DEFINITIONS FOR ISLAMIC BANKS

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Bennett Gilmore
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1 DEFINITIONS FOR ISLAMIC BANKS BALANCE SHEET Cash and short term funds, nonrevenue earning Short term funds, revenue earning Revenue earning balances with the Central Bank of Kuwait and other central banks Other deposit accounts Gross receivables and leased Provision for credit losses Net receivables and leased Investments in securities Investments in associates Investment properties Fixed, intangible and other Total Due to banks and other financial institutions Customer deposits Other liabilities Total liabilities Includes cash on hand and current accounts with other banks and financial institutions and nonrevenue earning balances with the Central Bank of Kuwait and other central banks. Includes short notice murabaha maturing within three months of contract date. Tawarruq balances with the Central Bank of Kuwait and short-term murabaha with the Central Bank of Kuwait and other central banks. All deposits not included in the above items. Financing receivables include murabaha, wakala, leased and istisna a balances before the deduction of the provision for credit losses. Specific and general provision for credit losses, representing an estimate of the impairment on financing receivables. Gross receivables and leased less the provision for credit losses. Total holdings of sukook debt and equity securities and other investments. Aggregate of the bank s share of the equity of companies in which a significant but non-controlling stake is held. Total holding of properties owned by the bank to generate rental income and capital gain. Includes the net book value of land, premises and equipment, goodwill and other intangible, precious metals inventory, trade receivables, clearing accounts, deferred tax and other. The total of all economic resources owned and controlled by the bank. Interbank liabilities including current accounts, murabaha payable, sukook payable and obligations under finance lease. Includes current accounts and investment deposits, of retail and corporate customers. Includes trade payables, taxation due, accrued expenses, staff payables and other payables. The total of all funding not sourced from shareholders.

2 Share capital Retained earnings and other reserves Treasury shares Non-controlling interests Total equity Total liabilities and equity Finance revenue earning Non-performing receivables and leases Acceptances, LCs and guarantees Common equity Tier 1 capital Tier 1 capital Total regulatory capital Risk weighted The nominal value of shares, authorized, issued and fully paid. Includes general reserve, statutory reserve, retained earnings, foreign currency translation reserve, accumulated other comprehensive income, share based payment reserve and the proposed cash dividend. Shares the bank owns in itself. The proportion of subsidiaries equity owned by shareholders other than the parent bank. The sum of share capital, retained earnings and other reserves, Treasury shares and non-controlling interests. The sum of total equity and total liabilities. The sum of revenue earning short term funds, revenue earning balances with the Central Bank of Kuwait and other central banks, other deposits made by the bank, and net receivables and leased. Receivables and leases where payments are past 90 days due. Commitments on behalf of customers for which there are corresponding liabilities by the customers concerned. Includes acceptances, letters of credit and guarantees. The strictest definition of capital, as defined by the Central Bank of Kuwait as part of the implementation of Basel III capital standards. Includes common equity Tier 1 capital plus certain allowable forms of noncommon stock issued. The addition of Tier 1 and Tier 2 capital. The and exposures of the bank, as defined by the Central Bank of Kuwait as part of the implementation of Basel capital standards, weighted by risk. INCOME STATEMENT Finance income Finance expense Net finance income Net fees and commissions Net investment income Revenue earned from financing receivables and leased. Finance cost and distribution to depositors. Finance income less finance expense. Income from fees and commissions less related expenses. Includes gain on sales of investment and trading properties, rental income, net realized gains on available-for-sale investments, sukook income, net gains on investments carried at fair value through the statement of income, and dividend income.

3 Net gains from dealing in foreign currency Share of results of associates Other operating income Nonfinance income Staff expenses Administrative and other expenses Depreciation and amortization Impairment losses and other provisions Nonfinance expense Provision charge for credit losses Operating profit Extraordinary items Taxation and special contributions Net Profit for the year Non-controlling interests Shareholders net profit for the year Dividends proposed Dividends per share (fils) Earnings per share (fils) Net gains from dealing in foreign currencies and net gains from derivatives exposures. The groups share of net profit from equity stakes held in associates. Any other operating income not included in the above in items, such as income from maintenance, services and consultancy and rental income from operating leases. The total of net fees and commissions, net investment income, net gains from dealing in foreign currency, the share of results from associates and other operating income. Salaries and other benefits paid by the bank in relation to its employees. Includes administrative expenses and overheads required in the operation of the bank, and other expenses. Costs associated with the use of specific tangible and intangible over their useful economic life. Includes write-downs in the value of investment classified as available for sale, in addition to other provisions. The total of staff expenses, administrative and other expenses, depreciation and amortization expense, impairment losses and other provision charges. The charge for the year, net of recoveries, to maintain a suitable provision against estimated credit losses. Net finance income plus nonfinance income less nonfinance expense less the provision charge for credit loss. The net of income and expense items unrelated to the bank s ordinary activities. They result from rare events that are unlikely to recur in the foreseeable future. Includes the national labor support tax, taxes charged on profits generated in other countries, remuneration paid to board members and contributions to KFAS. Operating profit less extraordinary items, taxation and special charges. Profits belonging to shareholders of subsidiaries other than the parent bank Net profit for the year less non-controlling interests. The dividends proposed during the year, distributed as cash or checks. Dividends proposed for the year divided by the number of shares outstanding. Net profit for the year divided by the weighted average number of share outstanding during the year.

4 FINANCIAL RATIOS Finance income to average finance revenue earning Cost of funding to average finance revenue earning Net financing margin Provision charge to average gross receivables Provision charge to pre-provision operating profit Nonfinance income to average Nonfinance expense to average Nonfinance income to total income Cost to income Return on average Pre-provision return on average equity Return on average equity Assets per employee Total income per employee Operating profit per employee Staff expenses per employee Dividend payout ratio Finance income to average finance revenue earning Cost of funding to average finance revenue earning Finance income divided by average finance revenue earning. Finance expense divided by average finance revenue earning. Net finance income divided by average finance revenue earning. Provision charge for credit losses divided by average gross receivables and leases. Provision charge for credit losses divided by operating profit plus the provision charge for credit losses. Nonfinance income divided by average total. Nonfinance expense divided by average total. Nonfinance income divided by net finance income plus nonfinance income. Nonfinance expense divided by net finance income plus nonfinance income. Net profit for the year divided by average total. Shareholders net profit for the year plus provision charge for credit losses divided by average total equity. Shareholders net profit for the year divided by average total equity. Total divided by total number of employees. Net finance income plus nonfinance income divided by the total number of employees. Operating profit divided by the total number of employees. Staff expenses divided by the total number of employees. Dividend per share divided by earnings per share. Finance income divided by average finance revenue earning. Finance expense divided by average finance revenue earning.

5 Finance revenue earning to total Highly liquid to total Risk weighted to total Highly liquid to customer deposits Gross receivables to customer deposits Gross receivables to total liabilities Non-performing receivables to gross loans Provisions for credit losses to gross loans Provisions for credit losses to non-performing receivables Customer deposits to liabilities and equity Equity to total Common equity Tier 1 capital adequacy ratio Total regulatory capital adequacy ratio Finance revenue earning divided by total. Cash and short term funds plus balances with the Central Bank of Kuwait and other central banks, divided by total. Risk weighted divided by total. Cash and short term funds plus balances with the Central Bank of Kuwait and other central banks, divided by customer deposits. Gross receivables and leased divided by customer deposits. Gross receivables and leased divided by total liabilities. Non-performing receivables and leased divided by gross receivables and leased. Provisions for credit losses divided by gross receivables and leased. Provisions for credit losses divided by non-performing receivables and leased. Customer deposits divided by total liabilities plus total equity. Total equity divided by total. Common equity Tier 1 capital divided by risk weighted. Total regulatory capital divided by risk weighted.

KUWAIT FINANCE HOUSE K.S.C.P. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) 30 JUNE 2017

KUWAIT FINANCE HOUSE K.S.C.P. AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) 30 JUNE INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) For the period ended