National Bank of Umm Al Qaiwain: Consolidated Interim Financial Information - 31 December 2017

Transcription

1. NATIONAL BANK OF UMM AL-QAIWAIN (l’SC) AND SUBSIDIARY Consolidated financial statements and independent auditor’s report for the year ended 31 December 2017 These audited consolidated financial statements are subject to approval of the Central Bank of the U.A.E. and adoption by shareholders at the annual general meeting.
2. NATIONAL BANK OF UMM AL-QAIWAIN (PSC) Pages Contents Chairman’s report Independent AND SUBSIDIARY auditor's report Consolidated statement of financial 1 - 2 3 - 9 10 position 11 Consolidated statement of income Consolidated statement of comprehensive Consolidated statement of changes in 12 income 13 equity Consolidated statement of cash flows l4 - 15 Notes to the consolidated financial statements 16 - 71
3. I I ”NWEEQS CHAIRMAN’S REPORT On behalf ofthe Board, 1 am pleased to welcome you all to the 35th Annual General Meeting ofthe bank and present the annual report of the Board of Directors for the year ended 3| December 2017. Despite challenging economic scenario and the competition in the banking industry, inform that the Bank has achieved net profit ofAED 369.76 million which is l3.5l% Our total revenue reached AED 636.67 million and operating it is my pleasure to than last year. income stood at AED 350.43 million for the more year ended 3] December 2017. Total assets reached AED l4.12 billion. Loans and advances were at AED 9.46 billion recording an increase compared to last year. while customer deposits stood at AED 9.51 billion marginally up from last of 7.41% yean The Bank holds collateral and specific provision to the tune of I55% of the non-performing loans. Which and effective monitoring of our loans and advances portfolio. Our NPL ratio prudent management has marginally improved as compared to year 20l6. With more cases in execution. it is expected that the ratio w0ulcl improve sharply during the current year. reflects Shareholders’ equity amounted The Bank has consistently December 20l7 stands at to AED 4. l 7 billion maintained high as at level of 31 December 20l 7 (2016: AED 3.99 liquidity as in the past and liquidity billion). ratio as of3l 26.87%. We continue to maintain one of the highest capital adequacy ratios in the banking industry which stands at 34.6l% and is higher than the minimum prescribed levels stipulated by the UAE Central Bank. This demonstrates the financial capability. strength of the Bank and its capacity Tier l ratio is recorded at 33.33%. which is also substantially by the regulatory authorities. Cost to to expand its lending and investment when needed. income ratio is 3] 3% which is comparatively below higher industry Payment of cash dividend of l0% ofthe Share Capital for the approved by the UAE Central Bank. year than the prescribed limits stipulated levels. ending 3 lst December 2017 has been During 2017, the UAE’s growth was estimated at around 1.6% partly because of cuts in oil output under a global deal among producers. UAE is expected to grow around 3.54% in 20l8 based on the expected growth in investment in the infrastructure projects, foreign trade and firming oil prices. Markets expect the oil price to continue its gradual upward movement. interest rates in UAE are expected to demonstrate an upward trend based on the expected interest rate hikes in Fed Rates during 2018. Umm Al Qalwain. where the Bank is head quartered, is witnessing higher developmental activities in the infrastructural front. National Bank ofUmm Al Qaiwain (est) F 0 Box: 800, Umm Al Qalwain Iul: United Aran Emirates Fax: Website: www.nbd.ae E mail: (5.. M W716 706 6665 4.1.1 +971 6 me 6677 $51.: antflan ae {ti-SJ?" ash-1‘ __,_a,,n ___,,__.;n ‘J ___-:__..!Jl Pl 3441' www.an .J_Li 800 4.9., 3,3.” as 31447» 1432-"5-‘7lt3t" i__._.‘,_.ll
4. I I 10de During 2018 . banking sector in UAE is industries and contribute to the overall expected to increase their credit portfolio to support high quality growth of the economy. US economic activity picked up momentum in 2017 registering improvements in growth rate and employment data. US Federal reserve raised interest rates 3 times during the year. Europe showed signs of recovery and China continued its high growth though India slightly lagged behind in growth due to disruptions and changes in its tax rules. World Bank forecasts and developing global economies is economic growth to edge up to 3.1% in projected strengthen to 4.5% in 2013. 2018. Growth in market emerging to Growth in GCC is expected to reach around 3% by 2020 supported by easing fiscal adjustments. infrastructural investments and reforms to promote non-oil sector activities with the introduction of Value Added Tax with effect from 1‘[ January 2018. Equity market indices in the GCC remained Will be assisted by robust economic mostly stable in 2017 and are slated to move up in 2018 which growth expectations. Going forward. the Bank has framed a clear strategy in place to further take advantage of the expected growth opportunities in selected sectors. enhance shareholder returns and On behalf of the Board of Directors, we would like to express our gratitude to His Highness Sheikh Saud Bin Rashid Al Mualla Ruler of Untm Al—Qaiwain and Member of the Supreme Council ofthe United Arab Emirates for the continued support for the development of the Bank. — — We would also like to state our sincere appreciation for the on—going initiatives and support provided by UAE Central Bank to regulate the country‘s financial sector and for their helpful guidance to the Bank during this year. We would like to express our sincere appreciation and gratitude to our shareholders. customers and our objectives and maintaining continued Success in our operations. correspondent banks for achieving We have a good the Bank and we oftalented management officials and staff members who value their contribution. team are committed and loyal to On behalf of the Board of Directors. we would like to express our sincere thanks to all our employees for their contribution to the success of the Bank and in providing us strength to meet future challenges. RASHiD BIN SAUD AL. MUALLA Chairman National Bank ofUmm Al Qaiwain lpscl F 0 Box: BOD. Umm Al Qaiwain Tel: +9716 706 6656 United Arab Emirates Fair. #9716 706 6677 Website: www.nl:li:l.ae E-t’nail: obneianae ._-'.l_n J31; T4111? .541 l:r.-l,-—1-)“.:»-<’—v“‘ r14—3‘ swan ,1 .500 sum wwwanm 40-4 2:4“ swim :11;ij c.4325? 9’41
5. - Deloltte at Touche (M.E.) eullolng 3. Level 6 Emaar I Square Downtown Dubai PD. Box 4254 Ducal United Arab Emirates Tel: +971 (0) 4 376 BEBE Fax:+97t (0) 4 376 8399 www.deloltte.com INDEPENDENT AUDITOR'S REPORT The Shareholders of National Bank of Umm Al-Qaiwain (PSC) Umm Al-Qaiwain United Arab Emirates Report on the audit of the consolidated financial statements Opinion We have audited the consolidated financial statements of National Bank of Umm Al-Qaiwain (PSC) (“the Bank”) and its Subsidiary (together “the Group”), Umm Al-Qaiwain, United Arab Emirates which comprise the consolidated statement of financial position as at 31 December 20”, and the consolidated statement of income, consolidated statement of comprehensive income. consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended. and notes to the consolidated financial statements, including of summary a significant accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects. 31 December 20l7. and its consolidated financial position Group cash flows for the and its consolidated performance year then ended in accordance with lntemational Financial Reporting Standards ("LFRSs"). the consolidated financial Basis for We of the as at opinion conducted responsibilities our audit in accordance under those standards are with International Standards further described in the Auditor’s on Our Auditing (ISAs). responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the international Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (lESBA Code) the Group’s together consolidated financial responsibilities. We believe provide a basis for our opinion. ethical to Key audit Key that are relevant in United Arab Emirates. and we have fulfilled with the other ethical statements that the audit evidence requirements we to our have obtained is sufficient and audit of our other appropriate matters audit matters are those matters that. in our professional judgment. audit of the consolidated financial statements of the context of our thereon. and wc current period. audit of the consolidated financial statements do not provide a separate opinion on as a were These of most significance matters were in our addressed in the whole. and in forming our opinion these matters. Cont‘d. Anls Sadek Delanl (521), Cynthia Corby (995), Georges Najem (BOB), Mohammad Khamees AI Tan (717), Mass Ramahl (B72), Mutasem Rama Paamanabna Acharva (701) and Samlr Madnak (366) are registered aractlslng auditors with the UAE Ministry of (726). Economy. ..
6. Deloitte . INDEPENDENT AUDITOR’S REPORT (continued) Al-Qaiwain (PSC) to the Shareholders of National Bank of lem K ey audit Key {continued} matters How audit matter our audit addressed the key audit matter Impairment of loans and advances The exercises management when judgement of loan amount is impairment a significant the determining timing and impairment. The audit of loan key area of focus because of the significant judgements involved and the (representing loans and advances design, implementation and operating key controls to determine which loans and advances are impaired and provisions against those assets. These included testing: We tested the effectiveness of the size of 67% of total OSystem—based and manual controls over the timely recognition of impaired loans and assets). advances; assessed individually and Corporate assessed loans commercial in individually whether there exists any a loan is impaired as to the soon Group contractual Impaired order which to meet I Controls over I Controls over as payment in accordance with the original are measured on including the governance and the basis of the price or fair value impairment loss is process impairment provisions, including continuous reassessment recalculated the per approval related to provisions present value of expected future cash flows of We calculation collateral valuation estimates obligations terms. loans over the impairment including data inputs; determine classified are models are evidence that to objective IContt‘ols there is doubt about the as ability loans Loans impaired. borrower's represent mainly. and by compared the management. the impairment recorded for retail loans and advances Central specific provisions Bank guidance based on as specifies of days past which the number due. observable market The collateral. sample of individual loans and advances impairment events had occurred carrying value compared to the net present value and adequate impairments provisions had been of future cash flows using original effective recorded in a timely manner. calculated based interest on the shortfall in the loans We tested a to whether assess rate we focused our attention on individually significant exposures, where we tested the estimates and assumptions used by management underlying the Further. The impairment accounts losses on the include borrowings, and considered factors risk probability rating, when determining individually assessed customer’s aggregate value of the collateral of successful repossession and the costs involved to recover the debts. Impairment kisses of collectively assessed loans on performing include the allowances calculated loans and small features, which value are not loans with common individually significant. impairment valuation of identification underlying and estimated recovery and collateral on default. quantification, by external experts
7. Deloitte . INDEPENDENT AUDITOR'S REPORT (continued) Shareholders ol'National Bank of Umm Al-Qaiwain (PSC) to the Key audit Key matters (continued) How audit matter our audit addressed the key audit matter Impairment of loans and advances (continued) assessing collective impairment the Group uses the higher of I.5% of credit risk weighted In computed guidelines and assets allowance as as an per the UAE per Central Bank impairment Group‘s policies described estimated above and IFRS. For the collective the Group, calculations and tested we a sample of provide appropriate by the data used in the as evaluating the methodology involved. For the key assump tions well as judgements used in the calculations, to calculations used impairment objective we challenged management evidence that they were and included all relevant risks. We recalculated the collective impairment provision per the Group's policies and IFRS and cotnpared it with the calculations as per UAE Central Bank [0 as ensure Impairment adequacy of the provision. of available-far-sale financial instruments The impairment Group‘s of the sale financial instruments available-fun in considering of the of available for sale impairment the fair valuation of the securities. key compared significance of the judgement securities to its original purchase price and reviewed involved in determining the impairment to be its historical share performance. to identify any recognized and the size of the available-for-sale significant or prolonged decline in the securities. focus was area a we the given financial instruments (representing 5% of the We evaluated the total assets). the determining Impairment of available-for-sule investments is significant or determined when there has been a prolonged decline in the fair value below its cost. This determination of what is significant or prolonged significant requires particularly given judgement. the uncertainties that exist in the external markets. As described in Note 4 to these making consolidated financial such in statements. the Group evaluates the normal judgments volatility of the health ot‘ the performance. operational investce. changes share price. financial and sector industry technology and in and financial cash flows. key judgments impairment made by the Ciro up losses. Our verification of procedures included, among others. sufficient audit evidence related appropriate underlying accurate data driving the judgments and complete. Further. We in audit to to ensure reviewed the its the concIUsions reached by the Group, to ensure it is consistent with the appropriate application of the judgments.
8. Deloitte . INDEPENDENT AUDITOR’S REPORT (continued) to the Shareholders of National Bank of Umm Other Al-Qalwain (PSC) information The Board of Directors and management is responsible for the other information. The other information comprises the annual report of the Group. We obtained the Chairman‘s report, prior to the date of this auditors‘ report and the remaining information of the annual report is expected to be made available to us after that date. The other information does not include the consolidated financial statements and our auditor‘s report thereon. Our opinion on the consolidated financial statements does express any form of In connection with assurance our not cover the other information and we do not conclusion thereon. audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so. consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. lf. based on the work auditor‘s report. required When to have performed the other information that on a report that fact. We have nothing to read the we we conclude that there is we remaining material misstatement therein, required obtained prior to the date of this we are repon in this regard. information of the annual report of the we are we material misstatement of this other information. to communicate the Group. matter to if we conclude that there is a the Directors. Respmzsl‘bililies Off/1E management and the Directors for the consolidated financial Slaremenls Management is responsible for the preparation in accordance with International Financial applicable provisions and fair presentation of these consolidated financial statements Reporting Standards and their preparation preparing the consolidated financial statements, management is continue ability to going concern operations. or The Directors Auditor's Our as a going basis of has are no compliance of the UAE Federal Law No. (2) of 20l5. and for such internal control determines is necessary to enable the preparation of consolidated financial material misstatement. whether due to fraud or error. in in concern. disclosing. as applicable. responsible matters related to unless management either intends realistic alternative but to do so. accounting responsible for overseeing responsibilities for the audit oft/re the Group‘s financial consolidated financial statements to management are free from assessing the Group’s going concern and using the for liquidate reporting as that with the the Group or to cease process. statements are to obtain reasonable assurance about whether the consolidated Financial statements as a free from material misstatement, whether due to fraud or error. and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance. but is not a guarantee that an objectives whole are audit conducted in accordance with lSAs will M isstatements they could can arise from fraud teasonably be expected consolidated financial statements. to and always detect a material misstatement when it exists. considered material if, individually or in the aggregate. influence the economic decisions of users taken on the basis of these or error are
9. Deloitte . INDEPENDENT AUDITOR’S REPORT (continued) to the Shareholders of National Bank of Umm Auditor‘s responsibilt'tiesjbr the audit of the consolidated financial statements (continued) As part of audit in accordance with ISAs. an we exercise professional judgmcnt and maintain professional the audit. We also: skepticism throughout 0 Al-Qaiwain (PSC) the risks of material misstatement of the consolidated financial statements, fraud or error, design and perform audit procedures responsive to those risks. and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions. misrepresentations. or the override of identify and whether due assess to internal control. I of internal control relevant to the audit in order to design audit procedures in the circumstances. but not for the purpose of expressing an opinion on the appropriate effectiveness of the internal control. Obtain that 0 understanding an are Evaluate the accounting policies used and by management. of appropriateness the reasonableness of accounting estimates and rotated disclosures made I Conclude on the appropriateness of management’s of the use going concern basis of accounting and the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If based we on conclude that a material uncertainty exists, we are required to draw attention in our auditor’s consolidated financial statements or. if such disclosures are inadequate. to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor‘s report. However. future events or conditions may cause the Group to cease report to I to the related disclosures in the continue as a going Evaluate the overall concern. structure and content of the consolidated financial statements, and whether the consolidated financial statements represent the underlying in a manner that achieves fair presentation. presentation. including the disclosures. transactions and U events Obtain sufficient audit evidence regarding the financial information of the Group and to express an opinion on the consolidated financial statements. for thc direction, supervision and performance of the Group audit, We remain appropriate business activities within the We are responsible solely responsible We are required timing of that we to for our audit communicate the audit and identify during to significant our Group audit. opinion. the Directors audit regarding. findings. including among other matters. the planned scope and significant deficiencies in internal control any
10. Deloitte . INDEPENDENT AUDITOR’S REPORT (continued) the Shareholders of National Bank of Umm Al-Qaiwain (PSC) to Auditor‘s responsibilitiesfur Ihe audit oft/w consolidated financial statements (continued) We are with also required relevant to ethical Provide those charged with governance requirements regarding independence, and other matters that may relationships applicable. related safeguards. reasonably be thought with a statement and to to hear that on our have we communicate complied with them all where and independence, From the matters conununicated with those charged with governance. we determine those matters that were of most significance: in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the when, in extremely rare circumstances. we determine that a matter should not be because the adverse consequences of doing so would reasonably be expected to report outweigh the public interest benefits of such information. communicated in matter or our Report on Other Legal As required by and Regulatory Requirements the UAE Federal Law No. (2') of 2015, have obtained all the information we I the consolidated financial statements have been applicable provisions I I report that: considered necessary for the purposes of our audit; c we we prepared and comply. in all material respects. with the of the UAE Federal Law No. (2) of 20 I 5: the Group has maintained proper books of account; the financial information included in the Chairman's report is consistent with the books of account of the Group; U as disclosed in Note 8 shares - O during the to the consolidated financial statements. the financial year ended 3i December 2017: Note 26 to the consolidated financial statements balances, and the were based on terms under which they believe that the any ol“ the applicable provisions has purchased and invested in discloses material related party transactions and conducted. the information that has been made available causes us to Group to us nothing has come to our attention which Group has, during the financial year ended 31 December 20l7. contravened of the UAE Federal Law No. (2.) of 2015 or of its Articles of or its financial position as at 31 December 2017; Association, which would materially affect its activities
11. Deloitte . INDEPENDENT AUDITOR’S REPORT (continued) to the Shareholders of National Bank of Umm Al-Qaiwain (PSC) Report on Other Legal and Regulatory Requirements (continued) - Note 2] to the consolidated financial statements discloses the social contributions made during the financial year ended 31 December 2017'. Further, as required by all the information and the UAE Union Law No explanations Deloitte 8: Touche (ME) Musa Ramahi Registration 28 February No. 872 2018 Dubai United Arab Emirates we (10) of 1980, as amended, we report that considered necessary for the purpose of our we audit. have obtained
12. NATIONAL BANK OF UMM AL —QAIWAIN (PSC) AND SUBSIDIARY Consolidated statement of financial position At 31 December 2017 Notes 2017 2016 AED ’000 AED ‘000 1,642.905 1,544,868 8,808,894 1,143.136 Assets Cash and balances with the U.A.E. Central Bank 5 Due from other banks 6 2,042,785 1,080,246 Loans and advances 7 9,461,437 Investment securities 8 1,101,176 220,244 9 1.650 260.393 1.757 10 68,550 68,124 11 146,447 82.180 Customers‘ acceptances investment in an associate Property and equipment Other assets Total 14,122,535 assets Liabilities Due to other banks 12 Customers‘ 13 3.498 9.51 0,551 70,000 9.012.959 14 220,244 214,628 260.393 222.821 9,948,921 9.566.173 1,848,000 1,019.266 6.440 36,868 1,263,040 1 4.173.614 3,986,134 14,122,535 13,552.307 7,776,518 7,959,606 deposits Custnmers’ acceptances Other liabilities Total liabilities Shareholders” Share capital Statutory General equity 15 16 reserve 17 reserve Cumulative change in fair values Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity Commitments and contingencies 18 ’15:” Rashid Bin Saud AI Mualla Chaim1an accompanying notes Form 5,440 34,343 1.078.085 4:. Nasser Bin Rashid Al Moalla Vice Chairman and Chief Executive Officer The 348.000 1 .01 9.266 an integral part of these consolidated financial statements. _