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National Bank of Umm Al Qaiwain: Consolidated Interim Financial Statements - 30 June 2021

IM Insights
By IM Insights
4 years ago
National Bank of Umm Al Qaiwain: Consolidated Interim Financial Statements - 30 June 2021Islamic banking, Provision, Receivables

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  1. NATIONAL BANK OF UMM AL-QAIWAIN (PSC) AND SUBSIDIARY Review report and condensed consolidated interim financial statements For the period ended 30 June 2021
  2. NATIONAL BANK OF UMM AL-QAIWAIN (PSC) AND SUBSIDIARY Review report and condensed consolidated interim financial statements For the six months period ended 30 June 2021 Contents Pages Report on review of condensed consolidated interim financial statements 1 Consolidated interim statement of financial position 2 Consolidated interim income statement 3 Consolidated interim statement of comprehensive income 4 Consolidated interim statement of changes in equity 5 Consolidated interim statement of cash flows 6 Notes to the condensed consolidated interim financial statements 7 - 25
  3. REPORT ON REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF NATIONAL BANK OF UMM ALQAIWAIN PSC AND SUBSIDIARY Introduction We have reviewed the accompanying condensed consolidated interim financial statements of National Bank of Umm Al-Qaiwain PSC (the “Bank”) and its subsidiary (collectively referred to as the “Group”), which comprise the consolidated interim statement of financial position as at 30 June 2021 and the related consolidated interim statements of income, comprehensive income for the three month and six month periods then ended and consolidated interim statement of cash flows and changes in equity for the sixmonth period then ended and explanatory notes. Management is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting (“IAS 34”). Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with IAS 34. For Ernst & Young Signed by: Ashraf Abu Sharkh Partner Registration No. 690 27 July 2021 Sharjah, United Arab Emirates A member firm of Ernst & Young Global Limited
  5. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM INCOME STATEMENT For the six months period ended 30 June 2021 (Unaudited) Notes Interest income Income from Islamic financing products Total interest income and income from Islamic financing products Interest expense Distribution to depositors – Islamic products Three months period ended Six months period ended 30 June (Unaudited) 30 June (Unaudited) ─────────────────── ─────────────────── 2021 2020 2021 2020 AED ’000 AED ’000 AED ’000 AED ’000 75,876 108,705 151,147 221,733 5,999 ──────── 6,708 ──────── 14,764 ──────── 15,057 ──────── 81,875 115,413 165,911 236,790 (12,047) (22,940) (25,452) (51,651) (80) ──────── (131) ──────── (176) ──────── (294) ──────── Net interest income and income from Islamic products net of distribution to depositors 69,748 92,342 140,283 184,845 Net fees and commission income 10,457 10,072 23,847 32,378 4,986 ──────── 85,191 4,718 ──────── 107,132 18,169 ──────── 182,299 7,560 ──────── 224,783 Other operating income GROSS INCOME Operating expenses (32,835) Investment gains OPERATING INCOME Share of results from an associate PROFIT FOR THE PERIOD BEFORE IMPAIRMENT Net impairment losses (64,994) (66,336) 5,899 ──────── 58,255 1,986 ──────── 77,103 33,484 ──────── 150,789 39,364 ──────── 197,811 200 ──────── (69) ──────── 254 ──────── (105) ──────── 151,043 197,706 58,455 77,034 14 (3,462) ──────── 54,993 ════════ (22,614) ──────── 54,420 ════════ (19,563) ──────── 131,480 ════════ (70,470) ──────── 127,236 ════════ 15 0.03 ════════ 0.03 ════════ 0.07 ════════ 0.07 ════════ PROFIT FOR THE PERIOD Basic and diluted earnings per share (AED) (32,015) The attached notes 1 to 26 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 3
  6. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME For the six months period ended 30 June 2021 (Unaudited) Three months period ended Six months period ended 30 June (Unaudited) 30 June (Unaudited) ─────────────────── ─────────────────── 2021 2020 2021 2020 AED ’000 AED ’000 AED ’000 AED ’000 PROFIT FOR THE PERIOD 54,993 ──────── 54,420 ──────── 131,480 ──────── 127,236 ──────── 73,239 ──────── 41,660 ──────── 135,194 ──────── (180,996) ──────── 73,239 ──────── 41,660 ──────── 135,194 ──────── (180,996) ──────── 128,232 ════════ 96,080 ════════ 266,674 ════════ (53,760) ════════ Other comprehensive income Items that will not be reclassified subsequently to profit or loss Net fair value gain on investment securities carried at FVTOCI - equity Other comprehensive income/ (loss) for the period TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD The attached notes 1 to 26 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 4
  7. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the six months period ended 30 June 2021 (Unaudited) Balance at 1 January 2021 (audited) Profit for the period Other comprehensive income for the period Total comprehensive income for the period Dividend paid (see Note 16) Balance at 30 June 2021 (unaudited) Balance at 1 January 2020 (audited) Profit for the period Other comprehensive loss for the period Total comprehensive loss for the period Other movements of FVTOCI equity investments Excess provisions under CBUAE requirement written back (see Note 25) Dividend paid (see Note 16) Balance at 30 June 2020 (unaudited) Share capital AED ’000 Statutory reserve AED ’000 General reserve AED ’000 1,848,000 1,019,266 6,440 - - - Impairment reserve general AED ’000 Cumulative change in fair values AED ’000 Retained earnings AED ’000 Total AED ’000 - 135,632 1,688,084 4,697,422 - - 131,480 131,480 ──────── ──────── ──────── ──────── ──────── ──────── ──────── ──────── 135,194 ──────── 135,194 ──────── ──────── 131,480 ──────── 135,194 ──────── 266,674 ──────── ──────── 1,848,000 ════════ ──────── 1,019,266 ════════ ──────── 6,440 ════════ ──────── ════════ ──────── 270,826 ════════ (147,840) ──────── 1,671,724 ════════ (147,840) ──────── 4,816,256 ════════ 1,848,000 1,019,266 6,440 16,385 211,976 - - - ──────── ──────── - ──────── 1,848,000 ════════ ──────── ──────── - ──────── 1,019,266 ════════ ──────── ──────── - ──────── 6,440 ════════ ──────── ──────── - (16,385) ──────── ════════ The attached notes 1 to 26 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 5 (180,996) ──────── (180,996) ──────── 4,724 ──────── 35,704 ════════ 1,667,929 4,769,996 127,236 127,236 ──────── 127,236 ──────── (4,724) 16,385 (203,280) ──────── 1,603,546 ════════ (180,996) ──────── (53,760) ──────── - (203,280) ──────── 4,512,956 ════════
  8. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS For the six months period ended 30 June 2021 (Unaudited) Notes Cash flows from operating activities Profit for the period Adjustments for: Provision for expected credit losses Depreciation of property and equipment Depreciation of right of use asset Provision for employee end of service benefits Provision for impairment of inventory Increase in fair value of investment in securities at FVTPL Discount amortised on investment securities Dividend income (Gain) / loss on disposal of property and equipment Share of results from an associate Finance cost on lease liability Six months period ended 30 June (Unaudited) ─────────────────────── 2021 2020 AED ’000 AED ’000 131,480 14 14 Operating cash flows before movements in working capital Decrease / (increase) in certificate of deposits with original maturity greater than 3 months 17 (Increase) / decrease in statutory deposit with CBUAE Payment of employee end of service benefits Decrease in loans and advances and Islamic financing receivables Decrease in other assets Decrease in customers’ deposits and Islamic customers’ deposits (Decrease)/ increase in other liabilities Net cash generated from operating activities Cash flows from investing activities Purchase of property and equipment Proceeds from disposal of property and equipment Proceeds from sale and maturity of investment securities Dividend received from investment securities Dividend received from investment in an associate Net cash generated from investing activities Cash flows from financing activity Dividend paid Lease payments Net cash used in financing activity NET INCREASE IN CASH AND CASH EQUIVALENTS 127,236 16,613 7,569 863 706 2,950 1,749 (35,238) (90) (254) 67 ──────── 126,415 69,120 4,248 808 1,350 2,410 (16) (41,758) 16 105 ──────── 163,519 31,620 (27,971) (3,208) 446,895 6,834 (139,163) (57,398) ──────── 384,024 ──────── (25,000) 227,352 (1,846) 292,593 2,641 (264,053) 333,796 ──────── 729,002 ──────── (7,504) 247 (4,286) 35,238 49 ──────── 23,744 ──────── (1,092) 41,758 ──────── 40,666 ──────── (147,840) (899) ──────── (148,739) ──────── 259,029 (203,280) ──────── (203,280) ──────── 566,388 Cash and cash equivalents at the beginning of the period 17 3,308,809 ──────── 3,633,059 ──────── CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 17 3,567,838 ════════ 4,199,447 ════════ The attached notes 1 to 26 form an integral part of these condensed consolidated interim financial statements. The independent auditor’s report on review of the condensed consolidated interim financial statements is set out on page 1. 6
  9. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 1 GENERAL INFORMATION National Bank of Umm Al-Qaiwain (PSC) (the “Bank”) is a Public Shareholding Company incorporated in the Emirate of Umm Al-Qaiwain (“UAQ”) in the United Arab Emirates (“U.A.E.”) by Amiri Decree Number (1) on 5 January 1982, issued by His Highness, the Ruler of Umm Al-Qaiwain, and commenced its operations with effect from 1 August 1982. National Bank of Umm Al-Qaiwain (PSC), and its subsidiary, Twin Towns Marketing Management L.L.C. are together referred to as the “Group”. The address of the Bank’s registered Head Office is P.O. Box 800, Umm Al-Qaiwain, United Arab Emirates. The Bank is engaged in providing retail and corporate banking services through a network of 12 branches in the U.A.E. The Group carries out Islamic banking operations through Islamic banking window established in 2005 across all its branch network. The condensed consolidated interim financial statements of the Group for the six months period ended 30 June 2021 were authorised and approved for issue by the Board of Directors on 27 July 2021. 2 CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS 2.1 CHANGES IN ACCOUNTING POLICIES The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2020, except for the adoption of new standards effective as of 1 January 2021. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. Standards, amendments and interpretations that are effective for the Group’s accounting period beginning on 1 January 2021 The Group has consistently applied the accounting policies as applied in the annual consolidated financial statements for the year ended 31 December 2020 , except for effect of the Inter Bank Offer Rate ("IBOR") transition as mentioned below. The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements for the year ended 31 December 2020. The following amendments to existing standards have been applied by the Group in preparation of these interim condensed consolidated financial statements. The adoption of the below did not result in changes to previously reported net profit or equity of the Group. Description Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) Effective from 1 January 2021 Standard Issued but not yet Effective IFRS 17 Insurance Contracts is effective from 1 January 2023. The Group is currently evaluating the impact of this new standard. The Group will adopt this new standard on the effective date. Interest Rate Benchmark Reform - Phase 2 amendments Effective from 1 January 2021, Interest Rate Benchmark Reform - Phase 2 amendments address issues that might affect financial reporting as a result of the reform of an interest rate benchmark, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate. The amendments provide practical relief from certain requirements in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to changes in the basis for determining contractual cash flows of financial assets, financial liabilities and lease liabilities and hedge accounting. The amendments require an entity to account for a change in the basis for determining the contractual cash flows of a financial asset or financial liability that is required by interest rate benchmark reform by updating the effective interest rate of the financial asset or financial liability. In addition, it provides certain exceptions to hedge accounting requirements. 7
  10. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 2 CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS 2.1 CHANGES IN ACCOUNTING POLICIES (continued) Interest Rate Benchmark Reform - Phase 2 amendments (continued) The Group is in discussion with counterparties in relation to exposure to non-derivative financial assets and liabilities linked to Inter Bank Offered Rate maturing beyond the year 2021. Management believes that the amendments are not expected to have a material on the Group’s condensed consolidated interim financial information. Key accounting estimates and judgments The preparation of the condensed consolidated interim financial information requires management to make estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty, and actual results may therefore differ resulting in future changes in these estimates. In preparing, the condensed consolidated interim financial information, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation and uncertainty were the same as those that applied to the audited consolidated financial information as at and for the year ended 31 December 2020. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 BASIS OF PREPARATION These condensed consolidated interim financial statements are prepared in accordance with International Accounting Standard No. 34 - Interim Financial Reporting issued by the International Accounting Standard Board and also comply with the applicable requirements of the laws in the U.A.E. The condensed consolidated interim financial statements are prepared in accordance with the historical cost basis, except for the revaluation of certain financial instruments. The condensed consolidated interim financial statements are presented in U.A.E. Dirhams (AED) as that is the functional currency in which the majority of the Group’s transactions are denominated. All financial information presented in AED has been rounded off to the nearest thousand, unless otherwise stated. These condensed consolidated interim financial statements do not include all the information required for full annual consolidated financial statements and should be read in conjunction with the Group’s annual audited consolidated financial statements as at and for the year ended 31 December 2020. In addition, results for the six months period ended 30 June 2021 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2021. 3.2 BASIS OF CONSOLIDATION These condensed consolidated interim financial statements incorporate the financial statements of the Bank and entity controlled by the Bank. Control is achieved when the Bank: • • • has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns The condensed consolidated interim financial statements comprise the financial statements of the Bank and of the subsidiary as disclosed in the annual audited financial statements for the year ended 31 December 2020. The financial statements of the subsidiary are prepared for the same reporting period as that of the Bank. 3.3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies applied by the Group in the preparation of the condensed consolidated interim financial statements are consistent with those applied by the Group in the annual consolidated financial statements for the year ended 31 December 2020, except for changes in accounting policies explained in Note 2.1. 8
  11. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 4 CASH AND BALANCES WITH THE U.A.E. CENTRAL BANK 30 June 2021 AED’000 (Unaudited) Balances with the CBUAE Current account Statutory cash reserve deposit Monetary Bills Overnight deposits Certificate of deposits 11,833 339,885 457,887 430,000 ──────── 1,239,605 84,524 ──────── 1,324,129 ════════ Cash in hand 31 December 2020 AED’000 (Audited) 12,912 311,914 610,000 475,000 ──────── 1,409,826 101,085 ──────── 1,510,911 ════════ The statutory cash reserve deposit with the CBUAE is not available to finance the day to day operations of the Bank. 5 DUE FROM OTHER BANKS 30 June 2021 AED’000 (Unaudited) Term deposits Loans to financial institutions Demand deposits 3,000,046 385,665 27,567 ──────── 3,413,278 (2,854) ──────── 3,410,424 ════════ Total due from other banks Provision for credit loss Net due from other banks 30 June 2021 AED’000 (Unaudited) Gross amounts due from other banks by geographical area Within U.A.E. Within GCC Other countries 3,367,346 19,236 26,696 ──────── 3,413,278 ════════ 31 December 2020 AED’000 (Audited) 2,756,204 165,285 27,193 ──────── 2,948,682 (1,553) ──────── 2,947,129 ════════ 31 December 2020 AED’000 (Audited) 2,921,489 1,037 26,156 ──────── 2,948,682 ════════ All amounts due from other banks were classified as Stage 1 as at 30 June 2021 (31 December 2020: Stage 1) with corresponding ECL of AED 2.85 million at 30 June 2021 (31 December 2020: AED 1.55 million). There was no inter-stage movement in gross balances due from other banks during the period ended 30 June 2021 (31 December 2020: no inter-stage movement). 9
  12. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 6 LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES 30 June 2021 AED’000 (Unaudited) Loans Overdrafts Islamic financing products Loans against trust receipts Others 6,051,254 1,065,204 215,449 132,918 30,351 ──────── 7,495,176 (316,684) ──────── 7,178,492 ════════ Total loans and advances and Islamic financing receivables Provision for credit loss Net loans and advances and Islamic financing receivables Gross loans and advances and Islamic financing receivables by economic sector Wholesale and retail trade 1,009,275 Real estate and construction 2,260,057 Personal loans and other 439,491 Manufacturing 378,754 Agriculture and allied activities 1,199 Transport and communication 224,516 Financial institutions 468,213 Services and others 2,713,671 ──────── 7,495,176 ════════ 31 December 2020 AED’000 (Audited) 6,224,681 1,401,570 232,859 108,087 24,636 ──────── 7,991,833 (352,177) ──────── 7,639,656 ════════ 1,099,471 2,488,031 485,427 387,166 1,213 232,786 535,042 2,762,697 ──────── 7,991,833 ════════ All loans and advances and Islamic financing receivables are from customers within U.A.E. Movement in the gross balances of loans and advances and Islamic financing receivables Gross carrying amount as at 31 December 2020 New assets originated or purchased Assets derecognised or repaid Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Write-off As at 30 June 2021 (unaudited) Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 6,813,529 159,177 (541,146) 1,245 (65,218) (1,414) ──────── 6,366,173 ════════ 382,877 (56,735) (1,245) 71,636 (1,423) ──────── 395,110 ════════ 795,427 (8,191) (6,418) 2,837 (49,762) ──────── 733,893 ════════ 7,991,833 159,177 (606,072) (49,762) ──────── 7,495,176 ════════ 10
  13. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 6 LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES (continued) Movement in the gross balances of loans and advances and Islamic financing receivables (continued) Gross carrying amount as at 31 December 2019 New assets originated or purchased Assets derecognised or repaid Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Write off As at 31 December 2020 Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 7,114,324 249,312 (528,672) 309,111 (118,034) (212,512) ──────── 6,813,529 ════════ 773,830 1,052 (227,093) (309,111) 185,893 (41,694) ──────── 382,877 ════════ 752,678 (19,432) (67,859) 254,206 (124,166) ──────── 795,427 ════════ 8,640,832 250,364 (775,197) (124,166) ──────── 7,991,833 ════════ Movement in the provision for impairment of loans and advances and Islamic financing receivables: ECL allowances as at 31 December 2020 Net impairment charged during the period Recoveries Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Write off Closing Balance as at 30 June 2021 (unaudited) ECL allowances as at 31 December 2019 Net impairment charged during the period Recoveries Transfer to Stage 1 Transfer to Stage 2 Transfer to Stage 3 Write off Closing Balance as at 31 December 2020 (audited) Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 112,318 (1,326) 52 (1,222) (7) ──────── 39,523 2,306 (52) 1,222 (82) ──────── 200,336 14,930 (1,641) 89 (49,762) ──────── 352,177 15,910 (1,641) (49,762) ──────── 109,815 ════════ 42,917 ════════ 163,952 ════════ 316,684 ════════ Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 97,146 3,161 15,047 (1,469) (1,567) ──────── 48,909 6,812 (15,047) 1,469 (2,620) ──────── 231,508 97,159 (8,352) 4,187 (124,166) ──────── 377,563 107,132 (8,352) (124,166) ──────── 112,318 ════════ 39,523 ════════ 200,336 ════════ 352,177 ════════ 11 Total AED’000
  14. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 6 LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES (continued) Grading of loans and advances and Islamic financing receivables along with stages: 30 June 2021 (Unaudited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 Performing (Grades 1-8) Performing watchlist (9-12) Sub-standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss Carrying amount 6,366,173 ──────── 6,366,173 69,570 325,540 ──────── 395,110 89,505 615,207 29,181 ──────── 733,893 6,435,743 325,540 89,505 615,207 29,181 ──────── 7,495,176 (109,815) ──────── 6,256,358 ════════ (42,917) ──────── 352,193 ════════ (163,952) ──────── 569,941 ════════ (316,684) ──────── 7,178,492 ════════ 31 December 2020 (Audited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 Performing (Grades 1-8) Performing watchlist (9-12) Sub-standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss Carrying amount 6,813,528 ──────── 6,813,528 (112,318) ──────── 6,701,210 ════════ 32,165 350,713 ──────── 382,878 (39,523) ──────── 343,355 ════════ 187,688 578,608 29,131 ──────── 795,427 (200,336) ──────── 595,091 ════════ 6,845,693 350,713 187,688 578,608 29,131 ──────── 7,991,833 (352,177) ──────── 7,639,656 ════════ The non-performing loans as at 30 June 2021 amounted to AED 733.89 million (31 December 2020: AED 795.43 million) which is covered by securities of AED 1,112.18 million (31 December 2020: AED 1,134.73 million) and impairment provision of AED 163.95 million (31 December 2020: AED 200.30 million) aggregating to AED 1,276.13 million (31 December 2020: AED 1,334.73 million) which is 1.74 times (31 December 2020: 1.68 times) of the nonperforming loans. 12
  15. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 7 INVESTMENT SECURITIES Investment securities comprise the following: 30 June 2021 AED’000 (Unaudited) Securities at FVTPL Quoted equity securities Discretionary funds managed by third parties – quoted equity securities Securities at FVTOCI Quoted equity securities Unquoted equity securities Securities at amortised cost Quoted debt instruments Total investment securities Provision for expected credit loss Net investment securities Gross investment securities by geographical area Within U.A.E. Within GCC Other countries 31 December 2020 AED’000 (Audited) 15,977 17,730 249 ──────── 16,226 ──────── 248 ──────── 17,978 ──────── 894,788 1,362 ──────── 896,150 ──────── 759,593 747 ──────── 760,340 ──────── 168,958 ──────── 1,081,334 (173) ──────── 1,081,161 ════════ 165,285 ──────── 943,603 (249) ──────── 943,354 ════════ 986,804 57,343 37,187 ──────── 1,081,334 ════════ 865,038 44,152 34,413 ──────── 943,603 ════════ All debt investment are classified as Stage 1 as at 30 June 2021 (31 December 2020: Stage 1) with corresponding ECL of AED 0.17 million as at 30 June 2021 (31 December 2020: AED 0.25 million). There was no inter-stage movement in investment securities during the period ended 30 June 2021 (31 December 2020: no inter-stage movement). 8 OTHER ASSETS 30 June 2021 AED’000 (Unaudited) Inventory* Interest receivable Prepayments and deposits Others** 136,754 29,556 23,142 52,199 ──────── 241,651 ════════ 31 December 2020 AED’000 (Audited) 63,726 39,105 19,157 129,447 ──────── 251,435 ════════ *Inventory represents property acquired in the settlement of debt. The group has recorded an impairment on its inventory amounting to AED 2.95 million during period ended 30 June 2021 (31 December 2020: AED 8.25 million). **Others include amount of AED 48.89 million (31 December 2020: AED 124.87 million) deposited with the UAE courts for auction bids made by the bank. 13
  16. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 9 DUE TO OTHER BANKS 30 June 2021 AED’000 (Unaudited) Borrowing from the U.A.E. Central Bank * Demand deposits By geographical area Within U.A.E. Outside U.A.E. 31 December 2020 AED’000 (Audited) 221,000 19 ──────── 221,019 ════════ 198,560 25 ──────── 198,585 ════════ 221,000 19 ──────── 221,019 ════════ 198,560 25 ──────── 198,585 ════════ * Represents zero cost funding (“ZCF”) availed from the U.A.E. Central Bank under the Targeted Economic Support Scheme (“TESS”). 10 CUSTOMERS’ DEPOSITS AND ISLAMIC CUSTOMERS’ DEPOSITS 30 June 2021 AED’000 (Unaudited) Time deposits Current accounts Savings deposits Margin deposits Islamic customers’ deposits 5,123,024 2,666,639 189,267 27,476 79,289 ──────── 8,085,695 ════════ 31 December 2020 AED’000 (Audited) 5,307,100 2,616,166 191,898 29,420 80,274 ──────── 8,224,858 ════════ All customers’ deposits and Islamic customers’ deposits are from customers within U.A.E. 11 OTHER LIABILITIES 30 June 2021 AED’000 (Unaudited) Accounts payable Interest payable Provision for employees’ end of service benefits Other staff benefits Dividend payable Provision for expected credit loss on acceptance Provision for expected credit loss on commitments and contingencies (Note 13) Cheques on shelves Others 14 31 December 2020 AED’000 (Audited) 29,951 16,405 18,499 3,749 10,619 584 25,638 26,588 20,873 761 10,619 421 8,133 103,964 16,099 ──────── 208,003 ════════ 7,177 144,481 22,414 ──────── 258,972 ════════
  17. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 12 SHARE CAPITAL 30 June 2021 AED’000 (Unaudited) Issued and fully paid: 1,848 million ordinary shares of AED 1 each 13 1,848,000 ════════ 31 December 2020 AED’000 (Audited) 1,848,000 ════════ COMMITMENTS AND CONTINGENT LIABILITIES 30 June 2021 AED’000 (Unaudited) Guarantees Letters of credit Commitments to extend credit Others Gross commitments and contingent liabilities by geographical area Within the U.A.E. Outside the U.A.E. 31 December 2020 AED’000 (Audited) 1,988,633 106,083 ──────── 2,094,716 1,067,803 188,915 ──────── 3,351,434 ════════ 2,362,293 72,171 ──────── 2,434,464 956,972 259,193 ──────── 3,650,629 ════════ 3,279,912 71,522 ──────── 3,351,434 ════════ 3,632,460 18,169 ──────── 3,650,629 ════════ Movement in the gross balance and corresponding ECL allowances of commitments and contingent liabilities Gross carrying amount as at 31 December 2020 New assets originated or purchased Assets derecognised or repaid Transfer to Stage 2 Transfer to Stage 3 As at 30 June 2021 (unaudited) Gross carrying amount - 1 January 2020 Net movement during the period Transferred from Stage 1 As at 31 December 2020 (audited) Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 2,382,538 166,422 (506,170) (346) (1,608) ──────── 2,040,836 ════════ 2,252 346 ──────── 2,598 ════════ 49,674 1,608 ──────── 51,282 ════════ 2,434,464 166,422 (506,170) ──────── 2,094,716 ════════ Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 3,787,709 (1,420,317) 15,146 ──────── 2,382,538 ════════ 22,259 (4,861) (15,146) ──────── 2,252 ════════ 49,977 (303) ──────── 49,674 ════════ 3,859,945 (1,425,481) ──────── 2,434,464 ════════ 15
  18. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 13 COMMITMENTS AND CONTINGENT LIABILITIES (continued) Movement in the provision for impairment of commitments and contingent liabilities (included in other liabilities) ECL allowances as at 31 December 2020 Net impairment charged during the period Assets derecognised or repaid Transferred from stage 3 Closing balance as at 30 June 2021 (unaudited) ECL allowances – 1 January 2020 Transferred from Stage 1 Net movement during the period Closing balance as at 31 December 2020 (audited) Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 7,171 1,555 (594) (10) ──────── 6 5 ──────── (10) 10 ──────── 7,177 1,560 (604) ──────── 8,122 ════════ 11 ════════ ════════ 8,133 ════════ Stage 1 AED’000 Stage 2 AED’000 Stage 3 AED’000 Total AED’000 3,324 158 3,689 ──────── 189 (158) (25) ──────── ──────── 3,513 3,664 ──────── 7,171 ════════ 6 ════════ ════════ 7,177 ════════ Grading of commitments and contingent liabilities along with stages: 30 June 2021 (Unaudited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 Performing (Grades 1-8) Performing watchlist (9-12) Sub-standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss Carrying amount 2,040,837 ──────── 2,040,837 (8,122) ──────── 2,032,715 ════════ 2,597 ──────── 2,597 (11) ──────── 2,586 ════════ 360 10,765 40,157 ──────── 51,282 ──────── 51,282 ════════ 2,040,837 2,597 360 10,765 40,157 ──────── 2,094,716 (8,133) ──────── 2,086,583 ════════ 31 December 2020 (audited) ──────────────────────────────────────────── Stage 1 Stage 2 Stage 3 Total AED’000 AED’000 AED’000 AED’000 Performing (Grades 1-8) Performing watchlist (9-12) Sub-standard (Grade 13) Doubtful (Grade 14) Loss (Grades 15) Total gross carrying amount Expected credit loss Carrying amount 2,382,538 ──────── 2,382,538 (7,171) ──────── 2,375,367 ════════ 2,252 ──────── 2,252 (6) ──────── 2,246 ════════ 285 10,765 38,624 ──────── 49,674 ──────── 49,674 ════════ 2,382,538 2,252 285 10,765 38,624 ──────── 2,434,464 (7,177) ──────── 2,427,287 ════════ At 30 June 2021, the group has capital commitments of AED 3.04 million (31 December 2020: AED 3.34 million). 16
  19. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 14 NET IMPAIRMENT LOSSES Six months period ended 30 June (Unaudited) ──────────────────────── 2021 2020 AED’000 AED’000 Loans and advances and Islamic financing receivables Due from other banks Investment securities Customers’ acceptances Commitments and contingencies Property valuation – Impairment Total impairment charged Recoveries from loans and advances and Islamic financing receivables 15 15,910 1,301 (76) 163 956 2,950 ──────── 21,204 (1,641) ──────── 19,563 ════════ 69,620 997 65 (132) 679 1,350 ──────── 72,579 (2,109) ──────── 70,470 ════════ BASIC AND DILUTED EARNINGS PER SHARE The basic earnings per share is calculated by dividing the profit attributable to shareholders by the average number of ordinary shares in issue during the year. Three months period ended 30 June (Unaudited) ──────────────────── 2021 2020 AED ’000 AED ’000 Six months period ended 30 June (Unaudited) ──────────────────── 2021 2020 AED ’000 AED ’000 Profit for the period (in AED ’000) 54,993 ════════ 54,420 ════════ 131,480 ════════ 127,236 ════════ Weighted average number of shares (’000) 1,848,000 ════════ 1,848,000 ════════ 1,848,000 ════════ 1,848,000 ════════ Basic earnings per share (in AED) 0.03 ════════ 0.03 ════════ 0.07 ════════ 0.07 ════════ There were no potential dilutive shares as at 30 June 2021 and 30 June 2020. 16 DIVIDENDS At the Annual General Meeting held on 28 March 2021, the Shareholders approved dividend of 8% amounting to AED 147.84 million in respect of the year ended 31 December 2020 (2019: AED 203.28 million). 17
  20. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 17 CASH AND CASH EQUIVALENTS Cash and balances with the CBUAE (Note 4) Due from other banks (Note 5) Statutory cash reserve deposit (Note 4) Due from other bank and Certificates of deposits with original maturity over 3 months Due to other banks (Note 9) 18 30 June 2021 AED’000 (Unaudited) 31 December 2020 AED’000 (Audited) 1,324,129 3,413,278 (339,885) 1,510,911 2,948,682 (311,914) (608,665) (221,019) ──────── 3,567,838 ════════ (640,285) (198,585) ──────── 3,308,809 ════════ RELATED PARTY TRANSACTIONS The Group carries out transactions in the ordinary course of business with related parties, defined as shareholders who have a significant equity interest in the Group, all Directors of the Group and companies in which such shareholders and Directors have a significant interest and key management personnel of the Group. During the period, the Group entered into the following significant transactions with related parties in the ordinary course of business. Six months period ended 30 June (unaudited) ──────────────────────── 2021 2020 AED’000 AED’000 Interest income Interest expense Remuneration of key management personnel Other income Directors’ fees 888 14,004 1,839 44 1,500 3,331 24,984 1,382 59 1,500 2021 AED’000 2020 AED’000 1,799 40 1,330 52 Remuneration of key management personnel Salaries and other short-term benefits Employee end of service benefits The Group has entered into transactions with related parties which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with third parties. Outstanding balances at the end of reporting date from transactions with related parties are as follows: 30 June 2021 AED’000 (Unaudited) Loans and advances and Islamic financing receivables Customer deposits and Islamic customer deposits Irrevocable commitments and contingent liabilities 68,825 2,913,334 251,348 ════════ 18 31 December 2020 AED’000 (Audited) 82,798 2,728,217 260,229 ════════
  21. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 18 RELATED PARTY TRANSACTIONS (continued) 30 June 2021 AED’000 (Unaudited) Key Management Loans and advances and Islamic financing receivables Customer deposits and Islamic customer deposits 658 ════════ 31 December 2020 AED’000 (Audited) 534 412 ════════ The loans and advances and Islamic financing receivables given to related parties have been secured against collateral amounting to AED 61.15 million (31 December 2020: AED 61.15 million). All loans and advances to related parties are classified as Stage 1 (31 December 2020: Stage 1) with corresponding ECL of AED 3.06 million. (31 December 2020: AED 1.88 million) 19 BUSINESS SEGMENTS The Group is organised into three main business segments: Retail and corporate banking - wherein retail banking comprises private customer current accounts, savings accounts, deposits, credit and debit cards, customer loans and mortgages. Corporate banking involves transactions with corporate bodies including government and public bodies and comprises loans, advances, deposits and trade finance transactions. Treasury and investments - incorporating the activities of the dealing room, related money market, foreign exchange transactions with other banks and financial institutions including the U.A.E. Central Bank and operations by the Bank’s Head Office as a whole, none of which mutually constitute a separately reportable segment. Transactions between the business segments are on normal commercial terms and conditions. There are no material items of income and expense arising between the business segments. Segment assets and liabilities comprise operating assets and liabilities, being the majority of the condensed consolidated statement of financial position items. Primary segment information Retail and corporate banking AED’ 000 Six months period ended 30 June 2021 (Unaudited) Net interest income and income from Islamic products net of distribution to depositors Non-Interest income (Net) Gross income Operating expenses Investment gains Provision for impairment on financial assets Share of results from an associate Segment result As at 30 June 2021 (Unaudited) Segment assets Segment liabilities and equity Treasury and investments AED’ 000 Other AED’ 000 Total AED’ 000 134,867 23,987 ──────── 158,854 ──────── (17,368) - 5,416 1,684 ──────── 7,100 ─────── (1,056) 33,484 16,345 ──────── 16,345 ──────── (46,570) - 140,283 42,016 ──────── 182,299 ──────── (64,994) 33,484 (15,388) ──────── 126,098 ════════ (1,225) ──────── 38,303 ════════ (2,950) 254 ──────── (32,921) ════════ (19,563) 254 ──────── 131,480 ════════ 7,423,544 ════════ 5,393,490 ════════ 730,623 ════════ 13,547,657 ════════ 8,108,667 ════════ 414,924 ════════ 5,024,066 ════════ 13,547,657 ════════ 19
  22. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 19 BUSINESS SEGMENTS (continued) Primary segment information (continued) Retail and corporate banking AED’ 000 Six months period ended 30 June 2020 (Unaudited) Net interest income and income from Islamic products net of distribution to depositors Non-interest income (Net) Gross income Operating expenses Investment gains Provision for impairment on financial assets Share of results from an associate Segment result As at 30 June 2020 (Unaudited) Segment assets Segment liabilities and equity 20 Treasury and investments AED’ 000 Other AED’ 000 Total AED’ 000 159,753 30,478 ──────── 190,231 ──────── (21,249) - 25,092 1,566 ──────── 26,658 ─────── (1,047) 39,364 7,894 ──────── 7,894 ──────── (44,040) - 184,845 39,938 ──────── 224,783 ──────── (66,336) 39,364 (68,780) ──────── 100,202 ════════ (1,142) ──────── 63,833 ════════ (548) (105) ──────── (36,799) ════════ (70,470) (105) ──────── 127,236 ════════ 8,026,888 ════════ 5,455,990 ════════ 570,590 ════════ 14,053,468 ════════ 8,592,642 ════════ 716,572 ════════ 4,744,254 ════════ 14,053,468 ════════ FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, differences can arise between book values and the fair value estimates. Underlying the definition of fair value is the presumption that the Group a going concern without any intention or requirement to materially curtail the scale of its operation or to undertake a transaction on adverse terms. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:  Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.  Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).  Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). 20
  23. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 20 FAIR VALUE MEASUREMENTS (continued) Fair value of financial instruments carried at amortised cost The fair value of the quoted debt instruments at 30 June 2021 amounted to AED 169.15 million (31 December 2020: AED 165.90 million). The fair value determination of the quoted debt instruments will fall under level 1 category wherein fair value is determined based on inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Management believes that fair value of other financial instruments carried at amortized cost, are not materially different from their carrying values at the end of the reporting period. Valuation techniques and assumptions applied for the purposes of measuring fair value The fair values of financial assets and financial liabilities are determined using similar valuation techniques and assumptions as used in the audited annual consolidated financial statements for the year ended 31 December 2020. The quoted securities are valued using the prices from active market. The unquoted securities are valued using Internal valuation and models. Fair value of the Group’s financial assets that are measured at fair value on recurring basis Some of the Group’s financial assets are measured at fair value at the end of the reporting period. The following table gives information about how the fair values of these financial assets are determined; Fair value as at Financial assets 30 June 2021 (unaudited) AED ’000 Financial assets at FVTPL Quoted equity Securities Discretionary funds managed by third parties – quoted equity securities Financial assets at FVTOCI Quoted equity securities Unquoted equity securities Positive fair value of derivatives Negative fair value of derivatives 31 December 2020 (audited) AED ’000 Fair value hierarchy 15,977 17,730 Level 1 249 248 Level 1 857,602 38,548 4.2 0.3 725,279 35,061 211 2 Level 1 Level 3 Level 2 Level 2 There were no transfers between each of level during the year. There are no financial liabilities which should be categorised under any of the level in above table. 21 SEASONALITY OF RESULTS Investment income includes dividend income of AED 35.24 million for the six months period ended 30 June 2021 (30 June 2020: AED 41.76 million), which is of a seasonal nature. 22 CAPITAL ADEQUACY RATIOS Capital element Common equity tier 1 ratio (Including Buffers) Tier 1 capital ratio (Including Buffers) Capital adequacy ratio (Including Buffers) Basel III Minimum requirement 9.50% 11.00% 13.00% 21 As at 30 June 2021 As at 31 December 2020 41.24% 41.24% 42.36% 40.34% 40.34% 41.45%
  24. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 23 DERIVATIVES 30 June 2021 (Unaudited) ───────────────────────────── Positive Negative Notional fair value fair value amount AED’000 AED’000 AED’000 Foreign currency forward contracts Total 24 4.2 0.3 165,817 ──────── ──────── ──────── 4.2 0.3 165,817 ════════ ════════ ════════ 31 December 2020 (Audited) ───────────────────────────── Positive Negative Notional fair value fair value amount AED 000 AED 000 AED 000 211 ──────── 211 ════════ 2 ──────── 2 ════════ 257,674 ──────── 257,674 ════════ RISK MANAGEMENT COVID- 19 and Expected Credit Losses (ECL) The economic fallout of COVID-19 crisis continues to evolve. Regulators and governments across the globe have introduced fiscal and economic stimulus measures to mitigate its impact on corporates and individuals. The relief measures include liquidity support, payment moratoriums to customers and capital relief by the U.A.E. Central Bank (“CBUAE”). The Bank in its ECL computations has taken into consideration the guidelines issued by CBUAE on TESS and ‘Treatment of IFRS9 Expected Credit Loss in the context of Covid-19 crisis’ as well as the guidance issued by the International Accounting Standards Board (IASB). Further, the Bank has robust governance in place to ensure the appropriateness of the IFRS 9 framework and resultant ECL estimates at all times. The Bank has also reviewed the potential impact of COVID-19 outbreak on the inputs and assumptions for IFRS9 ECL measurement in light of available information. As at 30 June 2021, the Bank hold probability of pessimistic scenario to 40% while the probability of the upturn scenario is 20%. As per the CBUAE requirements, the Bank has divided its customers benefitting from payment deferrals into two groups as follows:  Group 1: includes those customers that are not expected to face substantial changes in their creditworthiness, beyond liquidity issues and are temporarily and mildly impacted by the Covid-19 crisis. For these clients, the payment deferrals are believed to be effective and thus the economic value of the facilities is not expected to be materially affected. These customers will remain in their current IFRS 9 stage, for the duration of the crisis.  Group 2: includes those customers that are expected to face substantial changes in their creditworthiness, in addition to liquidity issues that will be addressed by payment deferrals. For these customers, there is sufficient deterioration in credit risk to trigger IFRS 9 stage migration. The Group continues to monitor the creditworthiness of these customers, particularly indications of potential inability to pay any of their obligations as and when they become due. Accordingly, all staging and grouping decisions are subject to regular review to ensure these reflect an accurate view of the Bank’s assessment of the customers’ creditworthiness, staging and grouping as of the reporting date. 22
  25. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 24 RISK MANAGEMENT (continued) COVID- 19 and Expected Credit Losses (ECL) (continued) Analysis of customers benefiting from payment deferrals under TESS Below table contains analysis of the deferral amount and outstanding balances of customers benefiting from the TESS program: Deferral amount and outstanding balances as at 30 June 2021: Loans and advances and Islamic financing receivables Wholesale AED’000 Gross exposure Deferral amount Number of customers Retail AED’000 Total AED’000 2,161,002 215,832 50 1,331 200 2 2,162,333 216,032 52 Group 1 AED’000 Group 2 AED’000 Total AED’000 2,005,492 (37,601) ──────── 1,967,891 ════════ 156,841 (19,188) ──────── 137,653 ════════ 2,162,333 (56,789) ──────── 2,105,544 ════════ Group wise break up Loans and advances and Islamic financing receivables Gross exposure ECL Net exposure Sectoral composition of ECL for customers benefitting from payment deferrals under TESS: Economic Sector Wholesale and retail trade Real estate and construction Personal loans and other Manufacturing Transport and communication Services and other Grand Total By Product Term Loans Loans against trust receipts Grand Total 23 Exposure AED’000 ECL AED’ 000 181,726 570,649 259,209 65,590 12,307 1,072,852 ──────── 2,162,333 ════════ 7,797 9,496 7,052 1,518 204 30,722 ──────── 56,789 ════════ Gross exposure AED’000 ECL AED’ 000 1,951,898 210,435 ──────── 2,162,333 ════════ 48,344 8,445 ──────── 56,789 ════════
  26. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 24 RISK MANAGEMENT (continued) Movement in the gross balances of loans and advances and Islamic financing receivables deferred under TESS: Gross carrying amount as at 1 January 2021 New assets originated or purchased Exposure as at 30 June 2021 Stage1 AED’000 Stage2 AED’000 Stage3 AED’000 Total AED’000 1,787,871 190,122 ──────── 1,977,993 ════════ 97,021 87,319 ──────── 184,340 ════════ ──────── ════════ 1,884,892 277,441 ──────── 2,162,333 ════════ Movement in the provision for impairment of loans and advances and Islamic financing receivables deferred under TESS ECL allowances as at 1 January 2021 New assets originated or purchased ECL as at 30 June 2021 25 Stage1 AED’000 Stage2 AED’000 Stage3 AED’000 Total AED’000 40,333 (6,322) ──────── 34,011 ════════ 7,731 15,047 ──────── 22,778 ════════ ──────── ════════ 48,064 8,725 ──────── 56,789 ════════ GENERAL RESERVE The Group maintains a general reserve and the contributions to this reserve are made at the discretion of the Directors. This reserve may be utilised for any purpose to be determined by a resolution of the shareholders of the Group at an Ordinary General Meeting. Impairment Reserve under the CBUAE The CBUAE issued its IFRS 9 guidance on 30 April 2018 via notice no. CBUAE/BSD/2018/458 addressing various implementation challenges and practical implications for banks adopting IFRS 9 in the UAE (the “Guidance”). Pursuant to clause 6.4 of the guidance, the reconciliation between general and specific provision under circular 28/2010 of CBUAE and IFRS 9 is as follows: 30 June 2021 AED’000 (Unaudited) Impairment Reserve: General General Provisions under Circular 28/2010 of CBUAE Less: Stage 1 & Stage 2 provisions under IFRS 9 Impairment Reserve: General* Impairment Reserve: Specific Specific Provisions under Circular 28/2010 of CBUAE Less: Stage 3 provisions under IFRS 9 Impairment Reserve: Specific* 31 December 2020 AED’000 (Audited) 147,438 152,732 ──────── ════════ 149,022 151,841 ──────── ════════ 163,952 (163,952) ──────── ════════ 200,336 (200,336) ──────── ════════ * In the case where provisions under IFRS 9 exceed provisions under CBUAE, no amount shall be transferred to the impairment reserve. 24
  27. National Bank of Umm Al-Qaiwain (PSC) and Subsidiary NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2021 (Unaudited) 26 COMPARATIVE FIGURES Certain comparative figures have been reclassified where appropriate to conform to the presentation and accounting policies adopted in these condensed consolidated interim financial statements. 25