CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 30 JUNE 2013
CONTENTS Independent auditors report Page(s) 1 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Condensed consolidated interim statement of financial position 2 Condensed consolidated interim income statement 3 Condensed consolidated interim statement of comprehensive income 4 Condensed consolidated interim statement of cash flows 5 Condensed consolidated interim statement of changes in equity 6 Notes to the condensed consolidated interim financial statements 7 13
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT Six Months Ended 30 June 2013 Three Months Ended 30 June Six Months Ended 30 June 2013 2012 2013 2012 QR 000 QR 000 QR 000 QR 000 Notes (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest income 232,370 184,013 450,831 367,612 Interest expense (65,877) (56,646) (128,071) (113,589) NET INTEREST INCOME 5 166,493 127,367 322,760 254,023 Fee and commission income 29,658 31,515 58,354 54,287 Fee and commission expense - (201) - (501) NET FEE AND COMMISSION INCOME 29,658 31,314 58,354 53,786 Foreign exchange gain 4,552 7,256 9,964 14,114 Income from investment securities 5,449 219 10,415 6,171 Other operating income 1,116 1,030 2,253 2,233 11,117 8,505 22,632 22,518 TOTAL OPERATING INCOME 207,268 167,186 403,746 330,327 Staff costs (33,810) (28,761) (63,800) (55,959) Depreciation (4,364) (4,197) (8,547) (9,100) Net impairment (loss) /recovery on loans (9,370) 8,314 (14,868) 14,395 and advances to customers Other expenses (24,055) (20,003) (45,802) (38,697) (71,599) (44,647) (133,017) (89,361) PROFIT FOR THE PERIOD 135,669 122,539 270,729 240,966 Basic and Diluted Earnings per Share (QR) 7 1.07 1.03 2.13 2.02 The attached notes 1 to 9 form an integral part of these condensed consolidated interim financial statements. 3
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME Six Months Ended 30 June 2013 Three Months Ended 30 June Six Months Ended 30 June 2013 2012 2013 2012 QR 000 QR 000 QR 000 QR 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Profit for the period 135,669 122,539 270,729 240,966 Items that are or may be reclassified subsequently to profit or loss Cash flow hedges: Effective portion of changes in fair value (7) 1,763-3,975 Realised during the period 9-1,051 - Available-for-sale financial assets: Fair value (losses) / gains during the year (40,318) 12,976 (57,364) 17,079 Realised during the period (2,004) - (3,389) - Amortised during the period on reclassification to loans and receivables 37 27 74 52 Other comprehensive income for the period (42,283) 14,766 (59,628) 21,106 Total comprehensive income for the period 93,386 137,305 211,101 262,072 The attached notes 1 to 9 form an integral part of these condensed consolidated interim financial statements. 4
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS Six Months Ended 30 June 2013 Six Months Ended 30 June 2013 2012 QR'000 QR'000 CASH FLOWS FROM OPERATING ACTIVITIES (Unaudited) (Unaudited) Profit for the period 270,729 240,966 Adjustments for: Depreciation 8,547 9,100 Impairment/(recoveries) provisions on loans and advances 14,868 (14,395) Net gain on sale of financial investments (3,821) (164) Profit before changes in operating assets and liabilities 290,323 235,507 Change in due from banks (115,836) (9,689) Change in loans and advances to customers (1,790,779) 356,102 Change in other assets 753 28,589 Change in due to banks 585,429 388,507 Change in customer deposits 3,563,187 (726,773) Change in other liabilities 127,475 (39,367) Net cash from operating activities 2,660,552 232,876 Net cash used in investing activities (700,089) (880,147) Net cash used in financing activities (Dividend paid) (381,225) - NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 1,579,238 (647,271) Cash and cash equivalents at 1 January 1,519,351 2,009,691 CASH AND CASH EQUIVALENTS AT 30 JUNE 3,098,589 1,362,420 Cash and cash equivalents comprise: Cash and balances with Qatar Central Bank (i) 1,252,936 166,833 Deposits with banks and other financial institutions maturing within three months 1,845,653 1,195,587 Total 3,098,589 1,362,420 (i) Excludes the mandatory cash reserve requirement by Qatar Central Bank. The attached notes 1 to 9 form an integral part of these condensed consolidated interim financial statements. 5
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY Six Months Ended 30 June 2013 Share capital Legal reserve Risk reserve Fair value reserve Retained earnings Total QR 000 QR 000 QR 000 QR 000 QR 000 QR 000 Balance at 31 December 2011 (audited) 700,781 1,038,722 218,684 11,346 543,513 2,513,046 Profit for the period - - - - 240,966 240,966 Other comprehensive income - - - 21,106-21,106 Total comprehensive income for the period - - - 21,106 240,966 262,072 Contributions by and distributions to equity holders: Bonus shares issued (Note 3a) 420,469 - - - (420,469) - Total contributions by and distributions to equity holders 420,469 - - - (420,469) - Balance at 30 June 2012 (Unaudited) 1,121,250 1,038,722 218,684 32,452 364,010 2,775,118 Balance at 31 December 2012 (audited) 1,270,750 1,337,722 254,706 37,881 540,553 3,441,612 Profit for the period - - - - 270,729 270,729 Other comprehensive income - - - (59,628) - (59,628) Total comprehensive income for the period - - - (59,628) 270,729 211,101 Contributions by and distributions to equity holders: Dividends paid (Note 3b) - - - - (381,225) (381,225) Total contributions by and distributions to equity holders - - - - (381,225) (381,225) Balance at 30 June 2013 (Unaudited) 1,270,750 1,337,722 254,706 (21,747) 430,057 3,271,488 The attached notes 1 to 9 form an integral part of these condensed consolidated interim financial statements. 6
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 LEGAL STATUS AND PRINCIPAL ACTIVITIES Ahli Bank Q.S.C. ( the Bank ) was incorporated in the State of Qatar in 1983 as a public shareholding company under the Emiri Decree No. 40 of 1983. The Bank is engaged in commercial and retail banking services and operates through its registered Head Office located at Suhaim Bin Hamad Street, Al Sadd Area in Doha (P.O. Box 2309, Doha, State of Qatar) and seventeen branches established in the State of Qatar. The principal subsidiary of the Bank is as follows: Company s Name Country of Incorporation Company s Capital Ahli Brokerage Company S.P.C. (CR No 47943) Qatar QAR 50 million Company s Activities Percentage of ownership March 2013 Percentage of ownership Dec 2012 Brokerage 100 100 The Bank and its subsidiary, Ahli Brokerage Company S.P.C. are together referred to as the Group, throughout these condensed consolidated interim financial statements. The condensed consolidated interim financial statements of Ahli Bank Q.S.C. for the six months ended 30 June 2013 were authorized for issue in accordance with a resolution of the Board of Directors on 14 July 2013. 2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The condensed consolidated interim financial statements of the Group are prepared in accordance with International Accounting Standard ( IAS ) 34, Interim Financial Reporting and in conformity with the applicable provisions of Qatar Central Bank regulations, and have been presented in Qatari Riyals, which is the Group s functional and presentation currency. 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 financial statements for the year ended 31 December 2012. All material intra-group balances, transactions, income and expenses and profits and losses resulting from intragroup transactions are eliminated on consolidation. The condensed consolidated interim financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the annual consolidated financial statements of the Group for the year ended 31 December 2012. In addition, results for the six months ended 30 June 2013 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2013. Significant accounting policies The accounting policies used in the preparation of these condensed consolidated interim financial statements are consistent with those used in the preparation of the annual consolidated financial statements for the year ended 31 December 2012, except for the adoption of new standards and interpretations noted below: - IFRS 10 Consolidated Financial Statements - IFRS 11 Joint Arrangements - IFRS 12 Disclosure of Interests in Other Entities - IFRS 13 Fair Value Measurement - Amendments to IFRS 7 and IAS 32 on offsetting financial assets and financial liabilities - IAS 1- Presentation of items of other comprehensive income The adoption of the new standards did not have a material impact on the consolidated financial position or performance of the Group. 7
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED ) Standards, amendments and interpretations issued but not yet effective The new standards, amendments to standards and interpretations which have been issued but are not yet effective for the period ended 30 June 2013 and have not been early applied in preparing these condensed consolidated interim financial statements were as follows: -IFRS 9, Financial Instruments is the first standard issued as part of a wider project to replace IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortised cost and fair value. The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. The standard can be adopted early prospectively, and prior periods need not be restated if an entity adopts the standard for reporting periods beginning before 1 January 2012. The Group is currently assessing the impact of this standard for future periods. The standard is effective for annual periods beginning on or after 1 January 2015. As per the advice of Qatar Central Bank, banks in Qatar are required to defer the adoption of IFRS 9 to effective date i.e. 1 Jan 2015. 3 SHARE CAPITAL AND DIVIDENDS PAID 3 a) Share Capital 30 June 31 December 2013 2012 QR 000 QR 000 (Unaudited) (Audited) Authorised Ordinary shares of QR 10 each 1,270,750 1,270,750 Issued and fully paid as of 30 June 2013 Number of shares in thousands QR 000 At 1 January 2012 70,078 700,781 Issue of bonus shares on 26 February 2012 42,047 420,469 Issue of rights shares on 1 December 2012 14,950 149,500 At 31 December 2012 (Audited) 127,075 1,270,750 At 30 June 2013 (Unaudited) 127,075 1,270,750 On 26 February 2012, the Group issued bonus shares (42,046,876 ordinary shares) at the rate of 6 shares for every 10 shares held by the ordinary shareholders upon obtaining approval from the shareholders in the Annual General Meeting held on 26 February 2012. On 1 December 2012, the Group allotted 14,950,000 shares as rights shares at QR 30 per share, after obtaining necessary approvals. Qatar Foundation holds 29.4% of the ordinary shares of the Bank with the remaining shares held by Qatar Investment Authority (17.7%) and members of the public (52.9%). 3 b) Dividends Paid During the period, the Group has paid a cash dividend of QR 3 per share totaling to QR 381,225 thousand for the year ended 31 December 2012. (2011 - nil). 8
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 4 FAIR VALUE RESERVE Availablefor-sale investments 30 June 2013 (Unaudited) 31 December 2012 (Audited) Cash flow hedges Total Available for sale investments Cash flow hedges Total QR 000 QR 000 QR 000 QR 000 QR 000 QR 000 At the beginning of the period/year 38,932 (1,051) 37,881 19,416 (8,070) 11,346 Realised during the period/year (3,389) 1,051 (2,338) - - - Net movement in unrealised fair values during the period/year (57,364) - (57,364) 19,410 7,019 26,429 Amortised during the period/year on reclassification to loans and receivables 74-74 106-106 At the end of the period/year (21,747) - (21,747) 38,932 (1,051) 37,881 5 NET INTEREST INCOME Interest income includes profit from Islamic financing of QR11,476 thousand (30 June 2012- QR 18,643 thousand) after the discontinuance of Islamic banking operations effective 31 December 2011 as per Qatar Central Bank directives. 6 SEASONALITY OF RESULTS Dividend income of QR 6,594 thousand (30 June 2012: QR 6,007 thousand) is of a seasonal nature. 9
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 7 EARNINGS PER SHARE Basic earnings per share are calculated by dividing the profit for the period by the weighted average number of shares in issue during the period. Six Months Ended 30 June 2013 2012 (Unaudited) (Unaudited) Profit for the period QR 000 270,729 240,966 Weighted average number of shares 127,075,002 119,107,923 Basic and diluted earnings per share (QR) 2.13 2.02 The weighted average number of shares has been calculated as follows: Six Months Ended 30 June 2013 2012 (Unaudited) (Unaudited) Qualifying shares at the beginning of the period 127,075,002 70,078,126 Bonus shares issue on 26 February 2012-42,046,876 Rights issue on 1 Dec 2012-6,982,921 Qualifying weighted average shares at the end of the period 127,075,002 119,107,923 There were no potentially dilutive shares outstanding at any time during the period, therefore, the diluted earnings per share is equal to the basic earnings per share. 10
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 8 CONTINGENT LIABILITIES, GUARANTEES AND OTHER COMMITMENTS 30 June 31 December 2013 2012 QR'000 QR'000 (Unaudited) (Audited) Contingent liabilities: Unused credit facilities 8,449,351 7,575,487 Guarantees 3,259,429 2,556,295 Letters of credit 579,951 550,567 12,288,731 10,682,349 Other Commitments: Interest rate swaps 276,640 324,622 Forward foreign exchange contracts 1,695,902 2,152,809 Legal claims 8,132 4,731 1,980,674 2,482,162 Total 14,269,405 13,164,511 Unused credit facilities Commitments to extend credit represent contractual commitments to fund loans and revolving credits. Commitments generally have fixed expiry dates or other termination clauses. Since commitments may expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements. The commitments generally have expiry dates of less than one year. Guarantees and letters of credit Letters of credit and guarantees commit the Bank to make payments on behalf of customers contingent upon their failure to perform under the terms of the contract. Guarantees and standby letters of credit carry the same risk as loans. Credit guarantees can be in the form of irrevocable letters of credits, advance payment guarantees and endorsements liabilities from bills rediscounted. Legal Claims Legal claims represent claims of customers against the Bank and are not representative of the ultimate Bank s liability arising therefore, if any. 11
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 9 SEGMENT INFORMATION For management reporting purposes, the Group is organised into two major operating segments: Retail and private banking and wealth management Corporate banking, treasury, investments and brokerage subsidiary Principally handling individual customers deposit and current accounts, providing consumer loans, residential mortgages, overdrafts, credit cards and fund transfer facilities. Private banking and wealth management represents servicing high net worth individuals through a range of investment products, funds, credit facilities, trusts and alternative investments. Principally handling loans and other credit facilities, and deposit and current accounts for corporate and institutional customers and providing money market, trading and treasury services, as well as management of the Group s funding. This includes the brokerage activities of the wholly owned subsidiary, Ahli Brokerage Company. Management monitors the operating results of the operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss. Segment information for the period is as follows: 30 June 2013 (Unaudited) Retail & private banking and wealth management Corporate banking, treasury and investments Total QR 000 QR 000 QR 000 Net interest income 84,299 238,461 322,760 Net fee and commission income 22,531 35,823 58,354 Foreign exchange gain 5,122 4,842 9,964 Income from investment securities - 10,415 10,415 Other operating income - 2,253 2,253 Total segment revenue 111,952 291,794 403,746 Other material non-cash items: (Provisions)/ recoveries (12,685) (2,183) (14,868) Reportable segment profit 44,920 225,809 270,729 Reportable segment assets 4,574,976 20,137,131 24,712,107 Reportable segment liabilities 6,078,913 15,361,706 21,440,619 12
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 9 SEGMENT INFORMATION (CONTINUED.) 30 June 2012 (Unaudited) Retail & private banking and wealth management Corporate banking, treasury and investments Total QR 000 QR 000 QR 000 Net interest income 79,202 174,821 254,023 Net fee and commission income 21,464 32,322 53,786 Foreign exchange gain 3,611 10,503 14,114 Income from investment securities - 6,171 6,171 Other operating income - 2,233 2,233 Total segment revenue 104,277 226,050 330,327 Other material non-cash items: (Provisions)/ recoveries (9,617) 24,012 14,395 Reportable segment profit before tax 40,733 200,233 240,966 Reportable segment assets 3,774,709 13,991,409 17,766,118 Reportable segment liabilities 4,634,762 10,356,238 14,991,000 13