interim condensed consolidated financial information ... · basic and diluted earnings per 6 fils...

Interim Condensed Consolidated Financial Information (Unaudited)Ahlan Ahli 1 899 899

www.eahli.com 30 June 2013

The attached notes 1 to 12 form part of the interim condensed consolidated financial information

3

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) As at 30 June 2013

30 June2013

(Audited)31 December

201230 June

2012

Notes KD 000 KD 000 KD 000

ASSETS

Cash and balances with banks 308,527 251,477 288,500

Kuwait Government treasury bills and bonds 193,638 211,775 217,157

Central Bank of Kuwait bonds 236,492 259,654 267,741

Loans and advances 3 2,084,611 1,986,869 2,024,839

Investment securities 231,918 189,545 140,237

Investment in an associate 12,777 10,772 10,105

Other assets 27,840 33,734 39,574

Premises and equipment 29,564 29,193 28,561

TOTAL ASSETS 3,125,367 2,973,019 3,016,714

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES

Due to banks and other financial institutions 575,845 557,740 428,747

Customers’ deposits 1,963,987 1,838,673 2,033,360

Other liabilities 61,752 59,871 63,764

TOTAL LIABILITIES 2,601,584 2,456,284 2,525,871

SHAREHOLDERS’ EQUITY

Share capital 4 161,917 151,324 151,324

Proposed bonus shares 4 - 10,593 -

Share premium 108,897 108,897 108,897

Treasury shares (1,149) (118) (8,589)

Reserves 254,118 236,961 239,211

Proposed dividend 4 - 9,078 -

TOTAL SHAREHOLDERS’ EQUITY 523,783 516,735 490,843

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 3,125,367 2,973,019 3,016,714

Ali Hilal Al Mutairi Deputy Chairman & Executive Member

Abdulla M. Al SumaitDeputy Chief General Manager

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED) For the period ended 30 June 2013

Three months ended 30 June

Six months ended 30 June

2013 2012 2013 2012

Notes KD 000 KD 000 KD 000 KD 000

Interest income 26,154 30,714 52,349 62,609

Interest expense (5,545) (8,611) (11,610) (17,848)

NET INTEREST INCOME 20,609 22,103 40,739 44,761

Net fees and commission income 5,760 5,374 11,786 12,287

Net foreign exchange gain 806 1,339 1,483 2,018

Net gain on sale of investment securities 667 871 901 1,291

Dividend income 365 1,055 1,263 1,448

Share of results of an associate 635 - 964 -

Other income 352 411 638 671

OPERATING INCOME 29,194 31,153 57,774 62,476

Staff expenses (6,223) (6,182) (11,769) (11,590)

Other operating expenses and depreciation (4,048) (4,048) (7,465) (7,165)

OPERATING EXPENSES (10,271) (10,230) (19,234) (18,755)

OPERATING PROFIT FOR THE PERIOD BEFORE PROVISION /IMPAIRMENT LOSSES 18,923 20,923 38,540 43,721

Provision / impairment losses 5 (7,984) (10,280) (19,867) (20,810)

PROFIT FOR THE PERIOD BEFORE TAXATION 10,939 10,643 18,673 22,911

Taxation 6 (765) (848) (1,426) (1,720)

NET PROFIT FOR THE PERIOD 10,174 9,795 17,247 21,191

BASIC AND DILUTED EARNINGS PER SHARE 7 6 fils 6 fils 11 fils 13 fils


4

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) For the period ended 30 June 2013



2013 2012 2013 2012

KD 000 KD 000 KD 000 KD 000

NET PROFIT FOR THE PERIOD 10,174 9,795 17,247 21,191

Other comprehensive (expense) income

Effect of changes in fair values of investments available for sale (2,003) (2,203) 763 756

Net gain on sale / impairment losses on investments available for sale (546) (231) (869) (674)

Exchange difference on translation of foreign operations 12 29 16 54

Other comprehensive (expense) income for the period (2,537) (2,405) (90) 136

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 7,637 7,390 17,157 21,327


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6


INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOwS (UNAUDITED) For the period ended 30 June 2013

Note Six months ended

30 June

2013 2012

KD 000 KD 000OPERATING ACTIVITIESNet profit for the period 17,247 21,191Adjustments for:Net gain on sale of investments available for sale (1,045) (1,802)Dividend income (1,263) (1,448)Depreciation 808 758Share of results of an associate (964) - Provision / impairment losses 5 19,867 20,810Operating profit before changes in operating assets and liabilities 34,650 39,509Changes in operating assets and liabilitiesDeposits with banks (31,381) (64,973)Kuwait Government treasury bills and bonds 18,137 19,891Central Bank of Kuwait bonds 23,162 (67,913)Investments at fair value through profit or loss 390 906Loans and advances (116,089) 25,432Other assets 6,632 (1,083)Due to banks and other financial institutions 18,105 5,756Customer deposits 125,314 (69,073)Other liabilities 537 (3,244)Net cash flows from (used in) operating activities 79,457 (114,792)INVESTING ACTIVITIESPurchase of investments available for sale (56,165) (21,981)Proceeds from sale of investments available for sale 13,427 62,955Net movement in investment in associate (1,041) - Net purchase of premises and equipment (1,179) (458)Dividend income received 1,263 1,448Net cash flows (used in) from investing activities (43,695) 41,964FINANCING ACTIVITIESDividend paid (9,078) (21,394)Purchase of treasury shares (1,031) (33)Net cash flows used in financing activities (10,109) (21,427)Foreign currency translation difference 16 54NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 25,669 (94,201)Cash and cash equivalents at 1 January 167,058 216,506CASH AND CASH EQUIVALENTS AT 30 JUNE 192,727 122,305Cash and cash equivalents comprise:Balances with the Central Bank of Kuwait 60,170 33,007Cash in hand and in current account with other banks 67,753 27,094Deposits with banks with original maturity up to thirty days 64,804 62,204

192,727 122,305

7

1 ACTIVITIES

Al Ahli Bank of Kuwait K.S.C. (“the Bank”) is a public shareholding company incorporated in Kuwait on 23 May 1967, and is registered as a Bank with the Central Bank of Kuwait. Its registered office is at Al Safat Square, Ahmed Al Jaber Street, Kuwait City. It is engaged in banking, primarily in Kuwait and in the United Arab Emirates.

The Bank has a wholly owned subsidiary, Ahli Capital Investment Company K.S.C. (Closed) (“the Subsidiary”) which is engaged in investment management and advisory activities, regulated by Capital Markets Authority, Kuwait.

The interim condensed consolidated financial information of the Bank and its Subsidiary (collectively “the Group”) were approved by the Board of Directors on 25 July 2013.

The Companies Law issued on 26 November 2012 by Decree Law no. 25 of 2012 (the “Companies Law”), which was published in the Official Gazette on 29 November 2012, cancelled the Commercial Companies Law No. 15 of 1960. The Companies Law was subsequently amended on 27 March 2013 by Decree Law no. 97 of 2013 (the Decree). According to article 2 and 3 of the Decree, Executive Regulations which shall be issued by the Minister of Industry and Commerce by 26 September 2013 will determine the basis and rules which the Bank shall adopt to regularise its affairs with the Companies Law as amended.

2 BASIS OF PRESENTATION

(a) The interim condensed consolidated financial information of the Group has been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” except as noted below.

The annual consolidated financial statements for the year ended 31 December 2012, were prepared in accordance with the regulations of the State of Kuwait for financial services institutions regulated by the Central Bank of Kuwait. These regulations require adoption of all International Financial Reporting Standards (IFRS) except for the IAS 39 requirement for collective impairment provision, which has been replaced by the Central Bank of Kuwait’s requirement for a minimum general provision.

(b) The accounting policies used in the preparation of the interim condensed consolidated financial information are consistent with those used in the preparation of the annual consolidated financial statements for the year ended 31 December 2012, except for the adoption of the new and amended International Financial Reporting Standards that have become effective from 1 January 2013 and those which are applicable to the Group:

• IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities — Amendments to IFRS 7• IFRS 10 – Consolidated Financial Statements, IAS 27 Separate Financial Statements• IFRS 12 – Disclosure of Involvement with Other Entities• IFRS 13 – Fair Value measurement• IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1• IAS 1 Clarification of the requirement for comparative information (Amendment)• IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

The adoption of these standards did not have any significant or material impact on the interim condensed consolidated financial information of the Group and relevant disclosures will be made in the annual consolidated financial statements of the Group.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) 30 June 2013

8

2 BASIS OF PRESENTATION (continued)

(c) The interim condensed consolidated financial information does not contain all information and disclosures required for full financial statements prepared in accordance with IFRS, and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2012. Further, results for the six months period ended 30 June 2013, are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2013.

3 LOANS AND ADVANCES

During the period, CBK has issued its Circular No. 2/RB,RBA,RS/306/2013 to all local banks and investment companies regarding formation of Family Support Fund (the “Fund”) under Law No. 104/2013. The Fund has been established to purchase outstanding balance of instalment and consumer loans from the Bank as on 12 June 2013 for loans granted before 30 March 2008. The Bank is currently in the process of identifying such loans and continues to record these loans as per their original terms.

4 SHAREHOLDERS’ EqUITy

The shareholders at the Annual General Meeting held on 16 March 2013 approved the distribution of cash dividend of 6 per cent amounting to KD 9,078 thousand which was paid subsequently and bonus shares of 7 per cent for the year ended 31 December 2012 (cash dividend of 15 per cent amounting to KD 21,394 thousand and bonus shares of 5 per cent for the year ended 31 December 2011). The issue of bonus shares resulted in an increase in the number of authorised and issued shares by 105,926,763 shares and share capital by KD 10,593 thousand. Treasury shares are not entitled to any cash dividends.

5 PROVISION / IMPAIRMENT LOSSES



2013 2012 2013 2012

KD 000 KD 000 KD 000 KD 000

Credit facilities 7,808 9,152 19,691 15,950

Investments available for sale 176 1,128 176 1,128

Others (see note below) - - - 3,732

7,984 10,280 19,867 20,810

During the previous year, an amount of KD 3,732 thousand was provided for a customer legal claim.


9

6 TAXATION



2013 2012 2013 2012

KD 000 KD 000 KD 000 KD 000

Kuwait Foundation for the Advancement of Sciences 95 92 162 199

National Labour Support Tax 266 256 451 554

Zakat 106 103 180 222

Tax on overseas branches 298 397 633 745

765 848 1,426 1,720

7 BASIC AND DILUTED EARNINgS PER SHARE

Basic and diluted earnings per share are computed by dividing the net profit for the period by the weighted average number of shares outstanding during the period, calculated as follows:



2013 2012 2013 2012

Net profit for the period (KD 000) 10,174 9,795 17,247 21,191

Weighted average number of the Bank’s issued and paid-up shares 1,619,166,234 1,619,166,234 1,619,166,234 1,619,166,234

Less: weighted average number of treasury shares (537,578) (15,700,905) (378,652) (15,679,859)

Adjusted weighted average number of shares outstanding during the period 1,618,628,656 1,603,465,329 1,618,787,582 1,603,486,375

Basic and diluted earnings per share 6 fils 6 fils 11 fils 13 fils

The prior period comparative information has been restated for the effect of bonus shares issued during the current period (Note 4).


10

11


8 SEgMENTAL INFORMATION

The Group is organised into segments that engage in business activities which earn revenue and incur expenses. These segments are regularly reviewed by the chief operating decision maker for resource allocation and performance assessment. For the purposes of segment reporting the management has grouped the products and services into the following operating segments:

Commercial Banking - Comprising a full range of credit, deposit and related banking services provided to its commercial customers.

Treasury and Investment - Comprising money market, foreign exchange, treasury bonds, asset and surplus fund management investment securities and investment in an associate.

Operating income includes operating revenue directly attributable to a segment. Segment results include revenue and expenses directly attributable to a segment. Segment assets comprise those operating assets that are directly attributable to the segment.

Segmental information relating to interim condensed consolidated income statement for the six months period ended 30 June is as follows:

Commercial Banking Treasury and Investment Total

2013 2012 2013 2012 2013 2012

KD 000 KD 000 KD 000 KD 000 KD 000 KD 000

Operating income 47,898 54,124 9,876 8,352 57,774 62,476

Segment result 19,071 25,715 8,637 6,640 27,708 32,355

Unallocated expenses (9,035) (9,444)

Profit for the period before taxation 18,673 22,911

Segmental assets 2,238,870 2,091,875 829,093 856,704 3,067,963 2,948,579

Unallocated assets 57,404 68,135

Total assets 3,125,367 3,016,714

12


9 RELATED PARTy TRANSACTIONS

These represent transactions with certain related parties (major shareholders, directors and senior management of the Group, close members of their families and entities of which they are principal owners or over which they are able to exercise significant influence, managed funds and an associate entity) who were customers of the Group during the period. The terms of these transactions are approved by the Group’s management.

In the normal course of business, these related parties have deposits with the Bank and credit facilities granted to them by the Bank. The balances included in the interim condensed consolidated financial information are as follows:

(Audited)

30 June 31 December 30 June

2013 2012 2012

KD 000 KD 000 KD 000

Loans and advances 13,765 15,290 16,515

Deposits 25,203 25,045 13,992

Commitments and contingent liabilities 809 347 532

10 COMMITMENTS AND CONTINgENT LIABILITIES

Financial instruments with contractual amounts representing credit risk.

(Audited)


2013 2012 2012

KD 000 KD 000 KD 000

Acceptances 37,306 61,965 47,615

Letters of credit 249,520 198,768 216,629

Guarantees 607,441 660,575 649,966

894,267 921,308 914,210

Commitments to extend credit at the statement of financial position date amounted to KD 199,340 thousand (31 December 2012: KD 210,071 thousand and 30 June 2012: KD 213,372 thousand).

13


11 DERIVATIVE INSTRUMENTS

The notional or contractual amounts of outstanding derivative instruments together with the fair values are as follows:

30 June 2013(Audited)

31 December 2012 30 June 2012

Assets LiabilitiesContractual

amounts Assets LiabilitiesContractual

amounts Assets LiabilitiesContractual

amounts

KD 000 KD 000 KD 000 KD 000 KD 000 KD 000 KD 000 KD 000 KD 000

Held for hedging:

Fair value hedges

Interest rate swaps 363 (439) 45,130 - (683) 16,875 - (606) 16,809

Held for trading:

Forward foreign exchange contracts 2,153 (3,054) 247,880 4,054 (1,171) 189,007 3,752 (2,046) 168,231

Interest rate swaps - (1,777) 88,883 - (439) 88,883 114 (139) 113,883

2,516 (5,270) 381,893 4,054 (2,293) 294,765 3,866 (2,791) 298,923

All derivative contracts are fair valued using observable market inputs.

14


12 FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments comprise of financial assets, financial liabilities and derivative instruments. Financial assets consist of cash and balances with banks, Kuwait Government treasury bills and bonds, Central Bank of Kuwait Bonds, loans and advances, investment securities and certain other assets. Financial liabilities consist of due to banks and other financial institutions, customer deposits and certain other liabilities. Derivative instru-ments consist of Interest rate swaps and forward foreign exchange contracts.

Fair values of all financial instruments are not materially different from their carrying values. Further the Group uses the following hierarchy for determining and disclosing the fair value of investment securities.

• Level 1: Quoted securities traded in active markets.• Level 2: Unquoted securities where significant valuation inputs are based on observable market data.• Level 3: Unquoted securities where significant valuation inputs are not based on observable market data.

(Audited)


2013 2012 2012

KD 000 KD 000 KD 000

Level 1:

Equity 13,658 12,448 7,930

Debt securities 148,724 115,349 76,869

Level 2:

Equity 22,785 23,881 23,098

Debt securities 11,765 6,700 -

Managed funds 4,392 4,182 3,939

Level 3:

Equity 24,096 21,985 23,401

Debt securities 3,500 5,000 5,000

Managed funds 2,998 - -

231,918 189,545 140,237

The movements in Level 3 category above is mainly due to additional purchases made during the period.

Refer to note 11 for fair value hierarchy of derivative financial instruments.

Interim Condensed Consolidated Financial Information (Unaudited)Ahlan Ahli 1 899 899

www.eahli.com 30 June 2013

interim condensed consolidated financial information ... · basic and diluted earnings per 6 fils...

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