value at the date of transfer amounting to AED 21,337 thousand has been accounted for as an impairment allowance on property and equipment (Note 24).          

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

11          Other assets

 


As at

As at


September 30

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Interest receivable

1,046,771

859,898

Withholding tax

91,209

87,311

Prepayments

73,979

71,336

Acceptances

6,875,676

8,771,823

Others

280,032

231,126


                          

                        


8,367,667

10,021,494


                                 

                              

 

 

Acceptances arise when the Bank is under an obligation to make payments against documents drawn under letters of credit. Acceptances specify the amount of money, the date, and the person to which the payment is due. After acceptance, the instrument becomes an unconditional liability (time draft) of the bank and are therefore recognised as a financial liability (Note 17) in the consolidated statement of financial position with a corresponding contractual right of reimbursement from the customer recognised as a financial asset. The Bank generally receives cash collateral against these acceptances.

 

12          Due to banks

 


As at

As at


September 30

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Current and demand deposits

640,231

574,271

Deposits - banks

3,633,217

2,516,115


                        

                      


4,273,448

3,090,386


                              

                            

 

 

The Bank hedges certain interbank deposits for interest rate and foreign currency exchange risk through cross currency swaps and designates these instruments as fair value hedges. The positive fair value of these cross currency swaps at September 30, 2012 was AED 2,634 thousand (December 31, 2011: positive fair value of AED 22, 578 thousand).

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

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 September 30, 2012 was AED 58,233 thousand (December 31, 2011: Nil).

 

Refer Note 14 for the reclassification of Deposits from customers to Euro commercial paper.

 

 

14          Deposits from customers

 


As at

As at


September 30

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Call and demand deposits

27,397,647

24,274,344

Savings deposits

2,630,349

2,237,783

Time deposits

60,157,552

64,146,038

Murabaha deposits

8,187,391

9,201,851

Long term government deposits

449,569

458,940

Islamic deposits

10,165,683

8,851,869


__________  ______

                            


108,988,191

109,170,825


                                    

                                   

 

Islamic product related deposits include the following:

 


As at

As at


September 30

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000




Product



Wadiah - demand deposits

276,662

437,980

Mudaraba savings and term deposits

4,530,143

3,653,439

Wakala deposits

5,358,878

4,760,450


                          

                       


10,165,683

8,851,869


                                 

                             

 

An amount of AED 716,652 thousand of Euro commercial paper has been reclassified in the statement of financial position as at December 31, 2011 from Deposits from customers to Euro commercial paper to be consistent and comparable to current period's presentation.

 

The Bank hedges certain deposits from customer for interest rate and foreign currency exchange risk through cross currency swaps and foreign exchange contracts and designates these instruments as fair value or cash flow hedges. The net positive fair value of these hedge contracts at September 30, 2012 was AED 34,304 (December 31, 2011: positive fair value of AED 7,198 thousand).

 


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

15          Short and medium term borrowings

 

The details of short and medium term borrowings as at September 30, 2012 (unaudited) are as follows:

 

Instrument

Currency

Within 1 year

1-3 years

 3-5 years

Total



AED'000

AED'000

AED'000

AED'000







Unsecured notes

Chinese Renminbi (CNH)

-

-

115,394

115,394


Malaysian Ringitt (MYR)

-

871,027

373,321

1,244,348


Swiss Franc (CHF)

-

-

575,705

575,705


Turkish Lira (TRY)

-

-

94,003

94,003


U.A.E. Dirham (AED)

-

1,253,000

  500,000

1,753,000


US Dollar (US$)

-

3,673,000

-

   3,673,000



                        

                        

                        

                         



-

5,797,027

1,658,423

7,455,450













Syndicated loans

US Dollar (US$)

4,290,799

-

-

4,290,799


Euro (EUR)

135,065

-

-

135,065







Sukuk  financing notes

US Dollar (US$)

                         -

                         -

1,836,500

1,836,500







Subordinated floating rate notes

US Dollar (US$)

-

-

1,117,143

1,117,143







Tier 2 loan

U.A.E. Dirham (AED)

-

-

6,617,456

6,617,456







Borrowings through repurchase agreements

US Dollar (US$)

1,450,631

620,737

 -

2,071,368


U.A.E. Dirham (AED)

1,349,995

              -

-

1,349,995



                        

                        

                          

                         



7,226,490

6,417,764

11,229,522

24,873,776

Fair value adjustment on short and medium term borrowings being hedged

533,219






                         

 






25,406,995






                         

Included in short and medium term borrowings is AED 13,974,016 thousand which have been hedged using interest rate and cross currency swaps. These swaps are designated as fair value hedges. The positive fair value of these swaps at September 30, 2012 was AED 526,050 thousand.


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

15          Short and medium term borrowings (continued)

 

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

Instrument

Currency

Within 1 year

1-3 years

 3-5 years

Total



AED'000

AED'000

AED'000

AED'000

Unsecured notes

Australian Dollar (AUD)

                72,126

                   -  

                   -  

         72,126


Hong Kong Dollar (HKD)

                94,333

                   -  

                   -  

         94,333


Malaysian Ringitt (MYR)

-

-

       871,027

       871,027


Slovak Koruna (SKK)

              103,758

                   -  

                   -  

       103,758


South African Rand (ZAR)

                51,299

                   -  

                   -  

         51,299


Swiss Franc (CHF)

                         -  

                   -  

       575,705

       575,705


Turkish Lira (TRY)

                         -  

                   -  

         94,003

         94,003


U.A.E. Dirham (AED)

                         -  

    1,253,000

                   -  

    1,253,000


US Dollar (US$)

                         -  

    3,673,000

                   -  

    3,673,000



                        

                        

                         

                    









              321,516

    4,926,000

    1,540,735

    6,788,251







Syndicated loans

US Dollar (US$)

          3,789,801

    3,739,849

-   

    7,529,650


Euro (EUR)

328,015

                   -

-   

    328,015







Sukuk  financing notes

US Dollar (US$)

-

-

             1,836,500

    1,836,500







Subordinated floating rate notes

US Dollar (US$)

-

-

    1,172,789

    1,172,789







Tier 2 loan

U.A.E. Dirham (AED)

-

-

    6,617,456

    6,617,456







Borrowings through repurchase agreements

US Dollar (US$)

2,713,033

870,134

-  

3,583,167


U.A.E. Dirham (AED)

                  2,358,230

                   193,000

                   -  

              2,551,230



                         

                        

                          

                           









9,510,595

9,728,983

  11,167,480

30,407,058

Fair value adjustment on short and medium term borrowings being hedged




401,499






                          






30,808,557






                         

 

Included in short and medium term borrowings is AED 9,049,767 thousand which have been hedged using interest rate and cross currency swaps. These swaps are designated as fair value hedges. The positive fair value of these swaps at December 31, 2011 was AED 394,000 thousand.


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

15          Short and medium term borrowings (continued)

 

Interest on unsecured notes is payable half yearly and yearly in arrears and the contractual coupon rates as at September 30, 2012 (unaudited) are as follows: 

 

Currency

Within 1 year

1-3 years

3-5 years





CNH

-

-

Fixed rate of 3.7% p. a

MYR

-

Fixed rate of 5.2% p.a

Fixed rate of 4.3% p.a.

CHF

-

-

Fixed rate of 3.01% p.a.

TRY

-

-

Fixed rate of 12.75% p.a.

AED

-

Fixed rate of 6% p.a.

Fixed rate of 6% p.a.

US$

-

Fixed rate of 4.75% p.a.

-

 

 

Syndicated loans

 

Contractual interest on the syndicated loans are payable as follows:

 

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

 

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

 

Sukuk financing notes

 

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

 

Subordinated floating rate notes

 

Interest on the subordinated floating rate notes is payable quarterly in arrears at a coupon rate of 110 basis points over 3 months LIBOR. The subordinated floating rate notes were obtained from financial institutions outside the U.A.E. and qualified as Tier 2 subordinated loan capital for the first 5 year period till 2011 and thereafter are amortised at the rate of 20% per annum until 2016 for capital adequacy calculation (Note 28). This has been approved by the Central Bank of the U.A.E.

 

Tier 2 loan

    

In March 2009, the Bank converted AED 6,617,456 thousand government deposits into Tier 2 qualifying loans. The Tier 2 qualifying loans will mature seven years from the date of the issue and interest is payable on a quarterly basis at a fixed rate of 4 percent per annum commencing March 31, 2009 for the first two years, 4.5 percent per annum for the third year, 5 percent per annum for the fourth year and 5.25 percent per annum for the remaining period.  The terms also provide that the Bank will have a call option to repay the loans partially or fully at the end of five years from the date of issue. For regulatory purposes, the loans qualify as Tier 2 capital (Note 28).

 

Borrowings through repurchase agreements

 

Interest on borrowings through repurchase agreements are payable in quarterly coupons in arrears with 300 basis points over 3 months and half yearly coupons in arrears with 155 to 300 basis points over 6 months LIBOR and EIBOR.

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

16          Long term borrowings

 



As at

As at



September 30

December 31

Instrument

Currency

2012

2011



(unaudited)

(audited)



AED'000

AED'000





Unsecured notes

U.A.E. Dirham (AED)

-

500,000


Malaysian Ringitt (MYR)

473,706

473,706


US Dollar (US$)

367,300

73,460



                    

                     



841,006

1,047,166





Fair value adjustment on long term borrowings being hedged

56,673

41,286



                    

                     







897,679

1,088,452



                          

                          

 

 

Included in long term borrowings is AED 767,546 thousand (December 31, 2011 - AED 1,047,166 thousand) which have been hedged using interest rate and cross currency swaps. These swaps are designated as fair value hedges. The positive fair value of these swaps at September 30, 2012 was AED 60,817 thousand (December 31, 2011: positive fair value of AED 44,421 thousand).

 

Interest on unsecured notes is payable half yearly in arrears and the contractual coupon rates as at September 30, 2012 (unaudited) are as follows: 

 

 

Currency

Over 5 years



MYR

Fixed rate of 5.35% p.a.

US$

Fixed rate of 5% to 5.3875% p.a.



 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

17           Other liabilities

 


As at

As at


September 30

December 31


2012

2011


(unaudited)

(audited)


AED'000

AED'000




Interest payable

836,142

931,026

Employees' end of service benefits

207,685

179,824

Accounts payable and other creditors

153,638

973,519

Clearing payables

607

238

Deferred income

221,908

171,805

Acceptances (Note 11)

6,875,676

8,771,823

Others

894,328

875,332


                          

                       





9,189,984

11,903,567


                                 

                             

 

 

18           Share capital

 


Authorised

   Issued and fully paid



As at

As at



September 30

2012

(unaudited)

December 31

2011

(audited)


AED'000

AED'000

AED'000

Ordinary shares of AED 1 each

5,595,597

5,595,597

5,595,597


                             

                             

                           

 

 


September 30, 2012 (unaudited)


December 31, 2011 (audited)


Number of

shares

 

AED'000


Number of

shares

 

AED'000







As of January 1

5,595,597,381

5,595,597


4,810,000,000

4,810,000

Shares issued on conversion of mandatory convertible securities

 

-

 

-


 

785,597,381

 

785,597


                                 

                          


                             

                          







As at

5,595,597,381

5,595,597


5,595,597,381

5,595,597


                                          

                                


                                     

                                

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

18          Share capital (continued)

 

Reconciliation of share premium is as follows:

 


AED' 000



Nominal value of MCS

4,800,000

Less: Nominal value of shares issued on conversion of MCS

(785,597)


                         

Share premium

4,014,403



Less: Mandatory convertible securities - liability component

(144,482)

Less: Issue expenses of MCS

(21,635)


                         

Balance of share premium

3,848,286


                                

 

As at September 30, 2012, Abu Dhabi Investment Council held 58.08% (December 31, 2011: 58.08 %) of the Bank's issued and fully paid up share capital.

 

Proposed dividends

 

Following the Annual General Meeting held on April 24, 2012, the Shareholders approved the distribution of proposed cash dividends of AED 1,119,119 thousand representing 20% of the paid up share capital for the year 2011 (For the year 2010 : Nil).

 

19          Capital notes

 

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

 

The Notes are non-voting, non-cumulative perpetual securities for which there is no fixed redemption date. 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 coupon is not considered an event of default. In addition, there are certain circumstances under which the Bank is prohibited from making a coupon payment on a relevant coupon payment date ("Non-Payment Event"). 

 

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

 

 

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

20          Interest income (unaudited)

 


3 months ended September 30

 

9 months ended September 30


 

 

 


2012

2011

 

2012

2011


AED'000

AED'000

 

AED'000

           AED'000


 

 

 

 

 

Loans and advances to banks

54,964

42,444


188,798

163,906

Loans and advances to customers

1,693,060

1,744,185


5,128,503

5,065,497

Investment securities

127,088

87,950


352,503

218,535


                      

                     


                       

                     








1,875,112

1,874,579


5,669,804

5,447,938


                       

                     


                          

                     

 

21          Interest expense (unaudited)

 


3 months ended September 30

 

9 months ended September 30


 

 

 


2012

2011

 

2012

2011


AED'000

AED'000

 

AED'000

        AED'000


 

 

 

 

Deposits from banks

4,191

1,856


10,822

28,374

Deposits from customers

386,191

427,155


1,299,520

1,693,979

Debt securities issued and subordinated liabilities

 

112,328

 

103,225


 

339,703

 

291,349

Interest on mandatory convertible

securities and long term notes

 

68,649

 

43,685


 

149,986

 

231,426


                     


                     

                      








571,359

575,921


1,800,031

2,245,128


                     

                   


                      

                      

 

22          Net fees and commission income (unaudited)

 


3 months ended September 30

 

9 months ended September 30


 

 

 


2012

2011

 

2012

2011


AED'000

AED'000

 

AED'000

    AED'000


 

 

 

 

 

Fees and commission income












Retail banking fees

165,302

158,009


510,223

502,843

Corporate banking fees

78,849

66,178


277,680

224,805

Brokerage fees

959

695


3,137

3,022

Fees from trust and other fiduciary

activities

 

18,991

 

9,870


 

56,151

 

39,592

Other fees

8,240

12,192


35,984

36,286


                   

                    


                    

                   







Total fees and commission income

272,341

246,944


883,175

806,548

Fees and commission expenses

(58,677)

(41,124)


(150,530)

(91,185)


                    

                   


                     

                    







Net fees and commission income

213,664

205,820


732,645

715,363


                     

                   


                     

                   

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

23          Net trading income (unaudited)

 


3 months ended September 30

 

9 months ended September 30


 

 

 


2012

2011

 

2012

2011


AED'000

AED'000


AED'000

AED'000


 

 

 

 

 







Net gains from dealing in derivatives

14,219

61,014


91,104

167,989

Net gains from dealing in foreign currencies

27,010

51,187


105,344

124,397

Net gains from trading and investment

securities

 

8,351

 

3,898


 

29,973

 

30,145


                  

                 


                  

                 


 

49,580

 

116,099


 

226,421

 

322,531


                  

                  


                   

                  

 

 

24          Other impairment (release)/allowances (unaudited)

 


3 months ended September 30

 

9 months ended September 30


 

 

 


2012

2011

 

2012

2011


AED'000

AED'000


AED'000

AED'000


 

 

 

 

 







Impairment (release)/ allowance on investment securities

 

(746)

 

41,837


 

7,274

 

45,510

(Reversal of)/loss on credit default swaps

-

(70,879)


-

195,688

Impairment allowance on property and

equipment

 

-

 

-


 

21,337

 

-


              

                 


                

                


 

(746)

 

(29,042)


 

28,611

 

241,198


              

                 


                

                

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

25          Earnings per share (unaudited)

 

Basic and diluted earnings per share

 

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

 

 


3 months ended September 30

 

9 months ended September 30


 

 

 


2012

2011

 

2012

2011


 

 

 

 

 

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

 

594,203

 

607,566


 

2,127,715

 

2,516,909

 

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

 

-

 

-


 

-

 

25,564

 

Less: Capital notes coupon paid (AED'000)

 

(120,000)

 

(120,000)


 

(240,000)

 

(236,667)


                      

                     


                    

                     

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

 

474,203

 

487,566


 

1,887,715

 

2,305,806


                       

                    


                     

                    

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

 

 

(56,589)

 

 

(50,424)


 

 

(57,892)

 

 

(45,538)


                      

                  


                  

                  

 

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

 

 

5,539,008

 

 

5,545,173


 

 

5,537,705

 

 

5,550,059

 

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

 

 

56,589

 

 

50,424


 

 

57,892

 

 

45,538


                     

                  


                  

                  







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

 

5,595,597

 

5,595,597


 

5,595,597

 

5,595,597


                       

                 


                      

                  

 

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

 

0.09

 

0.09


 

0.34

 

0.42


             

            


            

           

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

0.08

0.09


0.34

0.41


           

           


           

          

 

 

 

 


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

26          Commitments and contingent liabilities

 

The Bank had the following commitments and contingent liabilities at:

 


September 30

December 31


2012

2011


(unaudited)

(audited)


AED'000

AED'000

Commitments on behalf of customers



Letters of credit

5,612,441

4,049,791

Guarantees

11,330,071

9,806,027

Commitments to extend credit - Revocable                                   

6,643,814

6,313,900

Commitments to extend credit - Irrevocable

4,029,537

5,688,356

Others

55,095

55,095


                          

                        





27,670,958

25,913,169

Others



Commitments for future capital expenditure

154,960

274,887

Commitments to invest in investment securities

219,525

230,009


                         

                        





28,045,443

26,418,065


                                

                               

 

 

 

 

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

27          Operating segments

 

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

 

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

 

 

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

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

 

Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

27            Operating segments (continued)

 

The following is an analysis of the Bank's revenue and results by operating segment for the nine month period ended September 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

 

1,773,461


 

1,109,227


 

935,686


 

90,910


 

3,909,284











Non-interest income

462,089 


344,164


150,553


118,809


1,075,615











Operating expenses

(992,253)


(396,854)


(116,170)


(53,527)


(1,558,804)


                    


                    


                    


                    


                        

Operating profit before impairment

allowances

 

1,243,297


 

1,056,537


 

970,069


 

156,192


 

3,426,095











Impairment allowance on loans and

 advances, net

 

(1,056,118)


 

(222,969)


 

-


                

 -


 

(1,279,087)











Other impairment release/(allowances)

-


220


(7,494)


(21,337)


(28,611)











Share of profit of associates

16,108


-


-


-


16,108


                    


                    


                    


                    


                    

Profit before taxation

203,287


833,788


962,575


134,855


2,134,505











Overseas income tax expense

-


(3,992)


-


-


(3,992)


                    


                    


                    


                    


                    

 

Net profit for the period

 

203,287


 

829,796


 

962,575


 

134,855


 

2,130,513


==========


==========


==========


==========


==========

Capital expenditure









171,410










==========

As at September 30, 2012 (unaudited)










Segment assets

58,551,324


74,922,516


47,747,360


669,436


181,890,636


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


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


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


==========


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

Segment liabilities

30,009,689


49,580,069


78,774,144


11,097


158,374,999


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


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


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


=======


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

 

 

 


Notes to the condensed consolidated interim financial information

for the nine month period ended September 30, 2012 (continued)

 

27            Operating segments (continued)

 

The following is an analysis of the Bank's revenue and results by operating segment for the nine month period ended September 30, 2011 (unaudited):

 

 


 

Consumer banking


 

Wholesale

banking


 

Investments and treasury


 

Property management


 

 

Total


AED' 000


AED' 000


AED' 000


AED'000


AED' 000











Net interest and Islamic financing

 income

 

1,629,273


 

881,589


 

705,789


 

79,656


 

3,296,307











Non-interest income

519,710


218,092


314,402


98,287


1,150,491











Operating expenses

(991,362)


(354,283)


(115,834)


(53,864)


(1,515,343)


                    


                    


                    


                    


                    

Operating profit before impairment

   allowances

 

1,157,621


 

745,398


 

904,357


 

124,079


 

2,931,455











Impairment allowance on loans and

 advances, net

 

(956,162)


 

(650,434)


 

-  


 

-  


 

(1,606,596)











Other impairment allowances

(40,000)


-


(201,198)


-


(241,198)











Share of (loss)/profit of associates

(13,811)


181,376


-


-


167,565


                    


                    


                    


                    


                    

Profit before taxation

147,648


276,340


703,159


124,079


1,251,226











Overseas income tax expense

-


(34,400)


-


-


(34,400)


                    


                    


                    


                    


                    

Profit for the period

147,648


241,940


703,159


124,079


1,216,826











Net gain on sale of investment in

 associate

 

-


 

1,314,315


 

-


 

-


 

1,314,315


                    


                    


                    


                    


                    

 

Net profit for the period

 

147,648


 

1,556,255


 

703,159


 

124,079


 

2,531,141


==========


==========


==========


==========


==========

Capital expenditure









158,377










==========

As at December 31, 2011 (audited)










Segment assets

64,430,343


71,728,699


47,161,658


404,930


183,725,630