Bank Albilad Interim Financial Statements - 1Q 2017

Transcription

1. BANK ALBILAD (A Saudi Joint Stock Company) UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTHS PERIOD ENDED MARCH 31, 2017
4. BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION Notes ASSETS Cash and balances with SAMA Due from banks and other financial institutions, net Investments, net Financing, net Property and equipment, net Investment property Other assets Total assets 6 7 8 March 31, 2017 SAR’000 (Unaudited) December 31, 2016 SAR’000 (Audited) (Restated) March 31, 2016 SAR’000 (Unaudited) (Restated) 4,019,088 4,528,825 4,168,205 8,791,861 3,744,023 38,702,049 814,734 1,000,000 218,652 57,290,407 7,950,844 3,080,945 36,178,387 802,424 1,000,000 207,245 53,748,670 8,817,438 3,001,912 37,330,648 786,197 194,573 54,298,973 2,015,964 742,580 43,541,622 2,006,553 1,617,754 49,924,473 2,006,214 996,391 40,234,715 2,007,047 1,352,419 46,596,786 250,000 2,290,569 43,928,037 1,311,092 47,779,698 6,000,000 630,997 17,152 482,065 300,000 (104,575) 3,135 6,000,000 630,997 25,280 260,188 300,000 (113,207) 8,720 5,000,000 429,066 (7,115) 206,335 1,000,000 (114,389) 5,378 7,328,774 7,111,978 6,519,275 37,160 7,365,934 57,290,407 39,906 7,151,884 53,748,670 6,519,275 54,298,973 LIABILITIES AND EQUITY Liabilities Due to SAMA Due to banks and other financial institutions Customer deposits Sukuk Other liabilities Total liabilities 9 17 Equity attributed to equity holders of the Bank Share capital 14 Statutory reserve Other reserves Retained earnings Proposed cash dividend Proposed issuance of bonus shares Treasury shares Employee share plan reserve Total equity attributed to equity holders of the Bank Non-controlling interest Total equity Total liabilities and equity The accompanying notes from 1 to 19 form an integral part of these interim condensed consolidated financial statements. -1-
5. BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 Note 2017 SAR’000 2016 SAR’000 INCOME: Income from investing and financing assets Return on deposits and financial liabilities Income from investing and financing assets, net 482,764 (90,321) 392,443 396,395 (62,645) 333,750 Fee and commission income, net Exchange income, net Dividend income Gains on non-trading investments, net Other operating income Total operating income 201,343 77,092 1,049 5,541 17,028 694,496 207,839 78,822 1,366 1,256 3,959 626,992 EXPENSES: Salaries and employee related benefits Rent and premises related expenses Depreciation Other general and administrative expenses Impairment charge for financing, net Impairment charge on available for sale investments Total operating expenses Net income for the period 229,105 61,826 24,913 101,617 50,406 467,867 226,629 211,908 63,725 24,470 65,346 56,411 30,609 452,469 174,523 Attributable to: Equity holders of the Bank Non-controlling interest Net income for the period 229,377 (2,748) 226,629 174,523 174,523 0.38 0.29 Basic and diluted earnings per share ( attributable to ordinary equity holders of the Bank) (SAR) 16 The accompanying notes from 1 to 19 form an integral part of these interim condensed consolidated financial statements. -2-
6. BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31 , 2017 AND 2016 2017 SAR’000 Net income for the period Other comprehensive income : Items that can be recycled back to interim consolidated statement of income in subsequent periods / have been recycled in the current period - Available for sale investments  Net changes in fair value  Net amount transferred to interim consolidated statement of income  Impairment charge for the period Total other comprehensive on available for sale investments (loss) income Total comprehensive income for the period Attributable to: Equity holders of the Bank Non-controlling interest Total comprehensive income for the period 2016 SAR’000 226,629 174,523 (2,587) (24,756) (5,541) - (1,256) 30,609 (8,128) 218,501 4,597 179,120 221,249 (2,748) 218,501 179,120 179,120 The accompanying notes from 1 to 19 form an integral part of these interim condensed consolidated financial statements. -3-
7. BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31,2017 Attributable to the equity holders of the Bank 2017 SAR’ 000 Notes Balance at the beginning of the period as reported Effect of change in accounting policy Balance at the beginning of the period as restated Share capital 6,000,000 Statutory reserve 630,997 5 6,000,000 630,997 Other reserves Retained earnings Proposed cash dividend 169,201 285,188 (143,921) (25,000) 25,280 260,188 300,000 300,000 Proposal issuance of bonus shares - - Treasury shares (113,207) (113,207) Employees’ share plan reserve 8,720 8,720 Total Noncontrolling interest Total equity 7,280,899 7,280,899 (168,921) (168,921) 7,111,978 - 7,111,978 Changes in the equity for the period Net changes in fair values of available for sale investments Net amount transferred to interim consolidated statement of income Net income recognized directly in equity (2,587) (2,587) (2,587) (5,541) (5,541) (5,541) )8,128( Net income for the period Total comprehensive income for the period Treasury shares Employees’ share plan reserve Zakat for current period Non-controlling interest arising on consolidation Balance at end of the period )8,128( )8,128( 229,377 (2,748) 226,629 229,377 221,249 (2,748) 218,501 8,632 )5,585( (7,500) 6,000,000 630,997 17,152 )8,128( 229,377 482,065 300,000 - (104,575) 3,135 The accompanying notes from 1 to 19 form an integral part of these interim condensed consolidated financial statements. -4- 8,632 8,632 (5,585) (5,585) (7,500) (7,500) 7,328,774 39,908 39,908 37,160 7,365,934
8. BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31,2016 Attributable to the equity holders of the Bank (Restated) 2016 SAR’ 000 Balance at the beginning of the period as reported Effect of change in accounting policy Notes Statutory reserve Share capital 5,000,000 Other reserves 961,066 (11,712) 5 Balance at the beginning of the period as restated Retained earnings Proposed cash dividend 591,317 - Proposal issuance of bonus shares Treasury shares - (113,758) Employees’ share plan reserve 15,326 (85,255) 5,000,000 961,066 (11,712) 506,062 Noncontrolling interest Total 6,442,239 Total equity - (85,255) - - (113,758) 15,326 6,356,984 6,442,239 (85,255) - 6,356,984 Changes in the equity for the period Net changes in fair values of available for sale investments Net amount transferred to interim consolidated statement of income Impairment charge on available for sale investments Net income recognized directly in equity (24,756) (24,756) (24,756) (1,256) (1,256) (1,256) 30,609 30,609 30,609 4,597 4,597 4,597 174,523 174,523 Net income for the period 174,523 Total comprehensive income for the period Issuance of bonus shares 16 - 4,597 (532,000) 174,523 - (468,000) - (631) (631) (9,948) (9,948) (6,250) (9,948) (6,250) 5,378 6,519,275 (6,250) 5,000,000 429,066 (7,115) 206,335 - 1,000,000 (114,389) The accompanying notes from 1 to 19 form an integral part of these interim condensed consolidated financial statements. -5- 179,120 - (631) Employees’ share plan reserve Zakat for current period Non-controlling interest arising on consolidation 179,120 1,000,000 Treasury shares Balance at end of the period - - 6,519,275
9. BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 Note OPERATING ACTIVITIES Net income for the period Adjustments to reconcile net income to net cash from / (used in) operating activities: Gains on non-trading investments, net Gains from disposal of property and equipment, net Depreciation Impairment charge for financing, net Impairment charge on available for sale investments Employees’ share plan Operating profit before changes in operating assets and liabilities Net (increase) decrease in operating assets: Statutory deposit with SAMA Due from banks and other financial institutions maturing after ninety days from the date of acquisition Commodity murabaha with SAMA maturing after ninety days from the date of acquisition Financing Other assets Net increase (decrease) in operating liabilities: Due to SAMA Due to banks and other financial institutions Customer deposits Other liabilities Net cash generated from operating activities INVESTING ACTIVITIES Purchase of non-trading investments Proceeds from sales of non-trading investments Purchase of property and equipment Proceeds from sale of property and equipment Net cash (used in) from investing activities FINANCING ACTIVITIES Distributed Sukuk profit Purchase of shares for employee share plan Net cash used in financing activities 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 Income received from investing and financing assets 17 11 Return paid on deposits and financial liabilities Supplemental non cash information Total other comprehensive (losses) income 2017 SAR' 000 2016 SAR' 000 226,629 174,523 (5,541) (1,607) 24,913 50,406 3,046 297,846 (1,256) (660) 24,470 56,411 30,609 1,907 286,004 (64,648) (60,717) (540,341) 241,594 (157,632) (2,574,068) (11,407) 51,210 (3,132,436) (19,839) 9,750 (253,811) 3,306,907 257,835 270,431 250,000 868,917 1,748,577 107,784 341,094 (254,125) 137,778 (37,277) 1,662 (151,962) (150,304) 171,593 (18,922) 999 3,366 (494) (494) 117,975 8,786,280 8,904,255 436,190 (12,486) (12,486) 331,974 8,066,276 8,398,250 377,820 85,085 42,614 (8,128) 4,597 The accompanying notes from 1 to 19 form an integral part of these interim condensed consolidated financial statements. -6-
10. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 1. GENERAL a) Incorporation and operation Bank AlBilad (the “Bank”), is a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia, was formed and licensed pursuant to Royal Decree No. M/48 dated 21 Ramadan 1425H (corresponding to November 4, 2004), in accordance with the Counsel of Ministers’ resolution No. 258 dated 18 Ramadan 1425H (corresponding to November 1, 2004). The Bank operates under Commercial Registration No.1010208295 dated 10 Rabi Al Awal 1426H (corresponding to April 19, 2005) and its Head Office is located at the following address: Bank AlBilad P.O. Box 140 Riyadh 11411 Kingdom of Saudi Arabia These consolidated financial statements comprise the financial statements of the Bank and its subsidiaries, ‘Albilad Investment Company’, ‘Albilad Real Estate Company’ and ‘Makkah Al Diyafah Fund’ (“the fund”) (collectively referred to as “the Group”). Albilad Investment Company and AlBilad Real Estate Company are 100% owned by the Bank while Makkah Al Diyafah Fund is 80% owned by the Group. The Fund is managed by Albilad Investment Company. All subsidiaries are incorporated in the Kingdom of Saudi Arabia. The Group’s objective is to provide full range of banking services and conduct, financing and investing activities through various Islamic instruments. The activities of the Bank are conducted in compliance with Islamic Shariah and within the provisions of the Articles of Association and the Banking Control Law. The Bank provides these services through 112 banking branches (March 31, 2016: 120) and 178 exchange and remittance centers (March 31, 2016: 172) in the Kingdom of Saudi Arabia. b) Shariah Authority The Bank has established a Shariah Authority (“the Authority”). It ascertains that all the Bank’s activities are subject to its approval and control. 2. BASIS OF PREPARATION a) Statement of compliance During 2017, SAMA issued a Circular no. 381000074519 dated April 11, 2017, and subsequent amendments through certain clarifications relating to the accounting for zakat and tax. The impact of these amendments are as follows: - the Accounting Standards for Commercial Banks promulgated by SAMA are no longer applicable from January 1, 2017; and Zakat and tax are to be accrued on a quarterly basis and recognized in consolidated statement of shareholders’ equity with a corresponding liability recognized in the consolidated statement of financial position. -7-
11. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 The interim condensed consolidated financial statements of the Group as at and for the quarter ended March 31, 2017, were prepared using IAS 34 and SAMA guidance described above. This change in framework resulted in a change in accounting policy for zakat as disclosed in note 4 and the effects of this change are disclosed in note 5 to the interim condensed consolidated financial statements. The interim condensed consolidated financial statements do not include all information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2016. The preparation of interim condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these interim condensed consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements for the year ended December 31, 2016, except for the change in the accounting policy in relation to SAMA guidance for the accounting of zakat and tax as mentioned above, which is effective January 1, 2017. b) Basis of measurement and presentation These interim condensed consolidated financial statements are prepared under the historical cost convention except for the measurement at fair value of available for sale investments. c) Functional and presentation currency These interim condensed consolidated financial statements are expressed in Saudi Arabian Riyals (SAR) which is the Bank’s functional currency and are rounded off to the nearest thousands. 3. BASIS OF CONSOLIDATION These interim condensed consolidated financial statements comprise the financial statements of the Bank and its subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting period as that of the Bank, using consistent accounting policies. Subsidiaries are investees controlled by the Group. The Group controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the investee and has ability to affect those returns through its power over the investee. Subsidiaries are consolidated from the date on which the control is transferred to the Bank and cease to be consolidated from the date on which the control is transferred from the Bank. -8-
12. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 Non-controlling interests represent the portion of net income or loss and net assets not owned, directly or indirectly, by the Bank and are presented separately in the interim consolidated income statement and within equity in the interim consolidated statement of financial position, separately from the equity holders of the Bank. Any losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. Inter-group balances and any income and expenses arising from intra-group transactions, are eliminated in preparing these interim condensed consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. 4. SIGNIFICANT ACCOUNTING POLICIES The accounting policies used in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2016, except for the change in the accounting policy in relation to zakat and tax as prescribed by SAMA effective January 1, 2017 (see note 2 and 5) and the adoption of amendments to the existing standards as mentioned below which has had no significant financial impact on the financial statements of the Group. - Amendments to IAS 7, Statement of cash flows on disclosure initiative: Applicable for annual periods beginning on or after January 1, 2017 These amendments introduce an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. This amendment is part of the IASB’s Disclosure Initiative, which continues to explore how financial statement disclosure can be improved. 5. CHANGE IN ACCOUNTING POLICY The Group amended its accounting policy relating to zakat and now recognize a liability for zakat on a quarterly basis. Previously, zakat was deducted from dividends upon payment to the shareholders and was recognized as a liability at that time. In case no dividends were paid, zakat was accounted for upon payment to GAZT and recorded as a receivable from shareholders. The Group has accounted for this change in the accounting policy relating to zakat retrospectively and the effects of the above change on the respective line items of statements of financial position and changes in equity are disclosed below: -9-
13. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 As at December 31, 2016 Account Other assets Other liabilities Retained earnings Other reserves Balance as previously reported at December 31, 2016 SR’000 351,166 1,327,419 285,188 169,201 Effect of restatement SR’000 (143,921) 25,000 (25,000) (143,921) Restated balance at December 31, 2016 SR’000 207,245 1,352,419 260,188 25,280 Effect of restatement SR’000 (65,256) 26,249 (91,505) Restated balance at March 31, 2016 SR’000 194,573 1,311,092 206,335 As at March 31, 2016 Account Other assets Other liabilities Retained earnings Balance as previously reported at March 31, 2016 SR’000 259,829 1,284,843 297,840 The above change in accounting policy did not have an impact on consolidated statements of income and comprehensive income for any of the above period/year presented. 6. INVESTMENTS, NET March 31, 2017 SAR' 000 (Unaudited) Available-for-sale investments Equities Mutual funds Sukuk Held at amortized cost Commodity Murabaha with SAMA Total December 31, 2016 SAR' 000 (Audited) March 31, 2016 SAR' 000 (Unaudited) 293,329 366,178 790,622 1,450,129 287,820 279,365 769,182 1,336,367 305,785 193,734 600,149 1,099,668 2,293,894 3,744,023 1,744,578 3,080,945 1,902,244 3,001,912 - 10 -
14. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 7. FINANCING, NET March 31, 2017 SAR'000 (Unaudited) Bei ajel Installment sales, Ijarah and credit cards Musharaka Ijarah Performing financing Non-performing financing Gross financing Impairment charge for financing Financing, net 8. December 31, 2016 SAR'000 (Audited) March 31, 2016 SAR'000 (Unaudited) 24,705,491 22,667,228 23,305,977 12,922,236 1,446,282 180,896 39,254,905 380,299 39,635,204 (933,155) 38,702,049 12,671,433 1,158,166 180,086 36,676,913 507,125 37,184,038 (1,005,651) 36,178,387 12,455,940 1,745,914 219,957 37,727,788 523,497 38,251,285 (920,637) 37,330,648 INVESTMENT PROPERTY As of March 31, 2017 investment property represents cost of properties in the Holy city of Makkah which aims to provide investors with dividends and capital growth on the medium and long term. This investment has resulted from the consolidation of Makkah Al Diyafah Fund which is managed by Albilad Investment Company, a subsidiary controlled by the Group. 9. CUSTOMER DEPOSITS March 31, 2017 SAR'000 (Unaudited) Demand Albilad account (Mudarabah) Direct investment Others Total December 31, 2016 SAR'000 (Audited) March 31, 2016 SAR'000 (Unaudited) 27,434,380 26,974,543 27,899,391 7,994,874 7,309,138 803,230 43,541,622 5,937,828 6,496,933 825,411 40,234,715 3,724,719 11,429,617 874,310 43,928,037 - 11 -
15. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 10. COMMITMENTS AND CONTINGENCIES a) The Group is subject to legal proceedings in the ordinary course of business. There was no change in the status of legal proceedings as disclosed at December 31, 2016. b) The Group’s commitments and contingencies are as follows: Letters of guarantee Letters of credit Acceptances Irrevocable commitments to extend credit Total March 31, 2017 SAR' 000 (Unaudited) 4,133,497 844,484 454,805 December 31, 2016 SAR' 000 (Audited) 4,241,932 895,732 217,432 March 31, 2016 SAR' 000 (Unaudited) 3,916,590 442,490 443,639 1,633,522 7,066,308 1,633,518 6,988,614 1,044,237 5,846,956 c) Zakat The Bank has filed its Zakat returns with the General Authority for Zakat and Tax (GAZT) and paid Zakat for financial years 2006 to 2015 of SAR 166 million The Bank has received the assessments for the years 2007 to 2014 in which the GAZT raised additional demands aggregating to SAR 561.1 million on account of “disallowance of long-term investments and the addition of long term financing to the Zakat base by the GAZT”. The basis for the additional Zakat liability is being contested by the Bank before the Higher Appeal Committee. Management expects a favorable outcome on the aforementioned appeals and have therefore not made any provisions in respect of the above. The final assessments for the years 2015 and 2016 are yet to be raised by the GAZT. However, if long-term investments are disallowed and long-term financing is added to the Zakat base, in line with the assessments finalized by GAZT for the years referred to above, it would result in significant additional zakat exposure to the Bank which remains an industry wide issue. During 2016, the Bank made an additional payment of SAR 58 million in respect of the assessment for financial year 2006. - 12 -
16. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 11. CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the interim consolidated the following: March 31, 2017 SAR' 000 1,422,143 December 31, 2016 SAR' 000 (Audited) 1,518,636 March 31, 2016 SAR' 000 (Unaudited) 1,519,653 6,670,274 6,369,598 6,649,631 691,754 300,070 150,232 120,084 8,904,255 597,976 8,786,280 78,734 8,398,250 (Unaudited) Cash Due from banks and other financial institutions (maturing within ninety days from acquisition) Held to maturity investment (maturing within ninety days from acquisition) Balances with SAMA (excluding statutory deposit) Total statement of cash flows comprise 12. FAIR VALUES OF FINANCIAL INSTRUMENTS 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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: - In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous accessible market for the asset or liability. Determination of fair value and fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices in active markets for the same or identical instrument that an entity can access at the measurement date; Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; and Level 3: valuation techniques for which any significant input is not based on observable market data. The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy: - 13 -
17. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 Fair value SAR’ 000 March 31, 2017 Financial assets measured at fair value Available for sale investments Financial assets not measured at fair value Due from banks and other financial institutions, net Investments held at amortized cost Financing, net Carrying value Level 1 Level 2 Level 3 Total 1,450,129 815,334 - 634,795 1,450,129 8,791,861 2,293,894 38,702,049 - - 8,791,861 2,293,894 37,917,665 8,791,861 2,293,894 37,917,665 Fair value SAR’ 000 December 31, 2016 Financial assets measured at fair value Available for sale investments Financial assets not measured at fair value Due from banks and other financial institutions, net Investments held at amortized cost Financing, net Carrying value Level 1 1,336,367 708,223 - 628,144 1,336,367 7,950,844 1,744,578 36,178,387 - - 7,950,844 1,744,578 35,613,860 7,950,844 1,744,578 35,613,860 Level 2 Level 3 Total Fair value SAR’ 000 March 31, 2017 Financial liabilities not measured at fair value Due to SAMA Due to banks and other financial institutions Customers’ deposits Sukuk Carrying value Level 1 2,015,964 742,580 43,541,622 2,006,553 Level 2 Level 3 - - - - 2,015,964 742,580 43,541,622 2,006,553 Total 2,015,964 742,580 43,541,622 2,006,553 Fair value SAR’ 000 December 31, 2016 Financial liabilities not measured at fair value Due to SAMA Due to banks and other financial institutions Customers’ deposits Sukuk Carrying value 2,006,214 996,391 40,234,715 2,007,047 Level 1 Level 2 Level 3 - - - - 2,006,214 996,391 40,234,715 2,007,047 Total 2,006,214 996,391 40,234,715 2,007,047 The fair values of financial instruments which are not measured at fair value in these interim condensed consolidated financial statements are not significantly different from the carrying values included in the interim condensed consolidated financial statements. The fair values, of profit - 14 -
18. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 bearing customer deposits, held at amortized cost investment, due from and due to banks and other financial institutions which are carried at amortized cost, are not significantly different from the carrying values included in the interim condensed consolidated financial statements, since either the current market profit rates for similar financial instruments are not significantly different from the contracted rates, or for the short duration of certain financial instruments particularly due from and due to banks and other financial institutions or a combination of both. An active market for these instruments is not available and the Group intends to realize the carrying value of these financial instruments through settlement with the counter party at the time of their respective maturities. Financing classified as level 3 has been valued using expected cash flows discounted at relevant SIBOR. 13. SEGMENT INFORMATION Operating segments, based on customer groups are identified on the basis of internal reports about components of the Group that are regularly reviewed by the Assets and Liabilities Committee (ALCO) and decision Maker in order to allocate resources to the segments and to assess its performance. The Group’s main business is conducted in the Kingdom of Saudi Arabia. There has been no change to the basis of segmentation or the measurements basis for the segment profit or loss since December 31, 2016. For management purposes, the Group is divided into the following five segments: Retail banking Services and products to individuals, including deposits, financing, remittances and currency exchange. Corporate banking Services and products to corporate and commercial customers including deposits, financing and trade services. Treasury Money market, trading and treasury services. Investment banking and brokerage Investment management services and asset management activities related to dealing, managing, arranging, advising and custody of securities. Other All other support functions including CEO Office which manages equity investments of the Group. Transactions between the above operating segments are under the terms and conditions of the approved Fund Transfer Pricing (FTP) system. The support segments and Head Office expenses are allocated to operating segments, based on approved criteria. The Group’s total assets and liabilities as at March 31, 2017 and 2016, together with its total operating income and expenses, and net income, for the three months period then ended, for each segment are as follows: - 15 -
19. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 SAR’000 Total assets Total liabilities Net income from investing and financing assets Fee, commission and other income, net Total operating income Impairment charge for financing , net Impairment charge on available for sale investments Depreciation Total operating expenses Net income for the period Attributable to Equity holders of the Bank Non-controlling interest Net income for the period Retail banking 16,355,997 28,651,115 Corporate banking 24,516,783 10,107,870 179,428 167,045 16,738 196,314 375,742 6,108 41,029 208,074 44,298 - Other 1,026,796 3,610,359 Total 57,290,407 49,924,473 3,396 25,836 392,443 29,385 46,123 - 20,441 23,837 - 14,884 40,720 - 302,053 694,496 50,406 - - - - - 21,965 321,341 54,401 2,097 111,871 96,203 402 18,677 27,446 449 17,736 6,101 (1,758) 42,478 24,913 467,867 226,629 54,401 96,203 27,446 6,101 54,401 96,203 27,446 6,101 45,226 (2,748) 42,478 229,377 (2,748) 226,629 March 31, 2016 (Unaudited) (Restated) Investment Corporate banking and Banking Treasury brokerage Other 24,575,949 11,027,907 444,400 1,279,131 9,202,485 10,046,220 154,630 1,156,462 Total 54,298,973 47,779,698 SAR’000 Total assets Total liabilities Net income from investing and financing assets Fee, commission and other income, net Total operating income Impairment charge for financing , net Impairment charge on available for sale investments Depreciation Total operating expenses Net income for the period Attributable to Equity holders of the Bank Non-controlling interest Net income for the period March 31, 2017 (Unaudited) Investment banking and Treasury brokerage 14,964,847 425,984 7,541,180 13,949 Retail Banking 16,971,586 27,219,901 115,831 164,317 32,944 903 19,755 333,750 209,191 325,022 27,357 35,658 199,975 29,054 24,577 57,521 - 19,046 19,949 - 4,770 24,525 - 293,242 626,992 56,411 - - - - 30,609 30,609 22,012 312,789 12,233 1,720 83,709 116,266 308 12,551 44,970 430 12,302 7,647 31,118 (6,593) 24,470 452,469 174,523 12,233 12,233 116,266 116,266 44,970 44,970 7,647 7,647 (6,593) (6,593) 174,523 174,523 14. SHARE CAPITAL The authorized, issued and fully paid share capital of the Bank consists of 600 million shares of SAR 10 each (31 December 2016: 600 million shares of SAR 10 each and 31 March 2016: 500 million shares of SAR 10 each). 15. CAPITAL ADEQUACY The Group’s objectives when managing capital are, to comply with the capital requirements set by SAMA; to safeguard the Group’s ability to continue as a going concern; and to maintain a strong capital base. - 16 -
20. BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2017 AND 2016 Capital adequacy and the use of regulatory capital are monitored regularly by the Group’s management. SAMA requires holding the minimum level of the regulatory capital and maintaining a ratio of total regulatory capital to the risk-weighted asset at or above the agreed minimum of 8%. The Group monitors the adequacy of its capital using ratios established by SAMA. These ratios measure capital adequacy by comparing the Group’s eligible capital with its interim consolidated statement of financial position assets and commitments at a weighted amount to reflect their relative risk. The following table summarizes the Group’s Pillar-I Risk Weighted Assets, Tier I and Tier II Capital and Capital Adequacy Ratios: Credit Risk RWA Operational Risk RWA Market Risk RWA Total Pillar-I RWA Tier I Capital Tier II Capital Total Tier I & II Capital Capital Adequacy Ratio % Tier I ratio Tier I + Tier II ratio March 31, 2017 December 31, 2016 March 31, 2016 SAR' 000 (Unaudited) SAR' 000 (Audited) (Restated) SAR' 000 (Unaudited) (Restated) 45,494,228 4,475,144 866,977 50,836,349 7,542,354 2,562,325 10,104,679 42,831,321 4,340,692 991,676 48,163,689 7,151,884 2,532,325 9,684,209 42,522,077 4,017,717 651,837 47,191,631 6,519,275 494,932 7,014,207 %14.84 %19.88 %14.85 %20.11 %13.81 %14.86 16. CAPITAL INCREASE AND DIVIDENDS In the Extra-ordinary General Assembly meeting of the Bank held on April 11, 2016 approval was given for a bonus issuance of one share for every five shares raising the Bank’s capital from SAR 5,000 million to SAR 6,000 million. The bonus share has been issued by capitalizing an amount of SAR 468 million from retained earnings, and transfer of an amount of SAR 532 million from statutory reserve as per the approval from SAMA increasing the number of shares outstanding after the bonus issuance from 500 million shares to 600 million shares. Basic and diluted earnings per share for the three months period ended March 31, 2017 and 2016 are calculated by dividing the net income for the period by 600 million shares to give retroactive effect of changes in number of shares increased as a result of the bonus share issue. 17. SUKUK On August 30th, 2016, the Bank issued 2,000 Sukuk Certificates (Sukuk) of SR 1 million each, and payable quarterly in arrears on 29 February, 30 May, 30 August, 30 November each year until 30 August 2026, on which Sukuk will expire. The Bank has a call option which can be exercised on or after 30 August 2021 upon meeting certain conditions and as per the terms mentioned in the related offering circular. The Sukuk may also be called upon occurrence of certain other conditions as per the terms specified in the offering circular. The Bank has not defaulted on any of payments (profit / - 17 -