Qatar Islamic Bank (Q.P.S.C) Condensed Consolidated Interim Financial Statements - 30 September 2017

Transcription

1. Qatar Islamic Bank (Q.P.S.C) CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 30 September 2017
2. Qatar Islamic Bank (Q.P.S.C) CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 30 September 2017 Contents Independent auditor’s review report Page(s) 1 Condensed consolidated interim financial statements: Condensed consolidated statement of financial position 2 Condensed consolidated income statement 3 Condensed consolidated statement of changes in equity 4–5 Condensed consolidated statement of changes in restricted investment accounts 6 Condensed consolidated statement of cash flows 7 Notes to the condensed consolidated interim financial statements 8 - 23
5. Qatar Islamic Bank (Q.P.S.C) CONDENSED CONSOLIDATED INCOME STATEMENT For the three and nine month period ended 30 September 2017 Note For the three month period ended 30 September 2016 2017 (Reviewed) (Reviewed) QR’000 QR’000 For the nine month period ended 30 September 2016 2017 (Reviewed) (Reviewed) QR’000 QR’000 Continuing operations Net income from financing activities Net income from investing activities 1,264,742 129,432 1,058,452 176,751 3,673,580 509,019 2,963,680 554,092 Total net income from financing and investing activities 1,394,174 1,235,203 4,182,599 3,517,772 Fee and commission income Fee and commission expense 155,155 (35,716) 160,947 (32,002) 499,201 (104,309) 490,275 (93,126) Net fee and commission income 119,439 128,945 394,892 397,149 28,114 12,574 21,736 45,139 (6,376) 4,540 84,026 29,523 31,440 120,059 15,995 13,765 Total income 1,576,037 1,407,451 4,722,480 4,064,740 Staff costs Depreciation and amortisation Sukuk holders’ share of profit Other expenses (151,910) (22,757) (66,815) (109,579) (160,273) (22,283) (39,959) (90,201) (462,638) (68,027) (165,425) (300,420) (484,071) (64,791) (111,688) (279,015) Total expenses (351,061) (312,716) (996,510) (939,565) Impairment losses on investment securities Net impairment losses on financing assets Other impairment losses (119,245) (78,993) (1,874) (25,324) (131,135) (728) (221,045) (400,299) (3,879) (129,924) (227,530) (728) Net profit for the period from continuing operations before tax and return to unrestricted investment account holders 1,024,864 937,548 3,100,747 2,766,993 (433,779) (444,211) (1,320,287) (1,202,418) 591,085 493,337 1,780,460 1,564,575 - 3,641 - 5,266 Net foreign exchange gain Share of results of associates Other income Less: Return to unrestricted investment account holders Profit from continuing operations before tax Discontinued operations Profit from a subsidiary held for sale Net profit for the period before tax Tax expense 591,085 (3,577) 496,978 (5,215) 1,780,460 (14,366) 1,766,094 1,569,841 (8,098) Net profit for the period 587,508 491,763 Net profit for the period attributable to: Equity holders of the Bank Non-controlling interests 610,105 (22,597) 550,084 (58,321) 1,775,213 (9,119) 1,605,392 (43,649) Net profit for the period 587,508 491,763 1,766,094 1,561,743 2.58 2.12 7.51 6.58 Earnings per share Basic / diluted earnings per share (QR per share) 12 The attached notes 1 to 21 form part of these condensed consolidated interim financial statements. 3 1,561,743
6. Qatar Islamic Bank (Q.P.S.C) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the nine month period ended 30 September 2017 Share capital Legal Reserve Risk reserve General reserve Foreign currency Fair value translation reserve reserve Other reserves Total Share- based equity attributable Nonpayment Retained to equity holders of controlling reserve earnings the Bank interests Proposed cash dividends Sukuk eligible as additional capital Total equity --------------------------------------------------------------------------------------------------QR’000-----------------------------------------------------------------------------------------------------------Balance at 1 January 2017 (Audited) 2,362,932 Foreign currency translation reserve movement Fair value reserve movement Net profit/(losses) for the period Total recognised income and (expense) for the period Cash dividends paid to shareholders (Note 15) Share-based payment (Note 16) Movement in noncontrolling interests Balance at 30 September 2017 (Reviewed) 2,362,932 6,370,016 2,170,280 81,935 195,089 (194,335) 216,820 1,122,393 10,223 1,902,780 14,238,133 1,760,528 4,000,000 19,998,661 - - - - 53,475 - - - - 53,475 - - 53,475 - - - (33,855) - - - - - (33,855) - - (33,855) - - - - - - - - 1,775,213 1,775,213 (9,119) - 1,766,094 - - - (33,855) 53,475 - - - 1,775,213 1,794,833 (9,119) - 1,785,714 - - - - - - (1,122,393) - - (1,122,393) - - (1,122,393) - - - - - - - 706 - 706 702 - 1,408 - - - - - - - - - - 15,339 - 15,339 10,929 3,677,993 14,911,279 1,767,450 6,370,016 2,170,280 81,935 161,234 (140,860) 216,820 The attached notes 1 to 21 form part of these condensed consolidated interim financial statements. 4 - 4,000,000 20,678,729
7. Qatar Islamic Bank (Q.P.S.C) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) For the nine month period ended 30 September 2017 Foreign Total Sukuk NonFair currency Proposed Share- based equity attributable eligible as Share Legal Risk General value translation Other cash payment Retained to equity holders of controlling additional Total interests capital reserve reserve reserve reserve reserve reserves dividends reserve earnings the Bank capital equity ---------------------------------------------------------------------------------------------------------QR’000------------------------------------------------------------------------------------------------------------Balance at 1 January 2016 (Audited) 2,362,932 6,370,016 Foreign currency translation reserve movement Sukuk eligible as additional capital (Note 17) Fair value reserve movement Net profit/(losses) for the period Total recognised income and (expense) for the period Cash dividends paid to shareholders (Note 15) Share-based payment (Note 16) Profit paid on sukuk eligible as additional capital Movement in noncontrolling interests Balance at 30 September 2016 (Reviewed) 2,362,932 6,370,016 1,993,090 81,935 134,013 (28,964) 216,820 - - - (115,954) - - - - - - - - - - - - - - 39,453 - - - - - - - - - - - - 1,605,392 1,605,392 (43,649) - - 39,453 (115,954) - - - 1,605,392 1,528,891 (43,649) - - - - - (1,004,246) - - (1,004,246) - - - - - - 3,003 - 3,003 - - - - - - - (50,000) (50,000) - - - - - - - - - 15,779 1,993,090 81,935 173,466 (144,918) - 9,219 13,854,089 1,773,450 216,820 The attached notes 1 to 21 form part of these condensed consolidated interim financial statements. 5 1,004,246 6,216 1,236,137 2,791,529 13,376,441 (115,954) 39,453 1,798,323 - - 2,997 - 2,000,000 - 2,000,000 17,174,764 (115,954) 2,000,000 - 39,453 - 1,561,743 2,000,000 3,485,242 - (1,004,246) - 6,000 - (50,000) - 15,779 4,000,000 19,627,539
8. Qatar Islamic Bank (Q.P.S.C) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN RESTRICTED INVESTMENT ACCOUNTS For the nine month period ended 30 September 2017 Movements during the period Investment Real Estate Portfolio Equity Securities Portfolio At 1 January 2017 (Audited) QR’000 Gross income QR’000 Dividends paid QR’000 Bank’s fee as an agent QR’000 Admin expense QR’000 At 30 September 2017 (Reviewed) QR’000 Investment (withdrawals) QR’000 Revaluation QR’000 73,164 892,856 (2,912) (77,488) (26,786) 15,504 (312) - (1,798) 70,252 801,976 966,020 (80,400) (26,786) 15,504 (312) - (1,798) 872,228 Bank’s fee as an agent QR’000 At 30 September 2016 (Reviewed) QR’000 Movements during the period Investment Real Estate Portfolio Equity Securities Portfolio At 1 January 2016 (Audited) QR’000 Investment (withdrawals) QR’000 Revaluation QR’000 73,164 578,183 307,365 8,579 6,494 (233) (939) (33) 73,164 899,416 651,347 307,365 8,579 6,494 (233) (939) (33) 972,580 The attached notes 1 to 21 form part of these condensed consolidated interim financial statements. 6 Gross income QR’000 Dividends paid QR’000 Admin expense QR’000
9. Qatar Islamic Bank (Q.P.S.C) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the nine month period ended 30 September 2017 For the nine month period ended 30 September 2017 (Reviewed) 2016 (Reviewed) QR’000 QR’000 Cash flows from operating activities Net profit for the period before tax Net changes in operating assets and liabilities 1,780,460 (7,832,436) 1,569,841 (8,219,148) Net cash flows used in operating activities (6,051,976) (6,649,307) Cash flows from investing activities Net changes in investment securities Net changes in fixed and intangible assets Net changes in investment in associates Net changes in investment properties Dividends received from associate companies 158,294 (45,374) (17,411) 11,489 (318,258) (86,399) 312,015 8,600 Net cash generated from/(used in) investing activities 106,998 (84,042) 987,763 (85,000) 2,851,377 15,335 (1,122,393) 2,808,468 (50,000) 1,339,408 2,000,000 18,776 (1,004,246) 2,647,082 5,112,406 (3,297,896) 10,656,507 (1,620,943) 9,255,437 7,358,611 7,634,494 Cash flows from financing activities Net changes in equity of unrestricted investment account holders Profit paid on sukuk eligible as additional capital Net proceeds from sukuk issue Proceeds from issuance of sukuk eligible as additional capital Net movement in non- controlling interest Cash dividends paid to equity holders Net cash flows from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents - beginning of the period Cash and cash equivalents - end of the period (Note 18) The attached notes 1 to 21 form part of these condensed consolidated interim financial statements 7
10. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 1 REPORTING ENTITY Qatar Islamic Bank Q.P.S.C (“QIB” or the “Bank”) is an entity domiciled in the State of Qatar and was incorporated on 8 July 1982 as a Qatari Public Shareholding Company under Emiri Decree no. 45 of 1982. The commercial registration number of the Bank is 8338. The address of the Bank’s registered office is at P.O. Box 559 Doha, State of Qatar. The condensed consolidated interim financial statements of the Bank at 30 September 2017 comprise the Bank and its subsidiaries (together referred to as the “Group”). The Bank is primarily involved in corporate, retail and investment banking in accordance with Islamic sharia rules as determined by sharia supervisory board of the Bank, and has 28 branches in Qatar and one branch in Sudan. The Parent Company of the Group is Qatar Islamic Bank (Q.P.S.C). The Bank’s shares are listed for trading on the Qatar Exchange. 2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The condensed consolidated interim financial statements have been prepared in accordance with Financial Accounting Standards (“FAS”) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (“AAOIFI”) and the applicable provisions of Qatar Central Bank (“QCB”) regulations. In line with the requirements of AAOIFI, for matters that are not covered by FAS, the Group uses the guidance from the relevant International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”). Accordingly, the condensed consolidated interim financial statements have been prepared in accordance with the guidance provided by International Accounting Standard 34 – ‘Interim Financial Reporting’. The condensed consolidated interim financial statements do not contain all information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group's annual consolidated financial statements as at 31 December 2016. In addition, results for the nine month period ended 30 September 2017 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2017. The preparation of the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The actual results may differ from these estimates. The significant judgments made by the management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2016. The Group’s financial risk management objectives are consistent with those disclosed in the consolidated financial statements for the year ended 31 December 2016. Significant accounting policies The significant 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 2016. New standards and interpretations New standards, amendments and interpretations effective from 1 January 2017 There are no new accounting standards and interpretations that are effective for the first time for the financial year beginning on or after 1 January 2017 that have been issued during the period. New standards, amendments and interpretations issued but not yet effective International Financial Reporting Standard No. 9 (IFRS 9): Financial Instruments The final version of IFRS 9 was issued in July 2014, replacing the earlier versions of introducing new classification and measurement requirements (issued in 2009 and 2010) and a new hedge accounting model (issued in 2013) and has an effective date of 1 January 2018. IFRS 9 will replace IAS 39 Financial Instruments: Recognition and Measurement and introduces new requirements for the classification and measurement of financial assets and financial liabilities, a new model based on expected credit losses for recognising loan loss provisions and provides for simplified hedge accounting by aligning hedge accounting more closely with an entity’s risk management methodology. QCB requires Islamic banks to move to an IFRS 9 – based expected credit loss (ECL) measurement effective 1 January 2018, while applying the existing classification and measurement principles of FAS. 8
11. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Significant accounting policies (continued) New standards and interpretations (continued) New standards, amendments and interpretations issued but not yet effective (continued) International Financial Reporting Standard No. 9 (IFRS 9): Financial Instruments (continued) The application of IFRS 9 in respect of expected credit loss (ECL) may have significant impact on amounts reported in the condensed consolidated interim financial statements and will result in more extensive disclosures in the condensed consolidated interim financial statements. However, the Group is currently in the process of evaluating and implementing the required changes in its systems, policies and processes to comply with IFRS 9 and regulatory requirements, and hence it is not practical to disclose a reliable quantitative impact until the implementation programme is further advanced. Basis of consolidation The condensed consolidated interim financial statements include the financial statements of the Bank and its following subsidiaries and special purpose entities after elimination of intercompany balances and transactions: Country of Incorporation Arab Finance House Aqar Real Estate Development and Investment Company W.L.L.(“Aqar”) (i) Durat Al Doha Real Estate Investment and Development W.L.L. (ii) QIB Sukuk Ltd (iii) QIB Sukuk Funding Limited QIB (UK) QInvest LLC Verdi Luxembourg SARL (iv) Q Business Services (iv) Q Liquidity Limited (iv) QInvest Holding Mauritius (iv) Q Exhibit (iv) QInvest Luxembourg S.a.r.l. (iv) QI St Edmund’s Terrace 2 Limited (iv) QInvest IBFin LLC (Previously known as QInvest Comms Holding LLC) (iv) QI One Wall Street Invest Co. (iv) QEthika 1 (iv) QNGPV1 (iv) QInvest Euro PE QFC LLC (iv) QInvest Rio LLC (iv) Rio income s.a.r.l. (iv) Q Tomahawk LLC (iv) QInvest Refin LLC (iv) Q Alloy S.a.r.l (iv) QSeven 1 LP (iv) Q Lake (iv) Q Anthem (iv) Q Magnolia LLC (iv) Qinvest Portfoy Yonetimi A.S. (iv) BOH LLC (iv) Principal Business Activity Lebanon Banking Qatar Effective Percentage of Ownership 30 September 31 December 2017 2016 99.99% 99.99% Investment in real estate 49% 49% Qatar Cayman Island Qatar United Kingdom Qatar Luxembourg Cayman Island Cayman Island Mauritius Mauritius Luxembourg Cayman Island Investment in real estate Sukuk issuance Financing company 39.87% 100% 39.87% 100% Investment banking Investment banking Investment in real estate Investment holding company Placements Investment holding company Investment holding company Investment holding company Investment holding company 99.66% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 99.66% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% Qatar Cayman Island Cayman Island Cayman Island Qatar Qatar Luxembourg Cayman Island Qatar Luxemburg Cayman Island Cayman Island Cayman Island Cayman Island Turkey Qatar To provide financing facility Investment holding company Investment holding company Investment holding company Investment holding company Investment holding company Investment in lease Investment holding company To provide financing facility To provide financing facility Investment in real estate To provide financing facility To provide financing facility Investment in real estate Asset Management Investment holding company 50.13% 50.13% 50.13% 50.13% 50.13% 31.6% 45.12% 50.13% 50.13% 50.13% 45.62% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 50.13% 31.6% 45.12% 50.13% 50.13% 50.13% 45.62% 50.13% 50.13% 50.13% - 9
12. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Significant accounting policies (continued) Basis of consolidation (continued) Notes: i) The Bank has the power to cast majority of the votes in the Board of Directors meetings of Aqar by virtue of representing the highest number of members in the Board. ii) Effective from 1 January 2013, the Group has obtained control to govern the financial and operating policies of its previous associate through a management agreement with other shareholders in the Company. iii) QIB Sukuk Ltd was incorporated in the Cayman Islands as an exempted company with limited liability for the sole purpose of Sukuk issuance for the benefit of QIB. iv) The Group has the power to control these entities, indirectly through QInvest LLC and accordingly these entities have been considered as subsidiaries of the Group. 3 OPERATING SEGMENTS The Group has four reportable segments, as described below, which are the Group’s strategic divisions. The strategic divisions offer different products and services, and are managed separately based on the Group’s management and internal reporting structure. For each of the strategic divisions, the Chief Executive Officer reviews internal management reports on a monthly basis. The following summary describes the operations in each of the Group’s reportable segments: Corporate banking – Corporate Banking includes services offered to institutional investors, corporate, other banks, and investment vehicles such as mutual funds or pensions. Personal banking – Personal banking includes services that are offered to individual customers through local branches of the Bank which includes checking and savings accounts, credit cards, personal lines of credit, mortgages, and so forth. Group function – Treasury, investment, finance and other central functions. Local & international subsidiaries – Local and international subsidiaries include the Groups local and international subsidiaries all of which are consolidated in the Group financial statements. Information regarding the results, assets and liabilities of each reportable segment is included below. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the Chief Executive Officer. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. 10
13. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 3 OPERATING SEGMENTS (CONTINUED) Information about operating segments 30 September 2017 (Reviewed) Corporate banking QR’000 Personal banking QR’000 Local & international subsidiaries QR’000 Group function QR’000 Total QR’000 External revenue: Total income from financing and investing activities Net fee and commission income Net foreign exchange gain Share of results of associates Other income Inter segment revenue 2,668,444 193,294 (761,128) 878,959 116,648 220,140 312,818 33,858 68,279 21,143 18,000 540,988 322,378 51,092 15,747 8,380 13,440 - 4,182,599 394,892 84,026 29,523 31,440 - Total segment income after discontinued operations 2,100,610 1,215,747 995,086 411,037 4,722,480 Staff costs , other expenses and depreciation and amortization Sukuk holders share of profit Net return to unrestricted investment account holders (171,307) (706,575) (297,458) (219,593) (130,652) (165,425) (328,068) (231,668) (66,051) (831,085) (165,425) (1,320,287) Other material non-cash items: Impairment losses on investment securities Net impairment losses on financing assets Other impairment losses (156,812) - (55,828) - (178,300) (149,054) - (42,745) (38,605) (3,879) (221,045) (400,299) (3,879) Reportable segment net profit before tax 1,065,916 642,868 43,587 28,089 1,780,460 - - - (14,366) (14,366) 1,065,916 642,868 43,587 13,723 1,766,094 Tax expense Reportable segment net profit after tax 11
14. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 3 OPERATING SEGMENTS (CONTINUED) Information about operating segments 30 September 2016 (Reviewed) Corporate banking QR’000 Personal banking QR’000 Local & international subsidiaries QR’000 Group function QR’000 Total QR’000 External revenue: Total income from financing and investing activities Net fee and commission income Net foreign exchange gain Share of results of associates Other income Inter segment revenue Profit from a subsidiary held for sale 2,061,171 186,509 (557,202) - 817,831 124,094 180,659 - 371,559 16,591 112,799 17,920 376,543 - 267,211 69,955 7,260 (1,925) 13,765 5,266 3,517,772 397,149 120,059 15,995 13,765 5,266 Total segment income after discontinued operations 1,690,478 1,122,584 895,412 361,532 4,070,006 Staff costs , other expenses and depreciation and amortization Sukuk holders’ share of profit Net return to unrestricted investment account holders (179,551) (601,238) (297,464) (169,699) (121,295) (111,688) (353,546) (229,567) (77,935) (827,877) (111,688) (1,202,418) Other material non-cash items: Impairment losses on investment securities Net impairment losses on financing assets Other impairment losses (29,055) - (46,827) - (119,600) (59,600) - (10,324) (92,048) (728) (129,924) (227,530) (728) Reportable segment net profit before tax 880,634 608,594 129,683 (49,070) 1,569,841 - - - (8,098) (8,098) 880,634 608,594 129,683 (57,168) 1,561,743 Tax expense Reportable segment net profit after tax Note: Certain segmental income and expenses for the nine month period ended 30 September 2016 were reclassified in the condensed consolidated interim financial statements for the nine months ended 30 September 2017 to conform to the presentation and classification adopted in the current period. 12
15. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 3 OPERATING SEGMENTS (CONTINUED) 30 September 2017 (Reviewed) Corporate banking QR’000 Personal banking QR’000 Group function QR’000 Local & international subsidiaries QR’000 Total QR’000 Reportable segment assets 88,438,360 18,287,443 37,059,577 5,570,636 149,356,016 Reportable segment liabilities and equity of unrestricted investments account holders 49,823,799 32,371,390 42,459,164 4,022,934 128,677,287 Personal banking QR’000 Group function QR’000 31 December 2016 (Audited) Corporate banking QR’000 Local & international subsidiaries QR’000 Total QR’000 Reportable segment assets 76,131,585 17,895,901 40,704,007 5,102,635 139,834,128 Reportable segment liabilities and equity of unrestricted investments account holders 41,145,223 30,367,726 44,720,953 3,601,565 119,835,467 13
16. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 4 FAIR VALUE AND CLASSIFICATION OF FINANCIAL INSTRUMENTS The table below sets out the carrying amounts and fair values of the Group’s financial assets and financial liabilities: Fair value through income statement QR’000 Fair value through equity QR’000 Amortised cost QR’000 Total carrying amount QR’000 Fair value QR’000 30 September 2017 (Reviewed) Cash and balances with central banks Due from banks Financing assets Investment securities: - Measured at fair value - Measured at amortised cost Other assets Due to banks Customers’ current accounts Sukuk financing Other liabilities Equity of unrestricted investment account holders - - 6,780,665 5,436,986 99,265,902 6,780,665 5,436,986 99,265,902 6,780,665 5,436,986 99,265,902 1,489,107 - 706,775 - 28,551,551 769,677 2,195,882 28,551,551 769,677 2,195,882 28,192,164 769,677 1,489,107 706,775 140,804,781 143,000,663 142,641,276 - - 17,302,163 16,332,268 9,641,126 3,072,325 17,302,163 16,332,268 9,641,126 3,072,325 17,302,163 16,332,268 9,641,126 3,072,325 - - 82,329,405 82,329,405 82,329,405 - - 128,677,287 128,677,287 128,677,287 14
17. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 4 FAIR VALUE AND CLASSIFICATION OF FINANCIAL INSTRUMENTS (CONTINUED) Fair value through income statement QR’000 Fair value through equity QR’000 Amortised cost QR’000 Total carrying amount QR’000 Fair value QR’000 31 December 2016 (Audited) Cash and balances with Central Banks Due from banks Financing assets Investment securities: - Measured at fair value - Measured at amortised cost Other assets Due to banks Customers’ current accounts Sukuk financing Other liabilities Equity of unrestricted investment account holders - - 5,447,183 10,149,896 98,170,520 5,447,183 10,149,896 98,170,520 5,447,183 10,149,896 98,170,520 1,025,115 - 519,020 - 18,414,582 684,574 1,544,135 18,414,582 684,574 1,544,135 18,027,867 684,574 1,025,115 519,020 132,866,755 134,410,890 134,024,175 - - 13,606,908 14,055,114 6,791,178 4,040,625 13,606,908 14,055,114 6,791,178 4,040,625 13,606,908 14,055,114 6,791,178 4,040,625 - - 81,341,642 81,341,642 81,341,642 - - 119,835,467 119,835,467 119,835,467 Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial investments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. 15
18. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 4 FAIR VALUE AND CLASSIFICATION OF FINANCIAL INSTRUMENTS (CONTINUED) Fair value hierarchy (continued) As at 30 September 2017 and 31 December 2016, the Group held the following financial instruments measured at fair value: Fair value measurement using 30 September 2017 (Reviewed) Quoted prices in active markets (Level 1) QR’000 Significant observable inputs (Level 2) QR’000 Significant unobservable inputs (Level 3) QR’000 417,190 - 417,190 - 2,852 2,852 - - 29,468 - 29,468 - 1,456,787 - 329,708 1,127,079 247,765 247,765 - - 459,010 - - 459,010 159,147 - 159,147 - Total QR’000 Shari’a compliant risk management instruments (assets) Investments securities: Quoted equity-type investments classified as fair value through income statement Unquoted debt-type investments classified as fair value through income statement Unquoted equity-type investments classified as fair value through income statement Quoted equity-type investments classified as fair value through equity Unquoted equity-type investments classified as fair value through equity Shari’a compliant risk management instruments (liabilities) Fair value measurement using 31 December 2016 (Audited) Quoted prices in active markets (Level 1) QR’000 Significant observable inputs (Level 2) QR’000 731,141 - 731,141 - 5,719 5,719 - - 46,507 46,507 - - 972,889 - 222,796 750,093 166,759 166,759 - - 352,261 - - 352,261 130,261 - 130,261 - Total QR’000 Shari’a compliant risk management instruments (assets) Investments securities: Quoted equity-type investments classified as fair value through income statement Quoted debt-type investments classified as fair value through income statement Unquoted equity-type investments classified as fair value through income statement Quoted equity-type investments classified as fair value through equity Unquoted equity-type investments classified as fair value through equity Shari’a compliant risk management instruments (liabilities) Significant unobservable inputs (Level 3) QR’000 The fair value of financial assets and liabilities carried at amortised cost are equal to the carrying value, hence, not included in the fair value hierarchy table, except for investment securities carried at amortised cost for which the fair value amounts to QR 2,036 million (31 December 2016: QR 4,146 million), which is derived using Level 1 fair value hierarchy. During the period ended 30 September 2017, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements. 16
19. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 4 FAIR VALUE AND CLASSIFICATION OF FINANCIAL INSTRUMENTS (CONTINUED) Fair value hierarchy (continued) The following table shows the reconciliation of the opening and closing amounts of level 3 investments which are recorded at fair value: At 1 January 2017 Total gain recorded in consolidated income statement Purchases /transfers Sales/ transfers At 30 September 2017 Equity investments: at fair value through equity 352,261 (301) 126,490 (19,440) 459,010 at fair value through income statement 750,093 46,594 365,836 (35,444) 1,127,079 1,102,354 46,293 492,326 (54,884) 1,586,089 At 1 January 2016 Total gain recorded in consolidated income statement Purchases Sales/ transfers At 31 December 2016 Equity investments: 5 at fair value through equity 410,756 - 4,368 (62,863) 352,261 at fair value through income statement 527,072 26,143 187,780 9,098 750,093 937,828 26,143 192,148 (53,765) 1,102,354 IMPAIRMENT The Group assesses at each statement of financial position date whether there is objective evidence that an asset is impaired. Objective evidence that financial assets (including equity-type investments) are impaired can include default or delinquency by a counterparty / investee, restructuring of financing assets or advance by the Group on terms that the Group would not otherwise consider, indications that a counterparty or issuer will enter bankruptcy, the disappearance of an active market for a security, or other observable data relating to a group of assets such as adverse changes in the payment status of counterparty or issuers, or economic conditions that correlate with defaults. In addition, for an investment in equity-type instruments, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. Equity-type investments classified as fair value through equity In the case of equity-type investments classified as fair value through equity and measured at fair value, a significant (where market value has declined by a minimum of 20%) or prolonged (where market value has declined for 9 months at least) decline in the fair value of an investment below its cost is considered in determining whether the investments are impaired. If any such evidence exists for equity-type investments classified as fair value through equity, the cumulative loss previously recognised in the condensed consolidated statement of changes in equity is removed from equity and recognised in the condensed consolidated income statement. Impairment losses recognised in the condensed consolidated income statement on equity-type investments are subsequently reversed through equity. The Group has provided QR 221 million (30 September 2016: QR 129.9 million) as impairment on equity investment securities which were recognised under “impairment losses on investment securities” in the condensed consolidated income statement. 17
20. Qatar Islamic Bank (Q.P.S.C) NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS At 30 September 2017 5 IMPAIRMENT (CONTINUED) Investment properties Investment property held for rental or capital appreciation is measured at fair value with the resulting unrealised gains being recognised in the condensed consolidated statement of changes in equity under fair value reserve. Any unrealized losses resulting from re-measurement at fair value is recognized in the condensed consolidated statement of financial position under fair value reserve to the extent of available balance. In case such losses exceed the available balance, the unrealized loss is recognized in the condensed consolidated income statement. In case there are unrealized losses that have been recognized in the condensed consolidated income statement in a previous financial year/period, the unrealized gains related to the current financial period is recognized to the extent of crediting back such previous losses in the condensed consolidated income statement. Any excess of such gains over such prior-year losses is added to the fair value reserve. Financial assets carried at amortised cost (including investment in Sukuk instruments classified as amortised cost) For financial assets carried at amortised cost, impairment is measured as the difference between the carrying amount of the financial assets and the present value of estimated cash flows discounted at the assets’ original effective profit rate. Losses are recognised in condensed consolidated income statement and reflected in an allowance account. When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is reversed through the condensed consolidated income statement, to the extent of previously recognised impairment losses. The Group considers evidence of impairment for financial assets carried at amortised cost at both a specific asset and collective level. All individually significant financial assets are assessed for specific impairment. Financial assets that are not individually significant are collectively assessed for impairment by grouping assets together with similar risk characteristics. The Group has provided QR 400.3 million (30 September 2016: QR 227.5 million) as impairment on financing assets which was recognised under “Net impairment losses on financing assets” in the condensed consolidated income statement. 6 FINANCING ASSETS 31 December 2016 (Audited) QR’000 30 September 2016 (Reviewed) QR’000 108,777,508 (8,285,201) (1,146,461) (79,944) 106,183,746 (7,149,002) (799,282) (64,942) 104,743,811 (7,286,960) (806,923) (41,350) 99,265,902 98,170,520 96,608,578 30 September 2017 (Reviewed) QR’000 Total financing assets Less: Deferred profit Impairment of financing assets Suspended profit Net financing assets Note: The impaired financing assets net of deferred profit amounted to QR 1,124 million as at 30 September 2017 representing 1.1% of the total financing assets net of deferred profit (31 December 2016: QR 996 million, representing 1% of the total financing assets net of deferred profit). 18