TIDM95HX
RNS Number : 9852I
GFH Financial Group B.S.C
10 August 2023
GFH FINANCIAL GROUP BSC
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
30 JUNE 2023
Commercial registration : 44136 (registered with Central Bank of Bahrain
as an Islamic wholesale Bank)
Registered Office : Bahrain Financial Harbour
Office: 2901, 29(th) Floor
Building 1398, East Tower
Block: 346, Road: 4626
Manama, Kingdom of Bahrain
Telephone +973 17538538
Directors : Ghazi Faisal Ebrahim Alhajeri , Chairman
Edris Mohammed Rafi Alrafi, Vice Chairman
Hisham Ahmed Alrayes
Rashid Nasser Al Kaabi
Ali Murad
Fawaz Talal Al Tamimi
Darwish Al Ketbi
Yusuf Abdulla Taqi
Chief Executive Officer : Hisham Ahmed Alrayes
Auditors : KPMG Fakhro
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
for the six months ended 30 June 2023
CONTENTS Page
Independent auditors' report on review of condensed consolidated
interim financial
information
1
Condensed consolidated interim financial information
Condensed consolidated statement of financial position 2
Condensed consolidated income statement 3
Condensed consolidated statement of changes in owners' equity 4-5
Condensed consolidated statement of cash flows 6
Condensed consolidated statement of changes in restricted investment accounts 7
Condensed consolidated statement of sources and uses of zakah and charity fund 8
Notes to the condensed consolidated interim financial
information 9-30
Independent auditors' report on review of condensed consolidated
interim financial information
To the Board of Directors
GFH Financial Group BSC
Manama, Kingdom of Bahrain
Introduction
We have reviewed the accompanying 30 June 2023 condensed consolidated
interim financial information of GFH Financial Group BSC (the "Bank")
and its subsidiaries (together the "Group"), which comprises:
* the condensed consolidated statement of financial
position as at 30 June 2023;
* the condensed consolidated income statement for the
three month and six-month periods ended 30 June 2023;
* the condensed consolidated statement of changes in
owners' equity for the six-month period ended 30 June
2023;
* the condensed consolidated statement of cash flows
for the six-month period ended 30 June 2023;
* the condensed consolidated statement of changes in
restricted investment accounts for the six-month
period ended 30 June 2023;
* the condensed consolidated statement of sources and
uses of zakah and charity fund for the six-month
period ended 30 June 2023; and
* notes to the condensed consolidated interim financial
information.
The Board of Directors of the Bank is responsible for the preparation
and presentation of this condensed consolidated interim financial
information in accordance with FAS 41, "Interim Financial Reporting".
Our responsibility is to express a conclusion on this condensed consolidated
interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the 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 Auditing
standards for Islamic Financial Institutions 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 30 June 2023 condensed consolidated
interim financial information is not prepared, in all material respects,
in accordance with FAS 41, "Interim Financial Reporting".
10 August 2023
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023 US$ 000's
Note 30 June 31 December 30 June
2023 2022 2022
(reviewed) (audited) (reviewed)
ASSETS
Cash and bank balances 398,578 858,239 674,570
Treasury portfolio 8 4,944,127 4,210,020 3,355,545
Financing assets 9 1,535,395 1,435,238 1,457,758
Investment in real estate 10 1,320,989 1,287,085 1,185,905
Proprietary investments 11 1,033,743 1,005,053 1,100,176
Co-investments 12 169,471 142,051 136,069
Receivables and other assets 13 726,535 589,869 540,197
Property and equipment 207,223 232,736 70,009
Total assets 10,336,061 9,760,291 8,520,229
=========== ============ ============
LIABILITIES
Clients' funds 151,190 123,300 148,073
Placements from financial institutions 2,959,023 3,790,870 2,826,616
Placements from non-financial
institutions and individuals 1,182,960 1,064,258 585,285
Customer current accounts 225,831 131,234 222,574
Term financing 14 1,975,706 1,942,198 1,988,847
Other liabilities 15 630,094 423,363 457,220
----------- ------------ ------------
Total liabilities 7,124,804 7,475,223 6,228,615
----------- ------------ ------------
Equity of investment account
holders 16 2,159,380 1,213,674 1,249,544
OWNERS' EQUITY
Share capital 1,015,637 1,015,637 1,015,637
Treasury shares (123,293) (105,598) (70,283)
Statutory reserve 36,995 36,995 27,970
Investment fair value reserve (55,527) (53,195) (58,839)
Retained earnings 90,860 95,831 62,629
Share grant reserve 8,530 6,930 -
----------- ------------ ------------
Total equity attributable to
shareholders of the Bank 973,202 996,600 977,114
Non-controlling interests 78,675 74,794 64,956
----------- ------------ ------------
Total owners' equity 1,051,877 1,071,394 1,042,070
----------- ------------ ------------
Total liabilities, equity of
investment account holders and
owners' equity 10,336,061 9,760,291 8,520,229
=========== ============ ============
The Board of Directors approved the condensed consolidated
interim financial information on 10 August 2023 and signed on its
behalf by:
Ghazi Faisal Ebrahim Alhajeri Hisham Alrayes
Chairman Chief Executive Officer & Board member
The accompanying notes 1 to 24 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2023 US$ 000's
Six months ended Three months
ended
Note 30 June 30 June 30 June 30 June
2023 2022 2023 2022
(reviewed) (reviewed) (reviewed) (reviewed)
Investment banking
Deal related income 80,890 41,514 38,726 17,824
Asset management 9,627 3,584 6,704 2,595
------------ ------------ ------------ ------------
90,517 45,098 45,430 20,419
------------ ------------ ------------ ------------
Commercial banking
Income from financing 53,704 42,975 26,485 21,747
Treasury and investment income 45,464 26,617 19,951 14,822
Fee and other income 14,629 1,960 9,161 (1,363)
Less: Return to investment account
holders (27,385) (18,638) (13,241) (10,123)
Less: Finance expense (45,170) (16,055) (26,592) (7,975)
------------ ------------ ------------ ------------
41,242 36,859 15,764 17,108
------------ ------------ ------------ ------------
Treasury and Proprietary Investments
Finance and treasury portfolio
income, net 121,989 49,792 64,308 24,168
Direct investment income, net 4,152 3,247 1,097 757
Income from co-investments,
net 6,566 9,128 2,846 4,694
Share of profit from equity-accounted
investees 17,244 10,500 10,426 10,500
Income from sale of assets 5,713 1,932 5,641 -
Leasing and operating income 8,877 7,265 4,447 6,137
Other income, net 2,340 9,893 390 1,918
Finance expenses - Repo and
FI (124,874) (51,580) (63,518) (29,590)
------------ ------------ ------------ ------------
42,007 40,177 25,637 18,584
Total income 173,766 122,134 86,831 56,111
Other operating expenses 78,266 59,565 37,166 25,266
Finance expense - Term financing
and others 31,359 20,062 10,598 9,072
Impairment allowances 17 6,952 (2,869) 6,316 (4,254)
------------ ------------ ------------ ------------
Total expenses 116,577 76,758 54,080 30,084
------------ ------------ ------------ ------------
Profit for the period 57,189 45,376 32,751 26,027
============ ============ ============ ============
Attributable to:
Shareholders of the Bank 54,616 42,180 30,609 23,062
Non-controlling interests 2,573 3,196 2,142 2,965
------- -------
57,189 45,376 32,751 26,027
======= ======= ======= =======
Earnings per share
Basic and diluted earnings per share
(US cents) 18 1.55 1.21 0.86 0.66
------- ------- -------
Ghazi Faisal Ebrahim Alhajeri Hisham Alrayes
Chairman Chief Executive Officer & Board member
The accompanying notes 1 to 24 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN OWNERS'
EQUITY
for the six months ended 30 June 2023 US$ 000's
Attributable to shareholders of the Bank
Investment Share Non-Controlling Total
Share Treasury Statutory fair value Retained grant Interests owners'
capital shares reserve reserve earnings reserve Total (NCI) equity
Balance at
1 January
2023 1,015,637 (105,598) 36,995 (53,195) 95,831 6,930 996,600 74,794 1,071,394
Profit for
the period - - - - 54,616 - 54,616 2,573 57,189
Fair value
changes
during the
period - - - (2,332) - - (2,332) (479) (2,811)
Total
recognised
income and
expense - - - (2,332) 54,616 - 52,284 2,094 54,378
Long Term
Incentive
Plan
(LTIP) - - - - - 1,600 1,600 - 1,600
Transfer to
zakah and
charity
fund - - - - (1,000) - (1,000) - (1,000)
Dividends
declared
for 2022 - - - - (56,261) - (56,261) - (56,261)
Purchase of
treasury
shares - (47,169) - - - - (47,169) - (47,169)
Sale of
treasury
shares - 29,474 - - (2,326) - 27,148 - 27,148
Additional
NCI
without a
change in
control - - - - - - - 5,747 5,747
Loss of
control - - - - - - - (3,960) (3,960)
Balance
at 30
June 2023 1,015,637 (123,293) 36,995 (55,527) 90,860 8,530 973,202 78,675 1,051,877
========== ========== ========== =========== ========= ======== ========== ================ ==========
The accompanying notes 1 to 24 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN OWNERS'
EQUITY
for the six months ended 30 June 2023 (continued) US$ 000's
Attributable to shareholders of the Bank
Foreign
Investment currency Non-Controlling Total
Share Treasury Statutory fair value translation Retained Interests owners'
capital shares reserve reserve reserve earnings Total (NCI) equity
----------
Balance at 1
January 2022 1,000,637 (48,498) 27,970 (28,561) (70,266) 81,811 963,093 205,027 1,168,120
Profit for the
period - - - - - 42,180 42,180 3,196 45,376
Transfer on
reclassification
from FVTE to
amortised cost - - - 41,320 - - 41,320 - 41,320
Fair value
changes during
the period - - - (69,084) - - (69,084) (2,335) (71,419)
Transfer to
income statement
on disposal of
sukuk - - - (2,514) - - (2,514) - (2,514)
Total recognised
income and
expense - - - (30,278) - 42,180 11,902 861 12,763
Bonus Shares
Issued 15,000 - - - - (15,000) - - -
Dividend Declared - - - - - (45,000) (45,000) - (45,000)
Purchase of
treasury shares - (53,650) - - - - (53,650) - (53,650)
Transfer to Zakah
and Charity Fund - - - - - (1,483) (1,483) - (1,483)
Sale of treasury
shares - 31,865 - - - 121 31,986 - 31,986
Transferred to
income statement
on
deconsolidation
of subsidiaries - - - - 70,266 - 70,266 - 70,266
Adjusted on
deconsolidation
of subsidiaries - - - - - - - (141,295) (141,295)
Additional NCI on
acquisition of
subsidiary - - - - - - - 363 363
---------- ---------- ----------- ----------- ------------ --------- --------- ---------------- ----------
Balance at 30
June 2022 1,015,637 (70,283) 27,970 (58,839) - 62,629 977,114 64,956 1,042,070
========== ========== =========== =========== ============ ========= ========= ================ ==========
The accompanying notes 1 to 24 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS-
for the six months ended 30 June 2023 US$ 000's
30 June
2023
30 June
(reviewed) 2022 (reviewed)
OPERATING ACTIVITIES
Profit for the period 57,189 45,376
Adjustments for:
Treasury and proprietary investments (42,007) (40,117)
Foreign exchange loss/ (gain) 2,238 (1,305)
Finance expense 31,359 (20,062)
Impairment allowances 6,952 (2,869)
Depreciation and amortisation 4,299 776
60,030 (18,201)
Changes in:
Placements with financial institutions
(original maturities of more than 3 months) 418,680 -
Financing assets (106,914) (146,756)
Receivable and other assets (97,132) (8,709)
CBB Reserve and restricted bank balance (8,230) (982)
Clients' funds 27,890 (68,689)
Customer current accounts 94,597 89,528
Placements from financial, non-financial
institutions and individuals (713,145) 359,808
Equity of investment account holders 945,706 (108,800)
Other liabilities 153,685 74,136
-----------------
Net cash from operating activities 775,167 171,335
-----------------
INVESTING ACTIVITIES
Payments for purchase of equipment (2,581) (74)
Purchase of proprietary investment securities,
net (52,891) 415
Purchase of treasury portfolio, net (237,445) (269,077)
Cash acquired on acquisition of subsidiary 1,346 407
Cash paid on acquisition of subsidiary (7,000) (5,215)
Proceeds from sale of real estate 11,771 -
Dividends received from proprietary investments
and co-investments 20,659 25,528
Payment for purchase of real estate (12,026) (22,652)
Net cash used in investing activities (278,167) (270,668)
FINANCING ACTIVITIES
Financing liabilities, net 33,773 149,146
Purchase of GFH sukuk, net - (2,028)
Finance expense paid (153,228) (82,531)
Dividends paid (57,861) (44,147)
Sale/(Purchase) of treasury shares,net (17,694) (21,785)
-----------------
Net cash used in financing activities (195,010) (1,345)
-----------------
Net increase / (decrease) in cash and
cash equivalents during the period 301,990 (100,678)
Cash and cash equivalents at 1 January 1,041,064 844,344
------------ -----------------
Cash and cash equivalents at 30 June * 1,343,054 743,666
============ -----------------
Cash and cash equivalents comprise:
Cash and balances with banks (excluding
CBB reserve balance and restricted cash) 320,957 615,504
Placements with financial institutions
(original maturities of 3 months or less) 1,022,097 128,162
------------ -----------------
1,343,054 743,666
============ =================
* net of expected credit loss of US$ 28 thousands (30 June 2022:
US$ 21 thousands).
The accompanying notes 1 to 24 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN RESTRICTED
INVESTMENT ACCOUNTS
for the six months ended 30 June 2023
30 June
2023 Balance at 1 January Balance at 30 June
(reviewed) 2023 Movements during the period 2023
Average Average
value Group's value
No of per Investment/ Gross Dividends fees as Administration No of per
units share Total (withdrawal) Revalua-tion income paid an agent expenses units share Total
Company (000) US$ US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's (000) US$ US$ 000's
----- ------- --------- ------------ ------------ --------- --------- --------- -------------- ----- ------- ---------
Mena Real
Estate
Company
KSCC 150 0.33 50 - - - - - - 150 0.33 50
Al Basha'er
Fund 12 7.87 94 - - - - - - 12 7.87 94
Safana
Investment
(RIA
1) 1,247 2.65 3,305 - - - - - - 1,247 2.65 3,305
Shaden Real
Estate
Investment
WLL (RIA
5) 269 2.65 713 - - - - - - 269 2.65 713
4,162 4,162
========= ============ ============ ========= ========= ========= ============== =========
30 June
2022 Balance at 1 January Balance at 30 June
(reviewed) 2022 Movements during the period 2022
Average Average
value Gross Group's value
No of per Investment/ income Dividends fees as Administration No of per
units share Total (withdrawal) Revaluation US$ paid an agent expenses units share Total
Company (000) US$ US$ 000's US$ 000's US$ 000's 000's US$ 000's US$ 000's US$ 000's (000) US$ US$ 000's
----- ------- --------- ------------ ----------- ------ --------- --------- -------------- ----- ------- ---------
Mena Real
Estate
Company
KSCC 150 0.33 50 - - - - - - 150 0.33 50
Al Basha'er
Fund 12 7.87 94 - - - - - - 12 7.87 94
Safana
Investment
(RIA
1) 1,247 2.65 3,305 - - - - - - 1,247 2.65 3,305
Shaden Real
Estate
Investment
WLL (RIA
5) 269 2.65 713 - - - - - - 269 2.65 713
4,162 - - - - - - 4,162
========= ============ =========== ====== ========= ========= ============== =========
The accompanying notes 1 to 24 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF SOURCES AND USES OF ZAKAH
AND CHARITY FUND
for the six months ended 30 June 2023 US$ 000's
30 June 30 June
2023 2022
(reviewed) (reviewed)
Sources of zakah and charity fund
Contribution by the Group 2,472 2,529
Non-Islamic income 543 21
---------------- ----------------
Total sources 3,015 2,550
---------------- ----------------
Uses of zakah and charity fund
Contributions to charitable organisations (1,666) (1,775)
---------------- ----------------
Total uses (1,666) (1,775)
---------------- ----------------
0B Surplus of sources over uses 1,349 775
Undistributed zakah and charity fund at
beginning of the period 5,924 5,196
---------------- ----------------
1B Undistributed zakah and charity fund
at end of the period 7,273 5,971
================ ================
Represented by:
Zakah payable 1,675 826
Charity fund 5,598 5,145
-------------- --------------
7,273 5,971
============== ==============
The accompanying notes 1 to 24 form an integral part of the
condensed consolidated interim financial information.
1 Reporting entity
The condensed consolidated interim financial information for the
six months ended 30 June 2023 comprise the financial information of
GFH Financial Group BSC (GFH or the "Bank") and its subsidiaries
(together referred to as "the Group").
The following are the principal subsidiaries consolidated in the
condensed consolidated interim financial information.
Effective
ownership
interests
Country of as at 30
Investee name incorporation June 2023 Activities
GFH Partners Ltd United Arab 100% Investment
Emirates management
---------------- ----------- -------------------
GFH Capital S.A. Saudi Arabia 100% Investment
management
---------------- ----------- -------------------
GFH Financial Group Limited United Kingdom 100 % Hold Co for
Investment
management
---------------- ----------- -------------------
Khaleeji Bank BSC ('KHB') Kingdom of 85.14% Islamic retail
Bahrain bank
---------------- ----------- -------------------
Al Areen Project companies 100% Real estate
development
---------------- ----------- -------------------
GBCORP Tower Group Ltd 62.91% Own & lease
real estate
----------- -------------------
GBCORP B.S.C (c)* 42.91% Islamic investment
firm
----------- -------------------
Residential South Real 100% Real estate
Estate Development Company development
W.L.L. (RSRED)
----------- -------------------
Harbour House Row Towers 100% Own & lease
W.L.L. real estate
----------- -------------------
Al Areen Hotels W.L.L. 100% Hospitality
management
services
----------- -------------------
Britus International School 100% Educational
for Special Education institution
W.L.L
---------------- ----------- -------------------
Gulf Holding Company KSCC State of Kuwait 53.63% Investment
in real estate
---------------- ----------- -------------------
SQ Topco II LLC United States 51% Property asset
management
Company
---------------- ----------- -------------------
Big Sky Asset Management United States 51% Real estate
LLC investment
manager
---------------- ----------- -------------------
Roebuck A M LLP United Kingdom 60% Property asset
management
Company
---------------- ----------- -------------------
*Control though majority representation on board of
directors.
The Bank has other investment holding companies, SPV's and
subsidiaries, which are set up to supplement the activities of the
Bank and its principal subsidiaries.
2 Basis of preparation
The condensed consolidated interim financial information of the
Group has been prepared in accordance with Financial Accounting
Standard FAS 41, Interim Financial Reporting ("FAS 41") issued by
the Accounting and Auditing Organisation of Islamic Financial
Institutions ("AAOIFI"). In line with the requirements of AAOIFI
and the Central Bank of Bahrain (CBB) rule book, for matters not
covered under AAOIFI standards the group uses guidance from the
relevant International Financial Reporting Standards ("IFRS")
issued by the International Accounting Standards Board
("IASB").
These condensed consolidated interim financial information are
reviewed and not audited. The condensed consolidated interim
financial information of the Group does not contain all information
and disclosures required for the annual consolidated financial
statements and should be read in conjunction with the Group's
audited annual consolidated financial statements for the year ended
31 December 2022. However, selected explanatory notes are included
to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual consolidated financial statements
as at and for the year ended 31 December 2022.
3 Significant accounting policies
The accounting policies and methods of computation applied by
the Group in the preparation of the condensed consolidated interim
financial information are the same as those used in the preparation
of the Group's last audited consolidated financial statements as at
and for the year ended 31 December 2022, except those arising from
certain changes in segment reporting and adoption of the following
standards and amendments to standards effective from 1 January
2023. The impact of adoption of these standards and amendments is
set out below.
a. New standards, amemdments and interpetations issued and
effective for annual periods beginning on or after 1 January
2023:
(i) FAS 39 Financial Reporting for Zakah
AAOIFI has issued FAS 39 Financial Reporting for Zakah in 2021.
The objective of this standard is to establish principles of
financial reporting related to Zakah attributable to different
stakeholders of an Islamic financial Institution. This standard
supersedes FAS 9 Zakah and is effective for the financial reporting
periods beginning on or after 1 January 2023.
This standard shall apply to institution with regard to the
recognition, presentation and disclosure of Zakah attributable to
relevant stakeholders. While computation of Zakah shall be
applicable individually to each institution within the Group, this
standard shall be applicable on all consolidated and separate /
standalone financial statements of an institution.
This standard does not prescribe the method for determining the
Zakah base and measuring Zakah due for a period. An institution
shall refer to relevant authoritative guidance for determination of
Zakah base and to measure Zakah due for the period. (for example:
AAOIFI Shari'a standard 35 Zakah, regulatory requirements or
guidance from Shari'a supervisory board, as applicable).
An institution obliged to pay Zakah by law or by virtue of its
constitution documents shall recognise current Zakah due for the
period as an expense in its financial statements. Where Zakah is
not required to be paid by law or by virtue of its constitution
documents, and where the institution is considered as an agent to
pay Zakah on behalf of certain stakeholders, any amount paid in
respect of Zakah shall be adjusted with the equity of the relevant
stakeholders.
The Group has adopted this standard and will provide the
necessary additional disclosures in its annual financial
statements.
3. Significant accounting policies (continued)
a. New standards, amemdments and interpetations issued and
effective for annual periods beginning on or after 1 January 2023:
(continued)
(ii) FAS 41 Interim financial reporting
This standard prescribes the principles for the preparation of
condensed interim financial information and the relevant
presentation and disclosure requirements, emphasizing the minimum
disclosures specific to Islamic financial institutions in line with
various financial accounting standards issued by AAOIFI. This
standard is also applicable to the institutions which prepare a
complete set of financial statements at interim reporting dates in
line with the respective FAS's.
This standard is effective for financial statements for the
period beginning on or after 1 January 2023. The Group has adopted
this standard for the basis of preparation of its condensed
consolidated interim financial information. The adoption of this
standard did not have any significant impact on the Group's interim
financial information.
b. New standards, amendments and interpretations issued but not yet effective
(i) FAS 1 General Presentation and Disclosures in the Financial
Statements
AAOIFI has issued the revised FAS 1 General Presentation and
Disclosures in the Financial Statements in 2021. This standard
describes and improves the overall presentation and disclosure
requirements prescribed in line with the global best practices and
supersedes the earlier FAS 1. It is applicable to all the Islamic
Financial Institutions and other institutions following AAOIFI
FAS's. This standard is effective for the financial reporting
periods beginning on or after 1 January 2024 with an option to
early adopt.
The revision of FAS 1 is in line with the modifications made to
the AAOIFI conceptual framework for financial reporting.
Some of the significant revisions to the standard are as
follows:
a) Revised conceptual framework is now integral part of the AAOIFI FAS's;
b) Definition of Quasi equity is introduced;
c) Definitions have been modified and improved;
d) Concept of comprehensive income has been introduced;
e) Institutions other than Banking institutions are allowed to
classify assets and liabilities as current and non-current;
f) Disclosure of Zakah and Charity have been relocated to the notes;
g) True and fair override has been introduced;
h) Treatment for change in accounting policies, change in
estimates and correction of errors has been introduced;
i) Disclosures of related parties, subsequent events and going concern have been improved;
j) Improvement in reporting for foreign currency, segment reporting;
k) Presentation and disclosure requirements have been divided
into three parts. First part is applicable to all institutions,
second part is applicable only to banks and similar IFI's and third
part prescribes the authoritative status, effective date an
amendments to other AAOIFI FAS's; and
l) The illustrative financial statements are not part of this
standard and will be issued separately.
The Group is assessing the impact of adoption of this standard
and expects changes in certain presentation and disclosures in its
consolidated financial statement in line with the wider market
practice .
4 Estimates and judgements
Preparation of condensed consolidated interim financial
information requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and
expenses. Actual results may differ from these estimates. The areas
of significant judgments made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were similar to those applied to the audited consolidated financial
statements as at and for the year ended 31 December 2022.
5 Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the audited consolidated
financial statements for the year ended 31 December 2022.
Regulatory ratios
a. Net stable funding Ratio (NSFR)
NSFR as a percentage is calculated as "Available stable funding"
divided by "Required stable funding".
5 Financial risk management (continued)
The Consolidated NSFR calculated as per the requirements of the
CBB rulebook, is as follows:
As at 30 June 2023
No. Item No Specified Maturity Less than 6 months More than 6 months and less Over one year Total weighted value
than one year
Available Stable Funding (ASF):
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1 Capital:
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Regulatory
2 Capital 966,799 - - 58,002 1,024,801
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Other Capital - - - - -
3 Instruments
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Retail deposits
and deposits from
small business
4 customers:
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
5 Stable deposits 139,154 37,534 20,217 188,071
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Less stable
6 deposits - 1,923,203 526,675 229,429 2,434,320
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Wholesale
7 funding:
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Operational
8 deposits
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Other Wholesale
9 funding - 4,085,457 664,714 1,230,386 2,549,645
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Other
10 liabilities:
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
NSFR - - -
Shari'a-compliant
hedging contract
11 liabilities
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
All other
liabilities not
included in the
12 above categories - 518,418 4,345 38,021 38,021
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
13 Total ASF 6,234,857
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Required Stable Funding (RSF):
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total NSFR
high-quality
liquid assets
14 (HQLA) 2,192,181 - - - 109,136
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Deposits held at
other financial
institutions for
operational
15 purposes
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Performing
financing and
sukuk/
16 securities: - 1,629,287 - 952,685 1,054,175
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Performing
financial to
financial
institutions by
17 level 1 HQLA - - - - -
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Performing
financing to
financial
institutions
secured by
non-level 1 HQLA
and unsecured
performing
financing to
financial
18 institutions - 16,598 - 1,137,067 974,806
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Performing
financing to non-
financial
corporate
clients,
financing to
retail and small
business
customers, and
financing to
sovereigns,
central banks and
19 PSEs, of which: - 205,680 141,959 240,090 329,878
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
With a risk
weight of less
than or equal to
35% as per the
CBB Capital
Adequacy Ratio
20 guidelines - - - - -
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Performing
residential
mortgages, of
21 which: - - - - -
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
With a risk
weight of less
than or equal to
35% under the CBB
Capital Adequacy
22 Ratio Guidelines - - - - -
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Securities/sukuk
that are not in
default and do
not qualify as
HQLA, including
exchange-traded
23 equities - 943,524 26,988 583,953 1,069,209
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
24 Other assets:
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Physical traded
commodities,
25 including gold - -
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
Assets posted as
initial margin
for
Shari'a-compliant
hedging contracts
contracts and
contributions to
default funds of
26 CCPs - - - -
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
NSFR
Shari'a-compliant
27 hedging assets - - - 3,035
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
5 Financial risk management (continued)
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NSFR
Shari'a-compliant
hedging contract
liabilities
before deduction
of variation
28 margin posted - - - -
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
All other assets
not included in
the above
29 categories 2,337,031 - - - 2,337,031
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
30 OBS items - - - 57,876
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
31 Total RSF 2,795,089 168,948 2,913,795 5,935,146
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
32 NSFR(%) 105%
------------------ --------------------------------- ------------------------ ------------------------------- --------------------------- ---------------------------------
As at 31 December 2022
No. Item No Specified Less than 6 More than 6 Over one year Total weighted
Maturity months months and less value
than one year
Available Stable Funding (ASF):
----------------------------------------------------------------------------------------------------------------------
1 Capital:
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Regulatory
2 Capital 1,004,974 - - 53,171 1,058,145
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Other Capital
3 Instruments - - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Retail deposits
and deposits from
small business
4 customers:
------------------ ----------------- ------------------ ----------------- -------------- ------------------
5 Stable deposits - 158,056 15,076 26,054 190,530
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Less stable
6 deposits - 1,684,867 423,803 328,355 2,226,158
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Wholesale
7 funding:
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Operational
8 deposits - - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Other Wholesale
9 funding - 3,548,055 931,464 1,303,542 2,656,368
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Other
10 liabilities:
------------------ ----------------- ------------------ ----------------- -------------- ------------------
NSFR
Shari'a-compliant
hedging contract
11 liabilities - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
All other
liabilities not
included in the
12 above categories - 311,371 - 43,201 43,201
------------------ ----------------- ------------------ ----------------- -------------- ------------------
13 Total ASF 6,174,402
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Required Stable Funding (RSF):
----------------------------------------------------------------------------------------------------------------------
Total NSFR
high-quality
liquid assets
14 (HQLA) 1,761,766 87,048
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Depsoits held at
other financial
institutions for
opetational
15 purposes
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Performing
financing and
sukuk/
16 securities: 1,576,916 790,425 908,398
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Performing
financial to
financial
institutions by
17 level 1 HQLA - - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Performing
financing to
financial
institutions
secured by
non-level 1 HQLA
and unsecured
performing
financing to
financial
18 institutions - - 94,704 1,050,345 940,145
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Performing
financing to non-
financial
corporate
clients,
financing to
retail and small
business
customers, and
financing to
sovereigns,
central banks and
19 PSEs, of which: - 294,926 102,548 279,352 380,316
------------------ ----------------- ------------------ ----------------- -------------- ------------------
With a risk
weight of less
than or equal to
35% as per the
CBB Capital
Adequacy Ratio
20 guidelines - - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Performing
residential
mortgages, of
21 which: - - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
With a risk
weight of less
than or equal to
35% under the CBB
Capital Adequacy
22 Ratio Guidelines - - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
5 FINANCIAL RISK MANAGEMENT (continued)
No. Item No Specified Less than 6 More than 6 Over one year Total weighted
Maturity months months and less value
than one year
Securities/sukuk
that are not in
default and do
not qualify as
HQLA, including
exchange-traded
23 equities - 945,435 388,631 426,531 1,093,564
------------------ ----------------- ------------------ ----------------- -------------- ------------------
24 Other assets: - - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Physical traded
commodities,
25 including gold - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
Assets posted as
initial margin
for
Shari'a-compliant
hedging contracts
contracts and
contributions to
default funds of
26 CCPs - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
NSFR
Shari'a-compliant
27 hedging assets - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
NSFR
Shari'a-compliant
hedging contract
liabilities
before deduction
of variation
28 margin posted - - - -
------------------ ----------------- ------------------ ----------------- -------------- ------------------
All other assets
not included in
the above
29 categories 2,090,285 - - - 2,090,285
------------------ ----------------- ------------------ ----------------- -------------- ------------------
30 OBS items - - - 43,344
------------------ ----------------- ------------------ ----------------- -------------- ------------------
31 Total RSF 2,817,278 585,882 2,546,653 5,543,102
------------------ ----------------- ------------------ ----------------- -------------- ------------------
32 NSFR(%) 111%
------------------ ----------------- ------------------ ----------------- -------------- ------------------
b. Liquidity Coverage Ratio (LCR)
LCR is computed as a ratio of Stock of High Quality Liquid
Assets (HQLA) over the Net cash outflows over the next 30 calendar
days.
Average balance
30 June 2023 31 December
2022
(reviewed) (audited)
--------------
Stock of HQLA 495,139 272,429
Net cashflows 214,439 213,055
LCR % 237% 134%
Minimum required by CBB 100% 100%
-------------- ------------
5 FINANCIAL RISK MANAGEMENT (continued)
c. Capital Adequacy Ratio
30 June 2023 31 December
2022
(reviewed) (audited)
CET 1 Capital before regulatory
adjustments 992,734 1,020,249
Less: regulatory adjustments - -
CET 1 Capital after regulatory
adjustments 992,734 1,020,249
T 2 Capital adjustments 60,243 52,628
-------------- ------------
Regulatory Capital 1,052,977 1,072,877
Risk weighted exposure:
Credit Risk Weighted Assets 6,459,029 6,799,081
Market Risk Weighted Assets 47,926 54,624
Operational Risk Weighted Assets 436,932 431,784
-------------- ------------
Total Regulatory Risk Weighted
Assets 6,943,887 7,285,489
Investment risk reserve (30%
only) 2 2
Profit equalization reserve (30%
only) 3 3
-------------- ------------
Total Adjusted Risk Weighted
Exposures 6,943,882 7,285,484
Capital Adequacy Ratio (CAR) 15.16% 14.73%
Tier 1 Capital Adequacy Ratio 14.30% 14.00%
Minimum CAR required by CBB 12.50% 12.50%
-------------- ------------
6 Seasonality
Due to the inherent nature of the Group's business (investment
banking, commercial banking and Proprietary and treasury), the
six-month results reported in this condensed consolidated interim
financial information may not represent a proportionate share of
the overall annual results.
7 Comparatives
Comparative figures have been regrouped in order to conform with
the presentation for current period. Such regrouping did not affect
previously reported profit for the period or total equity.
8 Treasury portfolio
30 June 31 December 30 June
2023 2022 2022
(reviewed) (audited) (reviewed)
Placements with financial
institutions 1,079,143 729,311 128,162
Derivatives
At fair value through income
statement 3,035 2,675 -
Equity type investments
At fair value through equity
* Quoted sukuk 33,008 32,966 32,844
At fair value through income
statement
* Structured notes* 390,631 371,978 365,964
* Quoted fund 28,803 - -
Debt type investments
At fair value through equity*
* Quoted sukuk 805,585 846,205 849,750
At amortised cost
* Quoted sukuk * 2,619,503 2,240,354 1,987,956
* Unquoted sukuk 3,494 3,494 3,494
Less: Impairment allowances (19,075) (16,963) (12,625)
4,944,127 4,210,020 3,355,545
=========== ============ =============
* Short-term and medium-term facilities of US$ 1,689,965 ( 31
December 2022 : US$ 1,653,875 thousand) are secured by quoted sukuk
of US$ 2,708,957 ( 31 December 2022 : US$ 2,506,041 thousand),
structured notes of US$ 390,631 ( 31 December 2022 : US$ 371,928
thousand).
Amortised cost sukuk of US$ 2,619,503 thousand (31 December
2022: US$ 2,240,354 thousand) had a market value of US$ 2,443,410
thousand as at 30 June 2023 (31 December 2022: US$ 2,085,938
thousand).
9 Financing assets
30 June 31 December 30 June
2023 2022 2022
(reviewed) (audited) (reviewed)
Murabaha 1,016,521 982,170 1,066,393
Wakala 239 239 239
Mudharaba 18,652 17,336 12,436
Ijarah assets 571,112 499,865 449,360
1,606,524 1,499,610 1,528,428
Less: Impairment allowances (71,129) (64,372) (70,670)
----------- ------------ -----------
1,535,395 1,435,238 1,457,758
=========== ============ ===========
Murabaha financing receivables are net of deferred profits of
US$ 52,220 thousands
(31 December 2022: US$ 50,133 thousands).
9 Financing assets (continued)
The movement on financing assets and impairment allowances is as
follows:
Financing assets Stage 1 Stage 2 Stage 3 Total
Financing assets (gross) 1,219,642 291,391 95,491 1,606,524
Expected credit loss (6,144) (28,374) (36,611) (71,129)
--------- -------- -------- ---------
Financing assets (net) 1,213,498 263,017 58,880 1,535,395
========= ======== ======== =========
Impairment allowances Stage 1 Stage 2 Stage 3 Total
At 1 January 2023 18,046 11,990 34,336 64,372
Net movement between
stages (5,082) 3,774 1,308 -
Net charge for the
period (6,820) 12,610 967 6,757
Write-offs - - - -
At 30 June 2023 (reviewed) 6,144 28,374 36,611 71,129
======= ======= ======= ======
Financing assets Stage 1 Stage 2 Stage 3 Total
Financing assets (gross) 1,286,549 143,496 69,565 1,499,610
Expected credit loss (18,046) (11,990) (34,336) (64,372)
--------- -------- -------- ---------
Financing assets (net) 1,268,503 131,506 35,229 1,435,238
========= ======== ======== =========
Impairment allowances Stage 1 Stage 2 Stage 3 Total
At 1 January 2022 19,995 7,109 44,345 71,449
Net movement between
stages 2,296 (1,411) (885) -
Net charge for the
period (4,245) 6,292 4,888 6,935
Write offs - - (14,012) (14,012)
At 31 December 2022
(audited) 18,046 11,990 34,336 64,372
======= ======= ======== ========
Financing assets Stage 1 Stage 2 Stage 3 Total
Financing assets (gross) 1,293,478 140,040 94,910 1,528,428
Expected credit loss (22,245) (6,162) (42,263) (70,670)
--------- ------- -------- ---------
Financing assets (net) 1,271,233 133,878 52,647 1,457,758
========= ======= ======== =========
Impairment allowances Stage 1 Stage 2 Stage 3 Total
At 1 January 2022 19,995 7,109 44,345 71,449
Net movement between
stages 1,859 (1,302) (557) -
Net charge for the
period 391 355 870 1,616
Writeoffs - - (2,395) (2,395)
At 30 June 2022 (Reviewed) 22,245 6,162 42,263 70,670
======= ======= ======= =======
10 Investment in real estate
30 June 31 December 30 June
2023 2022 2022
(reviewed) (audited) (reviewed)
Investment Property
* Land 572,314 556,215 520,773
* Building 199,177 194,050 165,716
----------- ------------ -----------
771,491 750,265 686,489
Development Property
* Land 154,183 147,393 100,405
* Building 395,315 389,427 399,011
----------- ------------ -----------
549,498 536,820 499,416
1,320,989 1,287,085 1,185,905
=========== ============ ===========
11 Proprietary investments
30 June 31 December 30 June
2023 2022 2022
(reviewed) (audited) (reviewed)
Equity type investments
At fair value through income
statement
* Unquoted securities 2,942 9,480 10,000
* Listed securities 14,830 - 7,464
17,772 9,480 17,464
At fair value through equity
* Listed securities - - 13
* Equity type Sukuk 833,051 836,251 -
* Unquoted securities 56,999 55,893 959,190
----------- ------------ -----------
890,050 892,144 959,203
----------- ------------ -----------
Equity-accounted investees 125,932 103,471 123,509
Impairment allowance (11) (42) -
----------- ------------ -----------
1,033,743 1,005,053 1,100,176
=========== ============ ===========
12 Co-investments
30 June 31 December 30 June
2023 2022 2022
(reviewed) (audited) (reviewed)
At fair value through equity
* Unquoted securities 160,532 131,553 125,439
At fair value through income
statement
* Unquoted securities 8,939 10,498 10,630
----------- ------------ -----------
169,471 142,051 136,069
=========== ============ ===========
13 RECEIVABLES AND OTHER ASSETS
30 June 31 December 30 June
2023 2022 2022
Investment banking receivables 206,390 193,923 142,120
Receivable from equity-accounted
investees 62,000 62,000 -
Financing to projects, net 10,765 26,744 45,034
Receivable on sale of development
properties 21,787 16,341 45,368
Advances and deposits 90,321 96,641 116,564
Employee receivables 12,195 5,067 18,508
Profit on sukuk receivable 18,172 18,766 11,423
Lease rentals receivable 5,460 6,117 2,549
Assets held for sale 29,147 - -
Goodwill and intangibles 30,675 12,571 8,830
Prepayments and other receivables 247,033 161,015 160,908
Less: impairment allowance
net (note 17) (7,410) (9,316) (11,107)
726,535 589,869 540,197
======== ============ =========
14 Term financing
30 June 31 December 30 June
2023 2022 2022
(reviewed) (audited) (reviewed)
Murabaha financing * 1,716,001 1,680,940 1,719,685
Sukuk ** 241,807 242,076 248,743
Ijarah financing 16,298 17,603 18,862
Other borrowings 1,600 1,579 1,557
---------- ----------- ----------
1,975,706 1,942,198 1,988,847
========== =========== ==========
*Murabaha financing comprise :
Short-term and medium-term facilities of US$ 1,689,965 thousand
(31 December 2022: US$ 1,653,875 thousand) are secured by quoted
sukuk of US$ 2,708,957 thousand (31 December 2022: US$ 2,506,041
thousand) and structured notes of US$ 390,631 thousand (31 December
2022: US$ 332,455 thousand).
** Sukuk
Represents outstanding unsecured sukuk certificates with a
profit rate of 7.5% p.a. repayable by 2025. The outstanding sukuk
also includes accrued profit of US$ 7,417 thousand.
15 OTHER LIABILITIES
30 June 31 December 30 June
2023 2022 2022
Employee related accruals 12,005 15,544 990
Deal related payables * 369,819 138,567 131,330
Board member allowances and
accruals - 1,500 -
Unclaimed dividends 3,154 4,754 5,428
Mudaraba profit accrual 13,021 13,184 11,123
Provision for employees' leaving
indemnities 4,627 4,125 3,725
Zakah and Charity fund 7,273 5,924 5,971
Advance received from customers** 7,869 6,648 7,219
Accounts payable 108,785 127,968 185,768
Other accrued expenses and
payables 100,236 105,149 105,666
Liabilities held for sale 3,305 - -
630,094 423,363 457,220
======== ============ ========
*Represents amounts payable against assets acquired as part of
investment banking deals along with payable for ongoing project
related costs of the said SPVs. These payables on receipt of funds
from investment banking receivables and underlying SPV's are
usually settled within 12 months.
** Represents amount received in advance from the customers on
account of real estate assets to be delivered by the Group.
16 EQUITY OF INVESTMENT ACCOUNT HOLDERS
30 June 31 December 30 June
2023 2022 2022
994,540 30,278 46,976
1,164,840 1,183,396 1,202,569
2,159,380 1,213,674 1,249,544
========== ============ ==========
From financial institutions
From non-financial institutions and individuals
17 Impairment allowances
Six months ended Three months ended
30 June 30 June 30 June 30 June
2023 (reviewed) 2022 (reviewed) 2023 (reviewed) 2022 (reviewed)
Expected credit loss on:
Bank balances 20 11 22 (14)
Treasury portfolio (note 8) 2,112 (1,626) (1,907) (228)
Financing assets, net (note
9) 6,757 1,616 8,448 (63)
Other receivables (note 13) (1,906) (2,871) (148) (3,948)
----------------- ----------------- -----------------
6,983 (2,870) 6,415 (4,253)
Impairment on investment in
equity securities (31) 1 (99) (1)
----------------- ----------------- -----------------
6,952 (2,869) 6,316 (4,254)
----------------- ----------------- -----------------
18 Earning Per Share
The calculation of basic earning per share has been based on the
following profit attributable to the ordinary shareholders and
weighted-average number of ordinary shares outstanding. The Group
does not have any diluted potentially ordinary shares as of the
reporting dates. Hence, the basic and diluted earning per share is
similar.
Six months ended Three months ended
30 June 30 June 30 June 30 June
2023 (reviewed) 2022 (reviewed) 2023 (reviewed) 2022 (reviewed)
Profit attributable to shareholders
of the Bank 54,616 42,180 30,609 23,062
Weighted Average number of
shares outstanding during the
period 3,528,590 3,485,422 3,547,177 3,473,959
----------------- ----------------- -----------------
Earnings per share
Basic and diluted earnings
per share (US cents) 1.55 1.21 0.86 0.66
----------------- ----------------- -----------------
19 Related party transactions
The significant related party balances and transactions as at 30
June 2023 are given below:
Related parties as per
FAS 1
Assets
Significant under
shareholders management
/ entities (including
in which special
Associates Key directors purpose
30 June 2023 and joint management are and other
(reviewed) venture personnel interested entities) Total
Assets
Cash and bank
balances - - - 13,754 13,754
Treasury portfolio - - - 68,058 68,058
Financing assets 49,938 11,308 82,960 18,821 163,027
Proprietary investments 833,050 - - - 833,050
Co-investments - - - 158,252 158,252
Receivables and
prepayments 96,657 11,555 1,507 214,293 324,012
Liabilities
Placements from
financial, non-financial
institutions and
individuals - 5,302 6,398 - 11,700
Current accounts 2,944 8 1,207 32,942 37,101
Payables and accruals 1,613 8,747 3,154 380,964 394,478
Equity of investment
account holders 5,812 4,905 21,927 18,077 50,721
Income
Investment banking - - - 81,851 81,851
Commercial banking
* Income from financing - 324 133 - 457
* Less: Return to investment account holders (24) (117) (2,653) (8) (2,802)
* Less: Finance expense - (125) (6,430) - (6,555)
Treasury and proprietary
investments 17,251 - 403 3,536 21,190
Expenses
* Operating expenses 3 (790) - (37) (824)
- Staff Cost - (5,670) (347) - (6,017)
* Finance Cost - - - (1,262) (1,262)
19 Related party transactions (continued)
Related parties as per FAS
1
Assets
Significant under
shareholders management
/ entities (including
in which special
Associates Key directors purpose
31 December 2022 and joint management are and other
(audited) venture personnel interested entities) Total
Assets
Cash and bank
balances - - - 12,777 12,777
Treasury portfolio - - - 70,656 70,656
Financing assets - 8,411 38,181 18,201 64,793
Proprietary investments 836,251 - 6,058 - 842,309
Co-investments - - - 142,665 142,665
Receivables and
prepayments 62,045 5,326 721 198,231 266,323
Liabilities
Placements from
financial, non-financial
institutions and
individuals - 3,379 22,697 24,077 50,153
Current accounts 1,918 183 2,003 13,973 18,077
Payables and accruals 36,009 1,565 139,529 177,103
Equity of investment
account holders 3,239 2,875 33,328 148,114 187,556
30 June 2022 (reviewed)
Income
Investment banking - - - 20,419 20,419
Commercial banking
* Income from financing - 300 626 - 926
* Fee and other income (1,809) - - - (1,809)
* Less: Return to investment account holders (13) (13) (9,599) (5) (9,630)
* Less: Finance expense - (101) - - (101)
Treasury and proprietary
investments 10,500 27,613 38,113
Real Estate Income - 3,020 - - 3,020
Expenses
Operating expenses - 790 - 37 827
Staff Cost - 4,545 - - 4,545
Finance Cost - - - 2,162 2,162
----------- ------------ ------------- ------------ ----------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
INFORMATION
for the six months ended 30 June 2023 ` US$ 000's
20 Segment reporting
The Group is organised into business units based on their nature
of operations and independent reporting entities and has three
reportable operating segments namely investment banking, commercial
banking and treasury and proprietary.
Investment Commercial Proprietary Total
banking banking and treasury
30 June 2023 (reviewed)
Segment revenue 90,517 41,242 42,007 173,766
Segment expenses (62,510) (24,469) (22,646) (109,625)
Impairment allowance - (2,857) (4,095) (6,952)
Segment result 28,007 13,916 15,266 57,189
Segment assets 438,297 3,909,935 5,987,829 10,336,061
Segment liabilities 411,581 2,196,056 4,517,167 7,124,804
Other segment information
Proprietary investments (Equity-accounted investees) - 10,777 115,155 125,932
Equity of investment account holders - 1,293,664 865,716 2,159,380
Commitments 55,485 170,656 - 226,141
----------- ----------- -------------- -----------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
INFORMATION
for the six months ended 30 June 2023 ` US$ 000's
20 Segment reporting (continued)
Investment Commercial Proprietary Total
banking banking and treasury
30 June 2022 (reviewed)
Segment revenue 45,098 36,859 40,177 122,134
Segment expenses (39,803) (16,429) (23,395) (79,627)
Impairment allowance 3,763 (2,196) 1,302 2,869
Segment result 9,058 18,234 18,084 45,376
31 Dec 2022 (audited)
Segment assets 201,828 3,785,535 5,772,928 9,760,291
Segment liabilities 171,359 1,761,879 5,541,985 7,475,223
Equity of investment account holders - 1,189,016 24,658 1,213,674
Other segment information
Proprietary investments (Equity-accounted investees) - 5,303 98,168 103,471
Commitments 55,485 142,992 7,007 205,484
----------- ----------- -------------- ----------
21 Commitments and contingencies
The commitments contracted in the normal course of business of
the Group:
30 June 31 December 30 June
2022
2023 (audited) 2022
(reviewed) (reviewed)
Undrawn commitments to extend
finance 126,804 100,422 122,480
Financial guarantees 43,852 49,044 76,562
Capital commitment for infrastructure
development projects 55,485 55,485 60,446
Commitment to lend - 533 1,610
226,141 205,484 261,098
============ ============ =============
Performance obligations
During the ordinary course of business, the Group may enter
performance obligations in respect of its infrastructure
development projects. It is the usual practice of the Group to pass
these performance obligations, wherever possible, on to the
companies that own the projects. In the opinion of the management,
no liabilities are expected to materialise on the Group at 30 June
2023 due to the performance of any of its projects.
Litigations, claims and contingencies
The Group has several claims and litigations filed against it in
connection with projects promoted by the Bank in the past and with
certain transactions. Further, claims against the Group entities
also have been filed by former employees and customers. Based on
the advice of the Bank's external legal counsel, the management is
of the opinion that the Bank has strong grounds to successfully
defend itself against these claims. Where applicable, appropriate
provision has been made in the books of accounts. No further
disclosures regarding contingent liabilities arising from any such
claims are being made by the Bank as the directors of the Bank
believe that such disclosures may be prejudicial to the Bank's
legal position.
22 Financial instruments
Fair values
Fair value is an amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction. This represents the price that would
be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date.
Underlying the definition of fair value is a presumption that an
enterprise is a going concern without any intention or need to
liquidate, curtail materially the scale of its operations or
undertake a transaction on adverse terms.
22 Financial instruments (continued)
Fair value hierarchy
The different levels have been defined as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e.as prices) or indirectly (i.e. derived from
prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The following table shows the valuation techniques used in
measuring Level 3 fair values, as well as the significant
unobservable inputs used:
Type Valuation technique Significant Inter-relationship
unobservable between significant
inputs unobservable inputs
and fair value
measurement
Structured Fair value of underlying Credit risk Ability of the
note reference portfolio of counterparty Group to hold the
adjusted for embedded and volatility structure note
derivatives that protect assumptions to maturity and
downside risk and cap for time to impact of the value
upside potential over maturity of embedded derivatives
the period of the contract. (strike prices
and barriers for
coupon and principal).
--------------------------------------- ----------------- ---------------------------
Equity Discounted cash flow Marketability Ability of Group
investments factor and to exit these investments
Discount rate and there impact
on the overall
value as these
are unquoted investments.
--------------------------------------- ----------------- ---------------------------
The potential effect of change in assumptions used above would
have the following effects.
30 June 2023 (reviewed) 30 June 2022 (reviewed)
Profit or FVTE Profit or FVTE
loss Loss
------------ ------------
Equity instruments- marketability factor ( +/- 10%) +/-894 +/-21,753 +/-1,063 +/-18,464
Structure notes- impact in underlying value ( +/- 5%) +/-19,532 - +/-18,298 -
Proprietary Investments- impact of change in value ( +/-
5%) +/-889 - +/-873 -
Quoted Fund- impact in underlying value ( +/- 5%) +/-1,440 - - -
------------ ------------ ------------ ------------
22 Financial instruments (continued)
The table below analyses the financial instruments carried at
fair value, by valuation method.
30 June 2023 (reviewed) Level Level Level Total
1 2 3
i) Proprietary investments
Investment securities carried
at fair value through:
* income statement 17,772 - - 17,772
* equity 833,051 - 56,999 890,050
---------- ------ -------- ----------
850,823 - 56,999 907,822
---------- ------ -------- ----------
ii) Treasury portfolio
Investment securities carried
at fair value through:
* income statement - - 422,469 422,469
* equity 838,593 - - 838,593
---------- ------ -------- ----------
838,593 - 422,469 1,261,062
---------- ------ -------- ----------
iii) Co-investments
Investment securities carried
at fair value through
* equity - - 160,532 160,532
* income statement - - 8,939 8,939
---------- ------ -------- ----------
- - 169,471 169,471
---------- ------ -------- ----------
1,689,416 - 648,939 2,338,355
========== ====== ======== ==========
31 December 2022 (audited) Level Level Level Total
1 2 3
(i) Proprietary investments
Investment securities carried
at fair value through:
* income statement 9,480 - - 9,480
* equity 836,251 - 55,893 892,144
---------- ------ --------
845,731 - 55,893 901,624
---------- ------ --------
(ii) Treasury portfolio
Investment securities carried
at fair value through:
* income statement - - 374,653 374,653
* equity 879,171 - - 879,171
---------- ------ --------
879,171 - 374,653 1,253,824
---------- ------ --------
iii) Co-investments
Investment securities carried
at fair value through equity - - 131,553 131,553
Investment securities carried
at fair value through income
statement - - 10,498 10,498
- - 142,051 142,051
1,724,902 - 572,597 2,297,499
========== ====== ======== ==========
22 Financial instruments (continued)
The following table analyses the movement in Level 3 financial
assets during the period:
30 June 31 December
2023 2022
(reviewed) (audited)
At beginning of the period 572,597 667,289
Disposals at carrying value (30,330) (134,550)
Purchases 73,556 88,256
Fair value changes during the period 33,116 (48,398)
------------------- ------------
At end of the period 648,939 572,597
=================== ============
23 ASSETS UNDER MANAGEMENT AND CUSTODIAL ASSETS
The Group provides corporate administration, investment
management and advisory services to its project companies, which
involve the Group making decisions on behalf of such entities.
Assets that are held in such capacity are not included in these
consolidated financial statements. At the reporting date, the Group
had assets under management of US$ 8,418 (31 December 2022: US$
7,845 million). During the period, the Group had charged management
fees amounting to US$ 9,627 (30 June 2022: US$ 3,584 thousands) to
its assets under management.
24 Acquisition of subsidiary
During the period, the Group intends to sell the below mentioned
subsidiary in next 12 months.
% stake acquired Place of Nature of activities
incorporation
Al Areen Leisure & Tourism 100% Kingdom of Leisure & Hospitality
The Lost Paradise of Dilmum Bahrain
Waterpark
-------------- ----------------------
Consideration
The total consideration amounted to US$ 32,000 thousand and
includes cash and deferred consideration. Deferred consideration of
US $ 25m will be paid over a period of 3 years including a profit
rate of 6.5% per annum.
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END
IR FLFLSTIIILIV
(END) Dow Jones Newswires
August 10, 2023 10:34 ET (14:34 GMT)
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