Emirates Islamic Bank: Consolidated Interim Financial Statements - 2Q 2017

Transcription

1. In the Name of Allah The most Gracious and Merciful Emirates Islamic Bank (Public Joint Stock Company) Head Office 3rd Floor, Building 16, Dubai Health Care City, Dubai Tel.: +971 600599995 Fax: +971 4 3582659 P.O. Box: 6564, Dubai, United Arab Emirates Website: www.emiratesislamic.ae GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017
2. EMIRATES ISLAMIC BANK PJSC GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 Contents Page Independent auditors’ report on the review of the Group condensed consolidated interim financial statements 1 Group condensed consolidated interim statement of financial position 2 Group condensed consolidated interim statement of income (unaudited) 3 Group condensed consolidated interim statement of comprehensive income (unaudited) 4 Group condensed consolidated interim statement of changes in equity (unaudited) 5 Group condensed consolidated interim statement of cash flows (unaudited) 6 Notes to the Group condensed consolidated interim financial statements 7-21
5. EMIRATES ISLAMIC BANK PJSC GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME (UNAUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 For the three months period ended 30 June Notes INCOME Income from financing and investing activities Income from investment securities Income from Group Holding Company Commission and fees income Other income, net TOTAL INCOME EXPENSES Personnel expenses General and administrative expenses Depreciation of property and equipment TOTAL EXPENSES NET OPERATING PROFIT BEFORE ALLOWANCES FOR IMPAIRMENT AND DISTRIBUTIONS Allowances for impairment, net of recoveries NET OPERATING PROFIT Customers' share of profit and distribution to sukuk holders NET PROFIT FOR THE PERIOD Earnings per share (AED) 13 14 For the six months period ended 30 June 2017 2016 2017 2016 AED'000 AED'000 AED'000 AED'000 482,390 12,571 33,983 125,188 52,092 706,224 509,909 18,569 43,952 130,995 36,392 739,817 991,813 54,072 62,976 240,234 81,985 1,431,080 1,011,408 25,341 89,251 256,386 69,737 1,452,123 (136,404) (96,749) (9,822) (242,975) (184,410) (95,099) (6,398) (285,907) (274,879) (191,993) (21,690) (488,562) (374,480) (197,242) (12,487) (584,209) 463,249 453,910 942,518 867,914 (174,965) 288,284 (241,035) 212,875 (309,850) 632,668 (504,413) 363,501 (122,608) 165,676 0.031 (120,767) 92,108 0.024 (245,880) 386,788 0.071 (226,200) 137,301 0.035 The attached notes 1 to 19 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors’ report is set out on page 1. 3
6. EMIRATES ISLAMIC BANK PJSC GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 For the three months period ended 30 June NET PROFIT FOR THE PERIOD For the six months period ended 30 June 2017 2016 2017 2016 AED'000 AED'000 AED'000 AED'000 165,676 92,108 386,788 137,301 3,076 23,093 10,336 31,749 (615) 2,461 168,137 (123) 22,970 115,078 (20,975) (10,639) 376,149 4,131 35,880 173,181 Items that may be reclassified subsequently to Income statement: Other comprehensive income Cumulative changes in fair value of available-for-sale investments - Net change in fair value - Net amount transferred to income statement Total TOTAL COMPREHENSIVE INCOME FOR THE PERIOD The attached notes 1 to 19 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors’ report is set out on page 1. 4
7. EMIRATES ISLAMIC BANK PJSC GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 ATTRIBUTABLE TO EQUITY HOLDERS OF THE GROUP Share capital AED '000 Statutory reserve AED '000 General reserve AED '000 Fair value reserve AED '000 Retained earnings AED '000 Total AED '000 As at 1 January 2016 Net profit for the period Other comprehensive income for the period Total comprehensive income for the period As at 30 June 2016 3,930,422 3,930,422 329,423 329,423 235,202 235,202 (4,127) 35,880 35,880 31,753 603,831 137,301 137,301 741,132 5,094,751 137,301 35,880 173,181 5,267,932 As at 1 January 2017 Net profit for the period Other comprehensive income for the period Total comprehensive income for the period As at 30 June 2017 5,430,422 - 339,986 - 245,765 - 5,430,422 339,986 245,765 19,404 (10,639) (10,639) 8,765 653,198 386,788 386,788 1,039,986 6,688,775 386,788 (10,639) 376,149 7,064,924 The attached notes 1 to 19 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors’ report is set out on page 1. 5
8. EMIRATES ISLAMIC BANK PJSC GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 OPERATING ACTIVITIES Note Net profit for the period Adjustments: Allowances for impairment on financing and investing receivables Allowances for impairment on investments Dividend income (Gain) / loss on sale of available-for-sale investments Depreciation on investment properties Depreciation on property and equipment Operating profit before changes in operating assets and liabilities Changes in balances with UAE Central Bank Changes in due from banks Changes in financing and investing receivables Changes in other assets Changes in customers’ accounts Changes in due to banks Changes in other liabilities Zakat paid Net cash generated from / (used in) operating activities INVESTING ACTIVITIES Purchase of investment securities Proceeds from sale of investment securities Dividend income received Additions in investment properties Changes in property and equipment Net cash used in investing activities FINANCING ACTIVITIES Repayment of Sukuk financing Net cash (used in) / generated from financing activities Net change 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 15 For the six months period ended 30 June 2017 2016 AED '000 AED '000 386,788 137,301 301,733 41,300 (6,500) (32,247) 6,010 21,690 718,774 597,599 52,969 (2,075) 3,178 13,607 12,487 815,066 (1,571,386) 1,878,246 715,548 153,205 677,581 (40,857) (94,530) (35,139) 2,401,442 (609,104) (118,478) (5,544,690) 36,968 2,449,778 149,871 (180,535) (33,483) (3,034,607) (305,050) 248,967 6,500 (133) (21,622) (71,338) (1,162,362) 560,350 1,911 (32) (32,475) (632,608) (1,838,869) (1,838,869) 2,754,375 2,754,375 491,235 6,822,904 7,314,139 (912,840) 3,168,627 2,255,787 The attached notes 1 to 19 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors’ report is set out on page 1. 6
9. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 1 LEGAL STATUS AND ACTIVITIES Emirates Islamic Bank PJSC (formerly Middle East Bank) (the “Bank”) was incorporated by a decree of His Highness the Ruler of Dubai as a conventional Bank with a limited liability in the Emirate of Dubai on 3rd of October 1975. The Bank was reregistered as a Public Joint Stock Company in July 1995 and is regulated by the Central Bank of United Arab Emirates. The Federal Law No. 2 of 2015, concerning Commercial Companies has come into effect from 1 July 2015, replacing the existing Federal Law No. 8 of 1984. At an extraordinary general meeting held on 10th of March 2004, a resolution was passed to transform the Bank’s activities to be in full compliance with the Sharia rules and principles. The entire process was completed on 9th of October 2004 (the “Transformation Date”) when the Bank obtained the UAE Central Bank and other UAE authorities’ approvals. The Bank is a subsidiary of Emirates NBD PJSC, Dubai (the “Group Holding Company”). The ultimate parent company of the Group Holding Company is Investment Corporation of Dubai, a company in which the Government of Dubai is the major shareholder. The Bank is listed in the Dubai Financial Market. In addition to its head office in Dubai, the Bank operates through 61 branches in the UAE. The Group condensed consolidated interim financial statements combine the activities of the Bank’s head office, its branches and the following subsidiaries (together referred to as “the Group”). Ownership % Date of incorporation Principal activity 30 June 31 December & country 2017 2016 Emirates Islamic Financial Brokerage Co. LLC 26 April 2006, UAE EIB Sukuk Company Limited EI Funding Limited Financial brokerage services 100% 100% 6 June 2007, Cayman Islands Special Entity 100% 100% 15 May 2014, Cayman Islands Special Purpose Entity 100% 100% Purpose The Bank provides full commercial and banking services and offers a variety of products through Islamic financing and investing instruments in accordance with Islamic Sharia. The Bank’s registered office address is P.O. Box 6564, Dubai, United Arab Emirates. 2 BASIS OF PREPERATION a) Statement of compliance These condensed consolidated interim financial statements have been prepared in accordance with IAS 34, ‘Interim Financial Reporting’. They do not include all the information and disclosures required for full annual consolidated financial statements prepared in accordance with International Financial Reporting Standards and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2016. The adoption of the new and amended IFRS and IFRIC interpretations with effect from 1 January 2017 has had no effect on the condensed consolidated interim financial statements of the Group. In addition, results for the six months period ended 30 June 2017 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2017. These Group condensed consolidated interim financial statements were approved and authorized for issue by the Board of Directors on 18 July 2017. 7
10. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 2 BASIS OF PREPARATION (continued) b) Basis of measurement The Group consolidated financial statements have been prepared under the historical cost convention except for financial assets available for sale which are measured at fair value. The Group condensed consolidated interim financial statements are presented in United Arab Emirates Dirham (AED), which is the Group’s functional currency. Except where indicated, financial information presented in AED has been rounded to the nearest thousand. c) Significant accounting policies The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its most recent audited consolidated financial statements for the year ended 31 December 2016. d) Judgements and estimates The preparation of the Group condensed consolidated interim financial statements in conformity with IFRS requires the management to use certain estimates and judgments that affect the reported amount of financial assets and liabilities and the resultant allowances for impairment and fair values. In particular, considerable judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of allowances required for impaired financing receivables as well as allowances for impairment provision for unquoted investment securities. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In preparing these Group condensed consolidated interim financial statements, significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation were the same as those that were applied to the Group consolidated financial statements as at and for the year ended 31 December 2016. e) Financial risk management The Group’s financial risk management objectives, policies and procedures are consistent with those disclosed in the audited Group consolidated financial statements for the year ended 31 December 2016. 3 CASH AND BALANCES WITH UAE CENTRAL BANK Cash in hand Balances with UAE Central Bank : Current accounts Reserve requirements Murabaha (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 378,366 263,571 3,992,668 4,073,811 4,771,405 13,216,250 1,375,258 4,014,785 6,009,188 11,662,802 The reserve requirements which are kept with the Central Bank of the UAE in AED and US Dollar are not available for use in the Group’s day to day operations and cannot be withdrawn without the Central Bank of the UAE’s approval. The level of reserves required changes every month in accordance with the Central Bank of the UAE’s directives. 8
11. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 4 DUE FROM BANKS Due from local banks Current accounts Interbank placements with other banks Murabaha with Group Holding Company Receivables from Dubai Bank PJSC Due from foreign banks Interbank placements Current accounts 5 (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 65 1,587,925 3,143,638 1,218,080 5,949,708 64 1,491,491 3,751,041 1,179,398 6,421,994 36,725 2,715,744 8,702,177 ¤ 1,333,199 7,755,193 INVESTMENTS Available-for-sale Equity shares Funds Sukuks Held-to-maturity Sukuks Less: Allowance for impairment Investment securities comprise: Quoted Unquoted Held-to-maturity investments located: Within UAE Outside UAE Available-for-sale investments located: Within UAE Outside UAE Movements in allowances for impairment: Balance as at 1 January Allowances for impairment made during the period / year Recoveries / write backs during the period / year Write off during the period / year Balance at the end of the period / year 9 (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 555,421 661,018 895,100 2,111,539 686,038 660,718 718,694 2,065,450 119,248 2,230,787 (754,334) 1,476,453 211,061 2,276,511 (797,297) 1,479,214 902,980 573,473 1,476,453 864,765 614,449 1,479,214 12,623 12,623 91,813 12,623 104,436 346,233 1,117,597 1,463,830 1,476,453 334,363 1,040,415 1,374,778 1,479,214 797,297 41,300 (84,263) 754,334 678,832 128,140 (3,771) (5,904) 797,297
12. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 6 FINANCING AND INVESTING RECEIVABLES (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 Murabaha Ijarah Istisna'a Financing wakala Mudarabah Secured overdraft Credit card receivables 24,064,139 13,395,113 2,071,890 242,816 211,161 167,202 1,088,724 41,241,045 25,303,142 13,539,998 1,934,104 435,256 91,150 189,240 1,101,315 42,594,205 Less: Deferred income Less: Allowances for impairment (2,459,200) (3,417,406) 35,364,439 3,706,211 (2,753,333) (3,498,304) 36,342,568 3,610,230 21,755,701 13,608,738 35,364,439 22,910,839 13,431,729 36,342,568 37,358 649,245 806,282 3,486,740 342,678 3,958,916 23,108,135 4,727,550 1,102,959 3,021,182 41,241045 (2,459,200) (3,417,406) 35,364,439 32,605 608,017 809,900 2,943,344 371,838 3,442,875 241,308 24,661,438 5,268,117 1,343,677 2,871,086 42,594,205 (2,753,333) (3,498,304) 36,342,568 Total of impaired financing and investing receivables By Segment : Retail banking Corporate banking LES ( Analysis by economic activity Agriculture and related activities Manufacturing Construction Trade Transportation and communication Services Sovereign Personal Real estates Financial institutions Others Total Less: Deferred income Less: Allowances for impairment Net Carrying Value 10
13. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 6 7 FINANCING AND INVESTING RECEIVABLES (continued) (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 Movements in allowances for specific impairment: Balance as at 1 January Allowances for impairment made during the period / year Write backs during the period / year Transfer from Dubai Bank PJSC Write offs during the period / year Balance as at the end of the period / year 2,653,028 594,533 (155,675) (382,631) 2,709,255 2,242,788 1,808,826 (591,073) 26,116 (833,629) 2,653,028 Movements in allowances for collective impairment: Balance as at 1 January (Writebacks) / Allowances for impairment made during the period / year Balance as at the end of the period / year Total 845,276 (137,125) 708,151 3,417,406 693,339 151,937 845,276 3,498,304 INVESTMENT PROPERTIES Land AED '000 Building AED '000 Work-inprogress AED '000 Total AED '000 375,895 133 376,028 333,719 333,719 8,230 8,230 717,844 133 717,977 - (72,218) (6,010) (78,228) - (72,218) (6,010) (78,228) (27,849) (27,849) (142,947) (142,947) - (170,796) (170,796) (27,849) 348,179 (221,175) 112,544 Cost Balance as at 1 January 2017 (audited) Additions Balance as at 30 June 2017 (unaudited) Accumulated depreciation Balance as at 1 January 2017 (audited) Charge during the period Total accumulated depreciation (unaudited) Accumulated impairment Balance as at 1 January 2017 (audited) Total accumulated impairment Total accumulated depreciation and impairment as at 30 June 2017 (unaudited) Net Book Value as at 30 June 17 (unaudited) 11 8,230 (249,024) 468,953
14. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 7 INVESTMENT PROPERTIES (continued) Land AED '000 Building AED '000 Work-inprogress AED '000 (Audited) Total AED '000 375,513 382 375,895 800,099 (466,380) 333,719 8,230 8,230 1,183,842 382 (466,380) 717,844 - (172,425) (23,415) 123,622 (72,218) - (172,425) (23,415) 123,622 (72,218) (27,849) (27,849) (177,632) 34,685 (142,947) - (205,481) 34,685 (170,796) (27,849) 348,046 (215,165) 118,554 8,230 (243,014) 474,830 Cost Balance as at 1 January 2016 Additions Disposals Balance as at 31 December 2016 Accumulated depreciation Balance as at 1 January 2016 Charge during the year Relating to disposals Total accumulated depreciation Accumulated impairment Balance as at 1 January 2016 Reversal of impairment Total accumulated impairment Total accumulated depreciation and impairment as at 31 December 2016 Net Book Value as at 31 December 2016 All investment properties are located within the United Arab Emirates. The fair value of investment properties as at 30 June 2017 is not materially different from their carrying value. 8 CUSTOMERS' ACCOUNTS Current accounts Saving accounts Investment accounts Wakala accounts Margins Customers’ accounts are concentrated as follows Resident customer accounts Non-resident customer accounts (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 17,840,878 10,734,245 3,825,757 8,953,598 454,110 41,808,588 16,803,227 10,179,886 4,252,457 9,441,448 453,989 41,131,007 41,237,499 571,089 41,808,588 40,703,736 427,271 41,131,007 34,529,389 7,279,199 41,808,588 34,287,138 6,843,869 41,131,007 By Segment: Retail banking Corporate banking 12
15. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 9 DUE TO BANKS Current accounts Overdrafts Interbank obligations – Other banks Wakala deposits from Group Holding Company Other balances from Group Holding Company & its subsidiaries Due to banks are concentrated as follows: Due to local banks Due to foreign banks (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 14,658 2,152 664,876 1,697,302 1,704,130 4,083,118 14,022 1,605 183,625 151,959 1,456,707 1,807,918 3,669,052 414,066 4,083,118 1,622,688 185,230 1,807,918 10 SUKUK FINANCING INSTRUMENTS The Group, through a Shari’a compliant sukuk financing arrangement raised tranches of US Dollar denominated medium term financing. Following are the details of all the sukuk financing arrangement in issue: Amount (USD) 500,000,000 750,000,000 250,000,000 Listing Profit rate (%) London Stock Exchange Irish Stock Exchange & Nasdaq Irish Stock Exchange & Nasdaq 4.140 3.542 3.542 Payment basis Maturity Semi annual Semi annual Semi annual January 2018 May 2021 May 2021 The terms of the arrangement include transfer of certain identified assets (the “Co-Owned Assets”) of the Bank to a Sukuk company, EIB Sukuk Company Limited (the “Issuer”), a special purpose entity formed for the issuance of the sukuks. In substance, the co-owned assets remain in control of the Bank. Accordingly these assets continue to be recognized by the Bank. In case of any default, the Group Holding Company has provided an undertaking to make good all losses to the sukuk holders. The assets are in the control of the Bank and shall continue to be serviced by the Bank. The Issuer will pay the semi-annual distribution amount from returns received in respect of the Co-Owned Assets. Such proceeds are expected to be sufficient to cover the semi-annual distribution amount payable to the sukuk holders on the semi-annual distribution dates. Upon maturity of the sukuk, the Bank has undertaken to repurchase the assets at the exercise price. Following is the movement in Sukuk payable: Balance as at 1 January New issue Sukuks matured Premium amortization Balance at end of period/ year 13 (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 7,368,138 (1,836,250) (2,619) 5,529,269 3,672,500 3,696,948 (1,310) 7,368,138
16. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 10 SUKUK FINANCING INSTRUMENTS (continued) As at 30 June 2017, the outstanding Sukuk payable is falling due as below: 2017 2018 2021 (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 1,836,250 3,693,019 5,529,269 1,836,250 1,836,250 3,695,638 7,368,138 During the period, a tranche of USD 500,000,000 (AED 1,826,250,000), listed at the London Stock Exchange, bearing a profit rate of 4.718 % matured and repaid in full. 11 SHARE CAPITAL (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 10,000,000 10,000,000 5,430,422 5,430,422 Authorized Share Capital 10,000,000,000 (31 December 2016: 10,000,000,000) ordinary shares of AED 1 each (31 December 2016: AED 1 each) Issued and fully paid up capital 5,430,422,000 (31 December 2016: 5,430,422,000) ordinary shares of AED 1 each (31 December 2016: AED 1 each) 12 ASSET SECURITISATION On 15 May 2014, EI Funding Limited (the “SPE”) was incorporated under Companies Law of Cayman Islands as a Special Purpose Entity. The principal activities of the company are to purchase portfolio of assets through issuance of notes. The securitization will result in a certificate pool that will be listed on the NASDAQ clearing system (off market) for private-purpose, over-the-counter dealing. The underlying Sharia structure has been approved by the Bank’s Sharia Supervisory Board. The Group has transferred part of its investment portfolio to EI Funding Limited (incorporated under Cayman Islands laws). However, the Group retains control over the transferred assets and hence the Group continues to recognize these assets as financing and investment assets. 13 ALLOWANCE FOR IMPAIRMENT, NET OF RECOVERIES (Unaudited) For the six months period ended 30 June 2017 2016 AED '000 AED '000 Net impairment of financing and investing receivables (note 6) Net impairment of investments (note 5) (Bad debt written off) / recovery - net 14 (301,733) (41,300) 33,183 (309,850) (597,599) (52,969) 146,155 (504,413)
17. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 14 EARNINGS PER SHARE The calculation of earnings per share is based on profit of AED 386 ,788,000 (30 June 2016: profit of AED 137,301,000), for the period divided by the weighted average of the number of shares outstanding during the period: 5,430,422,000 shares (30 June 2016: 3,930,422,000 shares). Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all diluted potential ordinary shares, if any. The diluted and basic earnings per share were the same for the six months period ended 30 June 2017. 15 CASH AND CASH EQUIVALENTS Cash in hand (note 3) Current account with U.A.E Central Bank (note 3) Murabaha with U.A.E Central Bank Due from banks Due to banks (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 378,366 3,992,668 6,829,382 (3,886,277) 7,314,139 263,571 1,375,258 2,750,143 4,004,152 (1,570,220) 6,822,904 16 RELATED PARTY TRANSACTIONS The ultimate parent of the Group is Investment Corporation of Dubai (55.6%), a company in which the Government of Dubai is the major shareholder. Customer accounts and financing to Government related entities other than those that have been individually disclosed amounts to 6.64% and 1.91% (31 December 2016: 5.77% and 2.00%) of the total customers’ accounts and financing receivables of the Group, respectively. These entities are independently run business entities, and all the financial dealings with the Group are on normal commercial terms. The Group has also entered into transactions with certain other related parties who are non-government related entities. Such transactions were also made on substantially the same terms, including profit rates and collaterals, as those prevailing at the same time for comparable transactions with third parties and do not involve more than a normal amount of risk. Related party transactions are as follows: (Unaudited) For the six months period ended 30 June 2017 2016 Group condensed consolidated interim statement of income Income from Group Holding Company Key management personnel compensations Key management personnel compensations - retirements benefits 15 62,976 (10,959) (66) 89,251 (16,984) (118)
18. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 16 RELATED PARTY TRANSACTIONS (continued) Balances with related parties are as follows: Group condensed consolidated interim statement of financial position Due from Group Holding Company & subsidiaries Due to Group Holding Company & subsidiaries Financing receivables - Ultimate Parent Company Investment in Ultimate Parent Company Deposits from Ultimate Parent Company Due from Dubai Bank PJSC (note 4) Financing receivables - Directors & affiliates Financing receivables - Key management personnel & affiliates Current and Investment accounts - Directors Current and Investment accounts - Key management personnel & affiliates Investment in Government of Dubai (Unaudited) 30 June 2017 AED '000 (Audited) 31 December 2016 AED '000 3,143,638 (3,401,432) 183,650 19,171 846,139 1,218,080 24,721 (990) 3,751,041 (1,608,666) 183,650 15,191 835,628 1,179,398 149 41,260 (760) (11,049) - (38,300) 207,873 Key management personnel are those persons, including non-executive directors, having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. No impairment losses have been recorded against balances outstanding during the period with key management personnel and their immediate relations at the period end. 17 FINANCIAL ASSETS AND LIABILITIES Fair value of assets and liabilities The table below analyses assets and liabilities measured at fair value on a recurring basis. The different levels in the fair value hierarchy have been defined as follows:    Level 1: quoted prices (unadjusted) in principal markets for identified assets or liabilities. Level 2: valuation using inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3: valuation using inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). 30 June 2017 INVESTMENT SECURITIES Available-for-sale: Investment in funds Investment in equities Debt securities TOTAL Quoted prices in active markets for identified assets Level 1 AED '000 Significant other observable inputs Level 2 AED '000 Significant unobservable inputs Level 3 AED '000 (Unaudited) Total AED '000 7,880 895,100 902,980 - 204,794 356,056 560,850 204,794 363,936 895,100 1,463,830 16
19. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 17 FINANCIAL ASSETS AND LIABILITIES (continued) 31 December 2016 INVESTMENT SECURITIES Available-for-sale: Investment in funds Investment in equities Debt securities TOTAL Quoted prices in active markets for identified assets Level 1 AED '000 Significant other observable inputs Level 2 AED '000 Significant unobservable inputs Level 3 AED '000 (Audited) Total AED '000 54,234 718,693 772,927 - 207,993 393,858 601,851 207,993 448,092 718,693 1,374,778 Reconciliation of financial assets, classified under level 3 (Unaudited) Available for sale financial assets AED '000 601,851 (41,002) 560,849 Balance as at 1 January 2017 Settlements Balance as at 30 June 2017 (Audited) 763,482 (161,631) 601,851 Balance as at 1 January 2016 Settlements Balance as at 31 December 2016 The fair value of financial instruments classified as level 3 are, in certain circumstances, measured using valuation techniques that incorporate assumptions that are not evidenced by the prices from observable current market transactions in the same instrument and are not based on observable market data. The Group employs valuation techniques, depending on the instrument type and available market data. For example, in the absence of active market, an investment’s fair value is estimated on the basis of an analysis of the investee’s financial position and results, risk profile and other factors. Favorable and unfavorable changes in the value of financial instruments are determined on the basis of changes in the value of the instruments as a result of varying the levels of the unobservable parameters, quantification of which is judgmental. During the period ended 30 June 2017, no transfers were made between Level 1 and Level 2. 17
20. EMIRATES ISLAMIC BANK PJSC NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 18 OPERATING SEGMENTS The Group ’s activities comprise the following main business segments: Corporate and Investments Within this business segment, the Bank provides to corporate customers a range of products and services and accepts their deposits. This segment invests in investment securities, sukuks, funds and Real Estate sector. Retail Retail segment provides a wide range of products and services to individuals and small and medium enterprises and accepts their deposits. Treasury This segment mainly includes deposits and placements on Murabaha and Wakala basis with banks including Group Holding Company and the Central Bank of UAE. 18