National Bank of Umm Al Qaiwain: Consolidated Interim Financial Statements - 31 March 2022

Transcription

1. NATIONAL BANK OF UMM AL-QAIWAIN (PSC) AND SUBSIDIARY Review report and condensed consolidated interim financial statements For the three months period ended 31 March 2022
2. NATIONAL BANK OF UMM AL-QAIWAIN (PSC) AND SUBSIDIARY Review report and condensed consolidated interim financial statements For the three months period ended 31 March 2022 Contents Pages Report on review of condensed consolidated interim financial statements 1 Consolidated interim statement of financial position 2 Consolidated interim income statement 3 Consolidated interim statement of comprehensive income 4 Consolidated interim statement of changes in equity 5 Consolidated interim statement of cash flows 6 Notes to the condensed consolidated interim financial statements 7 - 22
3. Ernst & Young (Sharjah Branch) P.O. Box 1350 City Gate Tower, Office No. 1402 Al Ittihad Street Sharjah, United Arab Emirates Tel: +971 6 574 1491 ey.com REPORT ON REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF NATIONAL BANK OF UMM ALQAIWAIN PSC AND SUBSIDIARY Introduction We have reviewed the accompanying condensed consolidated interim financial statements of National Bank of Umm Al-Qaiwain PSC (the “Bank”) and its subsidiary (collectively referred to as the “Group”), which comprise the consolidated interim statement of financial position as at 31 March 2022 and the related consolidated interim statements of income, comprehensive income, changes in equity and statement of cash flows for the three-month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting (“IAS 34”). Our responsibility is to express a conclusion on these condensed consolidated interim financial statements 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 statements are not prepared, in all material respects, in accordance with IAS 34. For Ernst & Young Signed by: Anthony O’Sullivan Partner Registration No: 687 17 April 2022 Sharjah, United Arab Emirates A member firm of Ernst & Young Global Limited
5. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM INCOME STATEMENT For the three months period ended 31 March 2022 (Unaudited) Notes Interest income Income from Islamic financing products Total interest income and income from Islamic financing products Interest expense Distribution to depositors – Islamic products Three months period ended 31 March (Unaudited) ──────────────────────── 2022 2021 AED ’000 AED ’000 71,967 75,271 5,796 ──────── 8,765 ──────── 77,763 84,036 (10,944) (13,405) (83) ──────── (96) ──────── Net interest income and income from Islamic products net of distribution to depositors 66,736 70,535 Net fees and commission income 10,702 13,390 23,648 ──────── 101,086 13,183 ──────── 97,108 Other operating income GROSS INCOME Operating expenses (35,683) Investment gains 30,494 ──────── 95,897 27,585 ──────── 92,534 58 ──────── 95,955 54 ──────── 92,588 14 616 ──────── 96,571 ════════ (16,101) ──────── 76,487 ════════ 15 0.05 ════════ 0.04 ════════ OPERATING INCOME Share of results from an associate PROFIT FOR THE PERIOD BEFORE IMPAIRMENT Net Impairment Losses PROFIT FOR THE PERIOD Basic and diluted earnings per share (AED) (32,159) The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 3
6. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME For the three months period ended 31 March 2022 (Unaudited) Three months period ended 31 March (Unaudited) ──────────────────────── 2022 2021 AED ’000 AED ’000 PROFIT FOR THE PERIOD 96,571 76,487 180,827 ──────── 180,827 ──────── 277,398 ════════ 61,955 ──────── 61,955 ──────── 138,442 ════════ Other comprehensive income Items that will not be reclassified subsequently to profit or loss Net fair value gain on investment securities carried at FVTOCI - equity Other comprehensive income for the period TOTAL COMPREHENSIVE INCOME FOR THE PERIOD The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 4
7. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the three months period ended 31 March 2022 (Unaudited) Balance as at 1 January 2022 (audited) Profit for the period Other comprehensive income for the period Total comprehensive income for the period Share capital AED ’000 Statutory reserve AED ’000 General reserve AED ’000 1,848,000 1,019,266 6,440 - ──────── ──────── ──────── ──────── ──────── ──────── Impairment reserve general AED ’000 Cumulative change in fair values AED ’000 Retained earnings AED ’000 Total AED ’000 35,911 372,617 1,768,501 5,050,735 - - 96,571 96,571 ──────── 96,571 ──────── 180,827 ──────── 277,398 ──────── ──────── ──────── 180,827 ──────── 180,827 ──────── Additional provision under U.A.E Central Bank requirement over IFRS 9 requirement (Note 24) - - - 2,264 - (2,264) Dividend paid (Note 16) - - - - - (147,840) Sale of FVOCI equity Balance as at 31 March 2022 (unaudited) Balance as at 1 January 2021 (audited) Profit for the period Other comprehensive income for the period Total comprehensive income for the period Balance as at 31 March 2021 (unaudited) ──────── 1,848,000 ════════ ──────── 1,019,266 ════════ ──────── 6,440 ════════ 1,848,000 1,019,266 6,440 - 135,632 - - - ──────── ──────── 1,848,000 ════════ ──────── ──────── 1,019,266 ════════ ──────── ──────── 6,440 ════════ ──────── 38,175 ════════ ──────── ──────── ════════ The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 5 (30,866) ──────── 522,578 ════════ 61,955 ──────── 61,955 ──────── 197,587 ════════ (147,840) 30,866 ──────── 1,745,834 ════════ ──────── 5,180,293 ════════ 1,688,084 4,697,422 76,487 76,487 ──────── 76,487 ──────── 1,764,571 ════════ 61,955 ──────── 138,442 ──────── 4,835,864 ════════
8. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS For the three months period ended 31 March 2022 (Unaudited) Notes Three months period ended 31 March (Unaudited) ──────────────────────── 2022 2021 AED ’000 AED ’000 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the period Adjustments for: Provision for expected credit losses Provision for impairment of inventory Depreciation of property and equipment Depreciation of right of use asset Provision for employee end of service benefits Decrease /(Increase) in fair value of investment in securities at FVTPL Discount amortised on investment securities Dividend income Loss on disposal of property and equipment Share of profit from an associate Finance cost on lease liability 96,571 14 14 21 Operating cash flows before movements in working capital Decrease in deposits with original maturity greater than 3 months (Increase)/Decrease in statutory deposit with CBUAE Payment of employee end of service benefits (Increase)/Decrease in loans and advances and Islamic financing receivables Decrease in other assets Decrease in customers' deposits Decrease in other liabilities Net cash generated from operating activities (616) 4,385 432 375 76,487 14,626 1,475 4,238 381 869 754 (32,117) (58) 26 ──────── 70,621 (437) (27,149) 15 (54) ──────── 69,582 81,626 8,290 (138) 224,000 (7,593) (1,412) (47,853) 11,678 (20,105) 47,372 ──────── 151,491 ──────── 221,908 5,915 (46,797) 18,341 ──────── 483,944 ──────── (1,036) 14 61,603 14,832 ──────── 75,413 ──────── (3,739) 66 (3,673) 17,077 ──────── 9,731 ──────── (147,840) (452) ──────── (148,292) ──────── 78,612 ──────── ──────── 493,675 3,628,046 ──────── 3,672,654 ──────── 3,706,658 ════════ 4,166,329 ════════ CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment Proceeds from disposal of property and equipment Purchase of investment securities Proceed from maturity and disposal of investment securities Dividend received from investment securities Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Lease payments 16 Net cash used in financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the period CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 17 The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 6
9. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 1. GENERAL INFORMATION National Bank of Umm Al-Qaiwain (PSC) (the “Bank”) is a Public Shareholding Company incorporated in the Emirate of Umm Al-Qaiwain (“UAQ”) in the United Arab Emirates (“U.A.E.”) by Amiri Decree Number (1) on 5 January 1982, issued by His Highness, the Ruler of Umm Al-Qaiwain, and commenced its operations with effect from 1 August 1982. National Bank of Umm Al-Qaiwain (PSC), and its subsidiary, Twin Towns Marketing Management L.L.C. are together referred to as the “Group”. The address of the Bank’s registered Head Office is P.O. Box 800, Umm Al-Qaiwain, United Arab Emirates. The Bank is engaged in providing retail and corporate banking services through a network of 12 branches in the U.A.E. The Group carries out Islamic banking operations through Islamic banking window established in 2005 across all its branch network. The condensed consolidated interim financial statements of the Group for the three months period ended 31 March 2022 were authorised and approved for issue by the Board of Directors on 17 April 2022 by circulation. 2. CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS 2.1 CHANGES IN ACCOUNTING POLICIES The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2021, except for the adoption of new standards effective as of 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. Several amendments apply for the first time in 2022, but do not have an impact on the interim condensed consolidated financial statements of the Group. Standards, amendments and interpretations that are effective for the Group’s accounting period beginning on 1 January 2022 Reference to the Conceptual Framework – Amendments to IFRS 3 The amendments replace a reference to a previous version of the IASB’s Conceptual Framework with a reference to the current version issued in March 2018 without significantly changing its requirements. The amendments add an exception to the recognition principle of IFRS 3 Business Combinations to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 Levies, if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.The amendments also add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date. These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no contingent assets, liabilities and contingent liabilities within the scope of these amendments arisen during the period. Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss. These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented. 7
10. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 2. CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (CONTINUED) 2.1 CHANGES IN ACCOUNTING POLICIES (continued) IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities (continued) IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. There is no similar amendment proposed for IAS 39 Financial Instruments: Recognition and Measurement These amendments had no impact on the interim condensed consolidated financial statements of the Group as there were no modifications of the Group’s financial instruments during the period. Standard Issued but not yet Effective The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s interim condensed consolidated financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.   IFRS 17 Insurance Contracts Amendments to IAS 1: Classification of Liabilities as Current or Non-current There are no other applicable new standards and amendments to published standards or IFRS IC interpretations that have been issued but are not effective for the first time for the Group’s financial year beginning on 1 January 2022 that would be expected to have a material impact on the Group’s consolidated financial statements. Key accounting estimates and judgments The preparation of the condensed consolidated interim financial information requires management to make estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty, and actual results may therefore differ resulting in future changes in these estimates. In preparing, the condensed consolidated interim financial information, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation and uncertainty were the same as those that applied to the audited consolidated financial information as at and for the year ended 31 December 2021. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 BASIS OF PREPARATION These condensed consolidated interim financial statements are prepared in accordance with International Accounting Standard No. 34 - Interim Financial Reporting issued by the International Accounting Standard Board and also comply with the applicable requirements of the laws in the U.A.E. The condensed consolidated interim financial statements are prepared in accordance with the historical cost basis, except for the revaluation of certain financial instruments. The condensed consolidated interim financial statements are presented in U.A.E. Dirhams (AED) as that is the functional currency in which the majority of the Group’s transactions are denominated. All financial information presented in AED has been rounded off to the nearest thousand, unless otherwise stated. These condensed consolidated interim financial statements do not include all the information required for full annual consolidated financial statements and should be read in conjunction with the Group’s annual audited consolidated financial statements as at and for the year ended 31 December 2021. In addition, results for the three months period ended 31 March 2022 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2022. 8
11. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.2 BASIS OF CONSOLIDATION These condensed consolidated interim financial statements incorporate the financial statements of the Bank and entity controlled by the Bank. Control is achieved when the Bank: • • • has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns The condensed consolidated interim financial statements comprise the financial statements of the Bank and of the subsidiary as disclosed in the annual audited financial statements for the year ended 31 December 2021. The financial year end for the subsidiary is the same as that of the Bank. 3.3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies applied by the Group in the preparation of the condensed consolidated interim financial statements are consistent with those applied by the Group in the annual consolidated financial statements for the year ended 31 December 2021, except for changes in accounting policies explained in Note 2.1. 4. CASH AND BALANCES WITH THE U.A.E. CENTRAL BANK 31 March 2022 AED’000 (Unaudited) Balances with CBUAE Current account Statutory cash reserve deposit Monetary Bills Overnight deposits 36,767 337,345 599,936 650,000 ──────── 1,624,048 101,207 ──────── 1,725,255 ════════ Cash in hand 31 December 2021 AED’000 (Audited) 34,104 345,635 349,957 625,000 ──────── 1,354,696 96,688 ──────── 1,451,384 ════════ The statutory deposit with the CBUAE is not available to finance the day to day operations of the Bank. 5. DUE FROM OTHER BANKS 31 March 2022 AED’000 (Unaudited) Term deposits Demand deposits Loans to financial institutions 2,289,223 29,597 821,339 ──────── 3,140,159 (2,771) ──────── 3,137,388 ════════ Total due from other banks Provision for expected credit loss Net due from other banks 9 31 December 2021 AED’000 (Audited) 2,642,634 29,663 752,965 ──────── 3,425,262 (2,699) ──────── 3,422,563 ════════
12. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 5. DUE FROM OTHER BANKS (continued) 31 March 2022 AED’000 (Unaudited) Gross amounts due from other banks by geographical area Within U.A.E. Within GCC Other countries 2,034,957 378,778 726,424 ──────── 3,140,159 ════════ 31 December 2021 AED’000 (Audited) 2,756,497 180,675 488,090 ──────── 3,425,262 ════════ All amounts due from other banks were classified as Stage 1 (31 December 2021: Stage 1) with corresponding ECL of AED 2.77 million (31 December 2021: AED 2.70 million). There was no inter-stage movement in gross balances due from other banks during the period (31 December 2021: no inter-stage movement) 6 LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES 31 March 2022 AED’000 (Unaudited) Loans Overdrafts Islamic financing products Loans against trust receipts Syndicated Loans Other Total loans and advances and Islamic financing receivables Provision for expected credit loss Net loans and advances and Islamic financing receivables 5,462,394 1,011,028 181,605 166,223 99,997 64,167 ──────── 6,985,414 (349,493) ──────── 6,635,921 ════════ 31 March 2022 AED’000 (Unaudited) Gross loans and advances and Islamic financing receivables by economic sector Wholesale and retail trade Real estate and construction Personal loans and other Manufacturing Agriculture and allied activities Transport and communication Financial institutions Services and other 851,662 3,196,161 397,570 430,777 1,491 154,315 454,717 1,498,721 ──────── 6,985,414 ════════ All loans and advances and Islamic financing receivables are from customers within U.A.E. 10 31 December 2021 AED’000 (Audited) 5,663,834 853,482 195,095 129,420 48,282 ──────── 6,890,113 (301,559) ──────── 6,588,554 ════════ 31 December 2021 AED’000 (Audited) 876,137 3,369,736 404,080 411,704 1,175 164,120 332,896 1,330,265 ──────── 6,890,113 ════════
13. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 6. LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES (continued) Movement in the gross balances of loans and advances and Islamic financing receivables Gross carrying amount as at 31 December 2021 New assets originated or purchased Assets derecognised or repaid Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Write off As at 31 March 2022 (unaudited) Gross carrying amount as at 31 December 2020 New assets originated or purchased Assets derecognised or repaid Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Write off As at 31 December 2021 Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 5,874,153 535,870 (467,306) 2,437 (35,263) (3,857) ──────── 5,906,034 ════════ 424,223 (11,066) (2,437) 35,263 ──────── 445,983 ════════ 591,737 47,046 (8,795) 3,857 (448) ──────── 633,397 ════════ 6,890,113 582,916 (487,167) (448) ──────── 6,985,414 ════════ Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 6,813,529 374,306 (1,034,295) 5,689 (254,256) (30,820) ──────── 5,874,153 ════════ 382,877 364 (199,009) (5,689) 260,675 (14,995) ──────── 424,223 ════════ 795,427 (211,725) (6,419) 45,815 (31,361) ──────── 591,737 ════════ 7,991,833 374,670 (1,445,029) (31,361) ──────── 6,890,113 ════════ Movement in the provision for impairment of loans and advances and Islamic financing receivables: Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 ECL allowances as at 31 December 2021 79,297 New assets originated or purchased 4,935 Assets derecognized or repaid (excluding write-offs) (6,170) Net impairment charged during the period Transfer to Stage 1 54 Transfer to Stage 2 (923) Recoveries Written off ──────── As at 31 March 2022 (unaudited) 77,193 ════════ 36,241 1,893 (54) 923 ──────── 39,003 ════════ 186,021 47,000 289 (460) 447 ──────── 233,297 ════════ 301,559 51,935 (4,277) 289 (460) 447 ──────── 349,493 ════════ Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 112,318 (28,834) 223 (4,028) (382) ──────── 79,297 ════════ 39,523 (6,289) (223) 4,028 (798) ──────── 36,241 ════════ 200,336 26,246 (5,380) 1,180 (36,361) ──────── 186,021 ════════ ECL allowances as at 31 December 2020 Net impairment charged during the period Recoveries Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Written off As at 31 December 2021 11 Total AED’000 352,177 (8,877) (5,380) (36,361) ──────── 301,559 ════════
14. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 6. LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES (continued) Grading of loans and advances and Islamic financing receivables along with stages: 31 March 2022 (Unaudited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 Performing (Grades 1-8) Performing Watchlist (9-12) Sub Standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss Carrying amount 5,906,034 ──────── 5,906,034 (77,193) ──────── 5,828,841 ════════ 259,100 186,883 ──────── 445,983 (39,003) ──────── 406,980 ════════ 102,108 497,551 33,738 ──────── 633,397 (233,297) ──────── 400,100 ════════ 6,165,134 186,883 102,108 497,551 33,738 ──────── 6,985,414 (349,493) ──────── 6,635,921 ════════ 31 December 2021 (Audited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 Performing (Grades 1-8) Performing Watchlist (9-12) Sub Standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss Carrying amount 5,874,153 ──────── 5,874,153 (79,297) ──────── 5,794,856 ════════ 231,097 193,126 ──────── 424,223 (36,241) ──────── 387,982 ════════ 110,608 448,187 32,942 ──────── 591,737 (186,021) ──────── 405,716 ════════ 6,105,250 193,126 110,608 448,187 32,942 ──────── 6,890,113 (301,559) ──────── 6,588,554 ════════ The non-performing loans as at 31 March 2022 amounted to AED 633.40 million (31 December 2021: AED 591.74 million) which is well covered by securities of AED 990.29 million (31 December 2021: AED 989.22 million) and impairment provision of AED 233.30 million (31 December 2021: AED 186.02 million) aggregating to AED 1,223 million (31 December 2021: AED 1,175 million) which is 1.93 times (31 December 2021: 1.99 times) of the nonperforming loans. 12
15. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 7. INVESTMENT SECURITIES Investment securities comprise the following: 31 March 2022 AED’000 (Unaudited) Securities at FVTPL Quoted equity securities Discretionary funds managed by third parties – quoted equity securities Securities at FVTOCI Quoted equity securities Unquoted equity securities Securities at amortised cost Quoted debt instruments Total investment securities Provision for expected credit loss Net investment securities 15,497 249 ──────── 15,746 ──────── 16,366 250 ──────── 16,616 ──────── 1,115,805 1,194 ──────── 1,116,999 ──────── 996,581 1,194 ──────── 997,775 ──────── 119,703 ──────── 1,252,448 (1,306) ──────── 1,251,142 ════════ 120,457 ──────── 1,134,848 (2,227) ──────── 1,132,621 ════════ 31 March 2022 AED’000 (Unaudited) Gross investment securities by geographical area Within U.A.E. Within GCC Other countries 31 December 2021 AED’000 (Audited) 1,049,588 167,565 35,295 ──────── 1,252,448 ════════ 31 December 2021 AED’000 (Audited) 933,928 166,536 34,384 ──────── 1,134,848 ════════ All debt investment are classified as Stage 1 (31 December 2021: Stage 1) with corresponding ECL of AED 1.31 million (31 December 2021: AED 2.23 million). There was no inter-stage movement in investment securities during the period (31 December 2021: no inter-stage movement). 8. OTHER ASSETS 31 March 2022 AED’000 (Unaudited) Inventory- property acquired in settlement of debt * Interest receivable Prepayments and deposits Others 178,362 22,223 23,816 24,312 ──────── 248,713 ════════ 31 December 2021 AED’000 (Audited) 178,362 32,620 28,004 4,117 ──────── 243,103 ════════ *Inventory represents property acquired in settlement of debt. The Group has recorded an impairment on its inventory amounting to Nil during 3 months period ended 31 March 2022 (31 December 2021: AED 3.74 million). 13
16. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 9. DUE TO OTHER BANKS 31 March 2022 AED’000 (Unaudited) Demand deposits By geographical area Other countries outside the U.A.E. 10. 31 December 2021 AED’000 (Audited) 72 ════════ ════════ 72 ════════ ════════ CUSTOMERS’ DEPOSITS AND ISLAMIC CUSTOMERS’ DEPOSITS 31 March 2022 AED’000 (Unaudited) Time deposits Current accounts Savings deposits Islamic customers’ deposits Margin deposits 4,687,315 2,684,599 170,110 85,705 52,286 ──────── 7,680,015 ════════ 31 December 2021 AED’000 (Audited) 4,499,220 2,891,856 171,459 84,721 52,864 ──────── 7,700,120 ════════ All customers’ deposits and Islamic customers’ deposits are from customers within U.A.E. 11. OTHER LIABILITIES 31 March 2022 AED’000 (Unaudited) Accounts payable Interest payable Provision for employees’ end of service benefits Other staff benefits Dividend payable Provision for expected credit loss on acceptance Provision for expected credit loss on commitments and contingencies (Note 13) Cheques on Selves Lease Liability Other 14 31 December 2021 AED’000 (Audited) 21,628 16,224 19,110 2,412 10,619 481 26,625 12,514 18,873 1,284 10,619 394 6,001 121,980 5,203 17,308 ──────── 220,966 ════════ 6,341 74,049 5,235 17,708 ──────── 173,642 ════════
17. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 12. SHARE CAPITAL 31 March 2022 AED’000 (Unaudited) Issued and fully paid: 1,848 million ordinary shares of AED 1 each 13. 1,848,000 ════════ 31 December 2021 AED’000 (Audited) 1,848,000 ════════ COMMITMENTS AND CONTINGENT LIABILITIES 31 March 2022 AED’000 (Unaudited) Guarantees Letters of credit Commitments to extend credit Other Gross commitments and contingent liabilities by geographical area Within the U.A.E. Outside the U.A.E. 31 December 2021 AED’000 (Audited) 1,696,776 143,512 1,037,077 141,739 ──────── 3,019,104 ════════ 1,805,349 145,229 1,131,723 457,028 ──────── 3,539,329 ════════ 2,940,908 78,196 ──────── 3,019,104 ════════ 3,454,044 79,872 ──────── 3,533,916 ════════ Movement in the gross balance and corresponding ECL allowances of commitments and contingent liabilities Gross carrying amount - 1 January 2022 New assets originated or purchased Assets derecognised or repaid (excluding write offs) Transferred to Stage 2 Gross carrying amount – 31 March 2022 (unaudited) Gross carrying amount - 1 January 2021 New assets originated or purchased Assets derecognised or repaid (excluding write offs) Transferred to Stage 2 Transferred to Stage 3 Gross carrying amount – 31 December 2021 Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 1,896,963 134,103 3,867 399 49,748 - 1,950,578 134,502 (244,792) (3,561) ──────── 3,561 ──────── ──────── (244,792) ──────── 1,782,713 ════════ 7,827 ════════ 49,748 ════════ 1,840,288 ════════ Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 49,674 - 2,434,464 274,469 2,382,539 274,469 (758,355) (1,616) (74) ──────── 1,896,963 ════════ 15 2,251 1,616 ──────── 3,867 ════════ 74 ──────── 49,748 ════════ (758,355) ──────── 1,950,578 ════════
18. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 13. COMMITMENTS AND CONTINGENT LIABILITIES (continued) Movement in the provision for impairment of commitments and contingent liabilities ECL allowances -01 January 2022 Originated/expired during the period Assets derecognised or repaid (excluding write offs) Transfer to Stage 2 As at 31 March 2022 (unaudited) ECL allowances - 01 January 2021 New assets originated or purchased Assets derecognised or repaid (excluding write offs) ECL allowances – 31 December 2021 Stage 1 AED’000 Stage 2 AED’000 6,334 972 7 1 Stage 3 AED’000 - Total AED’000 6,341 973 (1,314) (30) ──────── 5,962 ════════ 1 30 ──────── 39 ════════ ──────── ════════ (1,313) ──────── 6,001 ════════ Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 7,171 3,629 (4,466) ──────── 6,334 ════════ 6 1 ──────── 7 ════════ ──────── ════════ 7,177 3,629 (4,465) ──────── 6,341 ════════ Grading of commitments and contingent liabilities along with stages: 31 March 2022 (unaudited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 Performing (Grades 1-8) Performing Watchlist (9-12) Sub Standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss (Note 11) Carrying amount Performing (Grades 1-8) Performing watch list (Grades 9-12) Sub Standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss Carrying amount 1,782,713 ──────── 1,782,713 (5,963) ──────── 1,776,750 ════════ 5,230 1,787,943 2,597 2,597 359 359 10,765 10,765 38,624 38,624 ──────── ──────── ──────── 7,827 49,748 1,840,288 (38) (6,001) ──────── ──────── ──────── 7,789 49,748 1,834,287 ════════ ════════ ════════ 31 December 2021 (audited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 1,896,963 ──────── 1,896,963 (6,334) ──────── 1,890,629 ════════ 1,270 2,597 ──────── 3,867 (7) ──────── 3,860 ════════ 359 10,765 38,624 ──────── 49,748 ──────── 49,748 ════════ 1,898,233 2,597 359 10,765 38,624 ──────── 1,950,578 (6,341) ──────── 1,944,237 ════════ At 31 March 2022, the group has capital commitments of AED 2.27 million (31 December 2021: AED 4.79 million). The provision for expected credit loss against the off-balance sheet items disclosed above amounting to AED 6.00 million (31 December 2021: AED 6.34 million) is classified under other liabilities (Note 11). 16
19. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 14. NET IMPAIRMENT LOSSES Three months period ended 31 March (Unaudited) ──────────────────────── 2022 2021 AED ’000 AED ’000 Loans and advances and Islamic financing receivables Due from other banks Investment securities Acceptances and off-balance sheet items Impairment- Property acquired in settlement of debt 15. 486 72 (921) (253) ──────── (616) ════════ 14,032 277 (64) 381 1,475 ──────── 16,101 ════════ BASIC AND DILUTED EARNINGS PER SHARE The basic earnings per share is calculated by dividing the profit attributable to shareholders by the average number of ordinary shares in issue during the year. Three months period ended 31 March (unaudited) ───────────────────────── 2022 2021 Profit for the period (in AED ’000) 96,571 ════════ 76,487 ════════ Weighted average number of shares (’000) 1,848,000 ════════ 1,848,000 ════════ Basic and diluted earnings per share (in AED) 0.05 ════════ 0.04 ════════ There were no potential dilutive shares as at 31 March 2022 and 31 March 2021. 16. DIVIDENDS At the Annual General Meeting held on 14 March 2022, the Shareholders approved dividend of 8% amounting to AED 147.8 million for the year ended 31 December 2021 (2020: AED 147.8 million). 17. CASH AND CASH EQUIVALENTS 31 March (Unaudited) ───────────────────────── 2022 2021 AED’000 AED’000 Cash and balances with the U.A.E. Central bank (Note 4) Due from other banks (Note 5) 1,725,255 3,140,159 4,865,414 Statutory deposit (Note 4) Due from other banks with original maturity greater than three months Due to other banks (Note 9) 17 1,460,955 3,275,978 4,736,933 (337,345) (97) (821,339) (72) ──────── 3,706,658 ════════ (319,507) (251,000) ──────── 4,166,329 ════════
20. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 18. RELATED PARTY TRANSACTIONS The Group carries out transactions in the ordinary course of business with related parties, defined as shareholders who have a significant equity interest in the Group, all Directors of the Group and companies in which such shareholders and Directors have a significant interest and key management personnel of the Group. During the period, the Group entered into the following significant transactions with related parties in the ordinary course of business. Three months period ended 31 March (unaudited) ───────────────────────── 2022 2021 AED’000 AED’000 Interest income Interest expense Other income Directors’ fees 600 6,333 8 750 407 7,419 21 750 2022 AED’000 2021 AED’000 1,237 24 1,510 36 Remuneration of key management personnel Salaries and other short-term benefits Employee end of service benefits The Group has entered into transactions with related parties which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with third parties. Outstanding balances at the end of reporting date from transactions with related parties are as follows Loans and advances and Islamic financing receivables Customer deposits and Islamic customer deposits Irrevocable commitments and contingent liabilities 31 March 2022 AED’000 (Unaudited) 31 December 2021 AED’000 (Audited) 87,388 2,700,596 157,831 82,996 2,750,770 205,706 346 1,386 104 1,097 Key Management Loans and advances and Islamic financing receivables Customer deposits and Islamic customer deposits The loans and advances and Islamic financing receivables given to related parties have been secured against collateral amounting to AED 87.39 million (2021: AED 82.99 million). All loans and advances to related parties are classified as Stage 1 (31 December 2021: Stage 1) with corresponding ECL of AED 1.37 million (31 December 2021: AED 1.91 million). 18
21. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 19. BUSINESS SEGMENTS The Group is organised into three main business segments: Retail and corporate banking - wherein retail banking comprises private customer current accounts, savings accounts, deposits, credit and debit cards, customer loans and mortgages. Corporate banking involves transactions with corporate bodies including government and public bodies and comprises loans, advances, deposits and trade finance transactions. Treasury and investments - incorporating the activities of the dealing room, related money market, foreign exchange transactions with other banks and financial institutions including CBUAE and operations by the Bank’s Head Office as a whole, none of which mutually constitute a separately reportable segment. Transactions between the business segments are on normal commercial terms and conditions. There are no material items of income and expense arising between the business segments. Segment assets and liabilities comprise operating assets and liabilities, being the majority of the condensed consolidated statement of financial position items. Primary segment information Retail and corporate banking AED’ 000 Three months period ended 31 March 2022 (Unaudited) Net interest income and income from Islamic products net of distribution to depositors Net fees and commission income Other operating income Gross income Operating expenses Investment gains Provision for impairment on financial assets Share of profits from an associate Segment result As at 31 March 2022 (Unaudited) Segment assets Segment liabilities and equity Treasury and investments AED’ 000 Others AED’ 000 Total AED’ 000 21,701 ──────── 21,701 ──────── (25,829) - 66,736 10,702 23,648 ──────── 101,086 ──────── (35,683) 30,494 59,422 10,702 ──────── 70,124 ──────── (9,200) - 7,314 1,947 ──────── 9,261 ─────── (654) 30,494 (233) ──────── 60,691 ════════ 849 ──────── 39,950 ════════ 58 ──────── (4,070) ════════ 616 58 ════════ 96,571 ════════ 6,778,366 ════════ 5,777,145 ════════ 747,168 ════════ 13,302,679 ════════ 7,851,536 ════════ 50,072 ════════ 5,401,071 ════════ 13,302,679 ════════ 19 -
22. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 19. BUSINESS SEGMENTS (continued) Retail and corporate banking AED’ 000 Three months period ended 31 March 2021 (Unaudited) Net interest income and income from Islamic products net of distribution to depositors Net fees and commission income Other operating income Gross income Operating expenses Investment gains Provision for impairment on financial assets Share of profits from an associate Segment result As at 31 March 2021 (Unaudited) Segment assets Segment liabilities and equity 20. Treasury and investments AED’ 000 Others AED’ 000 Total AED’ 000 67,817 12,187 276 ──────── 80,280 ──────── (7,275) - 2,718 786 35 ──────── 3,539 ─────── (524) 27,585 417 12,872 ──────── 13,289 ──────── (24,360) - 70,535 13,390 13,183 ──────── 97,108 ──────── (32,159) 27,585 (14,031) ──────── 58,974 ════════ (213) ──────── 30,387 ════════ (1,857) 54 ──────── (12,874) ════════ (16,101) 54 ════════ 76,487 ════════ 7,625,044 ════════ 5,320,142 ════════ 736,602 ════════ 13,681,788 ════════ 8,076,880 ════════ 567,002 ════════ 5,037,906 ════════ 13,681,788 ════════ FAIR VALUE MEASUREMENTS Fair value is 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. As such, differences can arise between book values and the fair value estimates. Underlying the definition of fair value is the presumption that the Group a going concern without any intention or requirement to materially curtail the scale of its operation or to undertake a transaction on adverse terms. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:    Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from 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 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value of financial instruments carried at amortised cost The fair value of the quoted debt instruments at 31 March 2022 amounted to AED 120.32 million (31 December 2021: AED 120.28 million). The fair value determination of the quoted debt instruments will fall under level 1 category wherein fair value is determined based on inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Management believes that fair value of other financial instruments carried at amortized cost, are not materially different from their carrying values at the end of the reporting period. 20
23. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 20. FAIR VALUE MEASUREMENTS (continued) Valuation techniques and assumptions applied for the purposes of measuring fair value The fair values of financial assets and financial liabilities are determined using similar valuation techniques and assumptions as used in the audited annual consolidated financial statements for the year ended 31 December 2021. The quoted securities are valued using the prices from active market. The unquoted securities are valued using P/E multiples. Fair value of the Group’s financial assets that are measured at fair value on recurring basis Some of the Group’s financial assets are measured at fair value at the end of the reporting period. The following table gives information about how the fair values of these financial assets are determined; Financial assets Fair value as at ────────────────────── 31 March 31 December 2022 2021 AED ’000 AED ’000 (Unaudited) (Audited) Financial assets at FVTPL Quoted equity Securities Discretionary Funds managed by third parties – quoted equity securities Financial assets at FVTOCI Quoted equity securities Unquoted equity securities Positive fair value of Derivatives Negative fair value of Derivatives Fair value hierarchy 15,497 16,366 Level 1 249 250 Level 1 1,080,510 36,489 66 23 962,197 34,384 63 288 Level 1 Level 3 Level 2 Level 2 There were no transfers between each of level during the year. There are no financial liabilities which should be categorised under any of the level in above table. 21. SEASONALITY OF RESULTS Investment income includes dividend income of AED 32.12 million for the three months period ended 31 March 2022 (31 March 2021: AED 27.15 million), which is of a seasonal nature. 22. CAPITAL ADEQUACY RATIOS Capital element Common equity tier 1 ratio Tier 1 capital ratio Capital adequacy ratio Basel III Minimum requirement 7.0% 8.5% 10.5% 21 As at 31 March 2022 As at 31 December 2021 42.57% 42.57% 43.71% 43.53% 43.53% 44.66%
24. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 31 March 2022 (Unaudited) 23. DERIVATIVES 31 March 2022 (Unaudited) ───────────────────────────── Positive Negative Notional fair value fair value amount AED’000 AED’000 AED’000 Foreign currency forward contracts Total 24. 66 ──────── 66 ════════ 23 ──────── 23 ════════ 17,808 ──────── 17,808 ════════ 31 December 2021 (Audited) ───────────────────────────── Positive Negative Notional fair value fair value amount AED 000 AED 000 AED 000 63 ──────── 63 ════════ 288 ──────── 288 ════════ 428,900 ──────── 428,900 ════════ GENERAL RESERVE The Group maintains a general reserve and the contributions to this reserve are made at the discretion of the Directors. This reserve may be utilised for any purpose to be determined by a resolution of the shareholders of the Group at an Ordinary General Meeting. Impairment Reserve under the CBUAE The CBUAE issued its IFRS 9 guidance on 30 April 2018 via notice no. CBUAE/BSD/2018/458 addressing various implementation challenges and practical implications for banks adopting IFRS 9 in the UAE (the “Guidance”). Pursuant to clause 6.4 of the guidance, the reconciliation between general and specific provision under circular 28/2010 of CBUAE and IFRS 9 is as follows: 31 March 2022 AED ’000 (Unaudited) Impairment Reserve: General General Provisions under Circular 28/2010 of CBUAE Less: Stage 1 & Stage 2 provisions under IFRS 9* Impairment Reserve: General Impairment Reserve: Specific Specific Provisions under Circular 28/2010 of CBUAE Less: Stage 3 provisions under IFRS 9 Impairment Reserve: Specific 31 December 2021 AED ’000 (Audited) 154,371 (116,196) ──────── 38,175 ════════ 151,449 (115,538) ──────── 35,911 ════════ 233,297 (233,297) ──────── ════════ 186,021 (186,021) ──────── ════════ * Contains stage 1 and stage 2 provisions for loans and advances and Islamic receivables only. 25. COMPARATIVE FIGURES Certain comparative figures have been reclassified where appropriate to conform to the presentation and accounting policies adopted in these condensed consolidated interim financial statements. 22