TIDM95HX
RNS Number : 6294V
GFH Financial Group B.S.C
10 August 2022
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GFH FINANCIAL GROUP BSC
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
30 JUNE 2022
GFH FINANCIAL GROUP BSC
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
for the six months ended 30 June 2022
CONTENTS Page
Independent auditors' report on review of condensed consolidated
interim financial information 1
Condensed consolidated interim financial information
Condensed consolidated statement of financial position 2
Condensed consolidated income statement 3
Condensed consolidated statement of changes in owners' equity
4-5
Condensed consolidated statement of cash flows 6
Condensed consolidated statement of changes in restricted investment accounts 7
Condensed consolidated statement of sources and uses of zakah and charity fund 8
Notes to the condensed consolidated interim financial
information 9-33
KPMG Fakhro Audit
12 1 h Floor. Fakhro Tower PO Box 710, Manama Kingdom of Bahrain
Telephone +973 17 224807
Fax +973 17 227443
Website: home.kpmg/bh CR No. 6220
lndeoendent auditors-- reoort on review or condensed
consolidated interim flnanc1a1information
To t he Board of Directors
GFH Financial Group BSC
M an ama, Kingdom of Bah rain
We have reviewed the accompanying 30 June 2022 condensed
consolidated interim financial informat i on of GFH Finan c i a l
Group BSC (the "Bank") andits subsidiaries (together the "Group "
), which comprises :
-- the condensed consolidated statement of financial posit i on as at 30 June 2022 ;
-- the condensed consolidated income statement for the three -
month and s , x - month periods ended 30 June 2022 ;
-- the condensed consolidated statement of changes in owners'
equity for the s i x -- mont h period ended 30 June 2022;
-- the condensed consolidated statement of cash flows for the
six - month per i od ended 30 June 2022 ,
-- the condensed consolidated statement of changes in restricted
investment accounts for the s i x month per i od ended 30 June
2022;
-- the condensed consolidated statement of sources and uses of
zakah and char i ty fund for the si - x mont h per i od ended
30
June 2022; and
-- notes to the condensed consolidated interim financial information .
The Board of Directors of the Bank is responsible for the
preparation and presentation of this condensed conso l idated inter
i m financial information in accordance with the basis of
preparation and presentat i on as stated in note 2 of th i s
condensed consolidated interim financial information. Our respons i
bility is to express a cone usion on this condensed consol dated
inter i m financial information based on our review.
Scope o f Rcv ,c w
We conducted our review in accordance with the International
Standard on Rev i ew Engagements 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity". A
rev1ew of interim financial information consists of making
inquiries, pr i mar i ly of persons responsible for financial and
account f ng matters, and applying ana l ytical and other review
procedures . A review is substantially less in scope than an aud i
t conducted in accordance with Au , d ting standards for Islamic
Financial Institutions and consequently does not enable us to
obtain assurance that we would become aware of alt significant
matters that m i ghtbe ident f fied in an audit . Accord i ngly, we
do not express an audit opinion .
( on t l u o n
Based on our review, nothing has come to our attention that
causes us to believe that the accompany i ng 30 June 2022 condensed
consolidated interim financial information is not prepared, in a11
material respects, in accordance w i th the basis of preparation
and presentat i on as stated in note 2 of this condensed
consolidated interim financial informat i on.
l 'trA ugust 2022
30 June
2022
(reviewed)
674,570
3,314,062
1,457,758
1,185,905
1,141,659
136,069
540,197
70,009
8,520,229
========================
31 December
2021
(audited)
722,471
3,089,925
1,311,002
1,905,598
211,638
171,877
531,488
139,687
8,083,686
======================
30 June
2021
(reviewed)
593,229
2,379,758
1,252,936
1,817,499
171,357
128,272
578,336
135,741
7,057,128
======================
Note
ASSETS
Cash and bank balances
Treasury portfolio 8
Financing assets 9
Investment in real estate 10
Proprietary investments 11
Co-investments 12
Receivables and other assets 13
Property and equipment
Total assets
148,073
3,411,900
222,574
1,988,847
457,220
6,228,614
1,249,544
1,015,638
(70,283)
27,970
(58,839)
- 62,629
-
977,115
64,956
1,042,071
8,520,229
===============================
216,762
3,052,092
133,046
1,750,667
404,654
5,557,221
1,358,344
1,000,638
(48,498)
27,970
(28,561)
(70,266)
81,811
-
963,094
205,027
1,168,121
8,083,686
=======================
88,776
2,722,879
150,462
1,269,419
428,670
4,660,206
1,221,554
1,000,638
(62,234)
24,058
4,109
(50,258)
17,940
1,093
935,346
240,022
1,175,368
7,057,128
=========================
LIABILITIES
Clients' funds
Placements from financial, non-financial institutions and
individuals
Customer current accounts
Term financing 14
Other liabilities
Total liabilities
Total equity of investment account holders OWNERS' EQUITY
Share capital Treasury shares Statutory reserve
Investment fair value reserve Foreign currency translation
reserve Retained earnings
Share grant reserve
Total equity attributable to shareholders of the Bank
Non-controlling interests
Total owners' equity
Total liabilities, equity of investment account holders and
owners' equity
The Board of Directors approved the condensed consolidated
interim financial information on 10 August 2022 and signed on its
behalf by:
Ghazi Faisal Ebrahim Alhajeri
Chairman Chief Executive Officer & Board member
The accompanying notes 1 to 23 form an integral part of the
condensed consolidated interim financial information.
Six months ended
30 June 30 June
2022 2021
(reviewed) (reviewed)
3,584 1,599
41,514 33,138
-----------
45,098 34,737
-----------
42,975 39,784
26,617 33,323
1,960 2,257
(18,638) (16,093)
(16,055) (17,558)
-----------
36,859 41,713
-----------
1,932 7,346
7,265 2,134
3,247 13,921
10,500 -
15,865 5,010
-----------
38,809 28,411
-----------
52,104 58,898
9,893 17,251
-----------
61,997 76,149
-----------
182,763 181,010
-----------
59,565 59,760
80,691 63,396
(2,869) 13,709
-----------
137,387 136,865
-----------
45,376 44,145
-----------
Three months ended
30 June 30 June
2022 2021
(reviewed) (reviewed)
2,595 794
17,824 16,353
------------
20,419 17,147
------------
21,747 18,126
14,822 22,509
(1,363) 701
(10,123) (7,804)
(7,975) (8,991)
------------
17,108 24,541
------------
- 3,913
6,137 990
757 2,780
10,500 -
10,942 2,610
------------
28,336 10,293
------------
24,168 29,248
1,918 9,392
------------
26,086 38,640
------------
91,949 90,621
------------
25,266 27,575
44,910 29,733
(4,254) 8,508
------------
65,922 65,816
------------
26,027 24,805
------------
Note
Investment banking income
Asset management Deal related income
Commercial banking income
Income from financing
Treasury and investment income Fee and other income
Less: Return to investment account holders Less: Finance
expense
Income from proprietary and co-investments
Income from sale of real estate assets Leasing and operating
income
Direct investment income, net
Share of profit from equity-accounted investees Income from
co-investments
Treasury and other income
Finance and treasury portfolio income, net Other income, net
Total income
Operating expenses Finance expense
Impairment allowances 15
42,180 37,044
3,196 7,101
45,376 44,145
--------------
23,062 20,922
2,965 3,883
26,027 24,805
-----------------
Total expenses Profit for the period
Attributable to: Shareholders of Bank Non-controlling
interests
1.22 1.21
0.67 0.68
Earnings per share
Basic and diluted earnings per share (US cents) 16
Ghazi Faisal Ebrahim Alhajeri
Chairman Chief Executive Officer & Board member
The accompanying notes 1 to 23 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN OWNERS'
EQUITY
for the six months ended 30 June 2022 US$ 000's
Attributable to shareholders of the Bank
Foreign
Investment currency Non-
Share Treasury Statutory fair value translation Retained Controlling Total
30 June 2022 capital shares reserve reserve reserve earnings Total Interests owners'
(reviewed) (NCI) equity
----------- ----------- ----------- ------------ ------------- ----------- -----------
Balance at 1
January 2022 1,000,638 (48,498) 27,970 (28,561) (70,266) 81,811 963,094 205,027 1,168,121
----------- ----------- ----------- ------------ ------------- ----------- ----------- ------------- -----------
Profit for the
period - - - - - 42,180 42,180 3,196 45,376
Transfer on
reclassification
from FVTE
to amortised
cost - - - 41,320 - - 41,320 - 41,320
Fair value
changes during
the period - - - (69,084) - - (69,084) (2,335) (71,419)
Transfer to
income statement
on disposal
of sukuk - - - (2,514) - - (2,514) - (2,514)
----------- ----------- ----------- ------------ ------------- ----------- ----------- ------------- -----------
Total recognised
income and
expense - - - (30,278) - 42,180 11,902 861 12,763
----------- ----------- ----------- ------------ ------------- ----------- ----------- ------------- -----------
Bonus shares
issued 15,000 - - - - (15,000) - - -
Dividend declared - - - - - (45,000) (45,000) - (45,000)
Purchase of
treasury shares - (53,650) - - - - (53,650) - (53,650)
Transfer to zakah
and charity fund - - - - - (1,483) (1,483) - (1,483)
Sale of treasury
shares - 31,865 - - - 121 31,986 - 31,986
Transferred to
income statement
on
deconsolidation
of subsidiaries - - - - 70,266 - 70,266 - 70,266
Adjusted on
deconsolidation
of subsidiaries
(Note 22) - - - - - - - (141,295) (141,295)
Additional NCI on
acquisition of
subsidiary
(Note 23) - - - - - - - 363 363
----------- ----------- ----------- ------------ ------------- ----------- ----------- ------------- -----------
Balance at 30
June 2022 1,015,638 (70,283) 27,970 (58,839) - 62,629 977,115 64,956 1,042,071
=========== =========== =========== ============ ============= =========== =========== ============= ===========
The accompanying notes 1 to 23 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN OWNERS'
EQUITY
for the six months ended 30 June 2022 (continued) US$ 000's
Attributable to shareholders of the Bank Non - Total
controlling owners'
interests equity
Foreign
Investment currency Share
30 June Share Treasury Statutory fair value translatio Retained grant Total
2021 capital shares reserve reserve n reserve earnings reserve
(reviewed)
------------- ------------ ------------- ------------ ------------ ----------- ---------- -----------
Balance at
1 January
2021 (as
previously
reported) 975,638 (63,979) 19,548 5,593 (46,947) 22,385 1,093 913,331 272,733 1,186,064
Effect of
adoption of
FAS 32 - - - - - (2,096) - (2,096) - (2,096)
------------- ------------ ------------- ------------ ------------ ----------- ---------- ----------- ------------- -----------
Balance at 1
January
2021
(restated) 975,638 (63,979) 19,548 5,593 (46,947) 20,289 1,093 911,235 272,733 1,183,968
Profit for
the period - - - - - 37,044 - 37,044 7,101 44,145
Fair value
changes
during the
period - - - 11,200 - - - 11,200 (6) 11,194
Transfer to
income
statement
on
disposal of
sukuk - - - (12,684) - - - (12,684) - (12,684)
------------- ------------ ------------- ------------ ------------ ----------- ---------- ----------- ------------- -----------
Total
recognised
income and
expense - - - (1,484) - 37,044 - 35,560 7,095 42,655
------------- ------------ ------------- ------------ ------------ ----------- ---------- ----------- ------------- -----------
Bonus
shares
issued 25,000 - - - - (25,000) - - - -
Dividends
declared
for 2020 - - - - - (17,000) - (17,000) - (17,000)
Transfer to
zakah and
charity
fund - - - - - (1,572) - (1,572) (142) (1,714)
Transfer to
statutory
reserve - - 4,510 - - (4,510) - - - -
Purchase of
treasury
shares - (26,777) - - - - - (26,777) - (26,777)
Sale of
treasury
shares - 28,522 - - - 921 - 29,443 - 29,443
Foreign
currency
translation
differences - - - - (3,311) - - (3,311) (1,411) (4,722)
Acquisition
of NCI
without a
change
in control - - - - - 7,768 - 7,768 (38,253) (30,485)
------------- ------------ ------------- ------------ ------------ ----------- ---------- ----------- ------------- -----------
Balance at
30 June
2021 1,000,638 (62,234) 24,058 4,109 (50,258) 17,940 1,093 935,346 240,022 1,175,368
============= ============ ============= ============ ============ =========== ========== =========== ============= ===========
The accompanying notes 1 to 23 form an integral part of the
condensed consolidated interim financial information.
GFH FINANCIAL GROUP BSC 6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2022 US$ 000's
30 June 30 June
2022 2021
(reviewed) (reviewed)
OPERATING ACTIVITIES
Profit for the period 45,376 44,145
Adjustments for:
Income from commercial banking (26,321) (33,065)
Income from proprietary investments (37,282) (18,931)
Income from dividend and gain on treasury
investments (53,024) (85,628)
Foreign exchange gain (1,305) (1,105)
Finance expense 80,691 80,953
Impairment allowances (2,869) 13,709
Depreciation and amortisation 776 2,621
---------------- ----------------
6,042 2,699
Changes in:
Placements with financial institutions (maturities
of more than 3 months) - (100,995)
Financing assets (146,756) 14,330
Other assets (19,209) 44,773
CBB Reserve and restricted bank balance (982) (10,319)
Clients' funds (68,689) (42,159)
Placements from financial and non-financial
institutions 359,808 304,879
Customer current accounts 89,528 9,706
Equity of investment account holders (108,800) 64,561
Payables and accruals 17,099 (36,367)
---------------- ----------------
Net cash generated from operating activities 128,041 251,108
----------------
INVESTING ACTIVITIES
Payments for purchase of equipment (74) (851)
Proceeds from sale of proprietary investment
securities, net 415 23,129
Purchase of treasury portfolio, net (269,077) (411,882)
Cash acquired on acquisition of a subsidiary 407 -
Cash paid on acquisition of a subsidiary (5,215) -
Dividends received from proprietary investments
and co-investments 25,528 7,449
Advance paid for development of real estate (22,652) (5,081)
---------------- ----------------
Net cash used in investing activities (270,668) (387,236)
----------------
FINANCING ACTIVITIES
Financing liabilities, net 149,146 180,341
Finance expense paid (82,531) (72,767)
Purchase of sukuk (2,028) -
Dividends paid (853) (17,299)
Purchase of treasury shares, net (21,785) 1,746
---------------- ----------------
Net cash generated from financing activities 41,949 92,021
---------------- ----------------
Net decrease in cash and cash equivalents
during the period (100,678) (44,107)
Cash and cash equivalents at 1 January 844,344 655,455
---------------- ----------------
Cash and cash equivalents at 30 June 743,666 611,348
================
Cash and cash equivalents comprise:
Cash and balances with banks (excluding
CBB Reserve balance and restricted cash) 615,504 538,438
Placements with financial institutions (less
than 3 months) 128,162 72,910
---------------- ----------------
743,666 611,348
================ ================
The accompanying notes 1 to 23 form an integral part of the
condensed consolidated interim financial information.
GFH FINANCIAL GROUP BSC 7
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN RESTRICTED
INVESTMENT ACCOUNTS
for the six months ended 30 June 2022
30 June Balance at 1 January Movements during the period Balance at 30 June
2022 2022 2022
(reviewed)
Group's
No of Average Investment/ Revalua- Gross Dividends fees as Administration No of Average
Company units value Total (withdrawal) tion income paid an agent expenses units value Total
(000) per US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's (000) per US$ 000's
share share
US$ US$
--------- --------- ------------- ------------- ----------- ---------- ----------- ---------- ---------------- --------- ----------- -------------
Mena Real
Estate
Company
KSCC 150 0.33 50 - - - - - - 150 0.33 50
Al Basha'er
Fund 12 7.87 94 - - - - - - 12 7.87 94
Safana
Investment
(RIA
1) 1,247 2.65 3,305 - - - - - - 1,247 2.65 3,305
Shaden Real
Estate
Investment
WLL (RIA
5) 269 2.65 713 - - - - - - 269 2.65 713
--------- --------- ------------- ------------- ----------- ---------- ----------- ---------- ---------------- --------- ----------- -------------
4,162 - - - - - - 4,162
============= ============= =========== ========== =========== ========== ================ =============
30 June 2021 Balance at 1 January Movements during the period Balance at 30 June
(reviewed) 2021 2021
Group's
No of Average Investment/ Revalua- Gross Dividends fees as Administration No of Average
Company units value Total (withdrawal) tion income paid an agent expenses units value Total
(000) per US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's (000) per US$ 000's
share share
US$ US$
--------- --------- ------------- ------------- ----------- ---------- ----------- ---------- ---------------- --------- ----------- --------------
Mena Real
Estate
Company
KSCC 150 0.33 50 - - - - - - 150 0.33 50
Al Basha'er
Fund 12 7.91 95 (2) - - - - - 12 7.91 93
Safana
Investment
(RIA
1) 6,254 2.65 16,573 - - - - - - 6,254 2.65 16,573
Shaden Real
Estate
Investment
WLL (RIA 5) 3,434 2.65 9,100 - - - - - - 3,434 2.65 9,100
Locata
Corporation
Pty
Ltd (RIA 6) 2,633 1.00 2,633 - - - - - - 2,633 1.00 2,633
--------- --------- ------------- ------------- ----------- ---------- ----------- ---------- ---------------- --------- ----------- --------------
28,451 (2) - - - - - 28,449
============= ============= =========== ========== =========== ========== ================ ==============
The accompanying notes 1 to 23 form an integral part of the
condensed consolidated interim financial information.
CONDENSED CONSOLIDATED STATEMENT OF SOURCES AND USES OF ZAKAH
AND CHARITY FUND
for the six months ended 30 June 2022 US$ 000's
30 June 30 June
2022 2021
(reviewed) (reviewed)
Sources of zakah and charity fund
Contribution by the Group 2,529 1,714
Non-Islamic income 21 18
------------------- -------------------
Total sources 2,550 1,732
------------------- -------------------
Uses of zakah and charity fund
------------------- -------------------
Utilization of zakat and charity fund (1,775) (1,828)
------------------- -------------------
Total uses (1,775) (1,828)
------------------- -------------------
0B Surplus of sources over uses 775 (96)
Undistributed zakah and charity fund at beginning
of the period 5,196 5,346
------------------- -------------------
1B Undistributed zakah and charity fund at
end of the period 5,971 5,250
=================== ===================
Represented by:
Zakah payable 826 1,013
Charity fund 5,145 4,237
------- -------
5,971 5,250
======= =======
The accompanying notes 1 to 23 form an integral part of the
condensed consolidated interim financial information.
1 Reporting entity
The condensed consolidated interim financial information for the
six months ended 30 June 2022 comprise the financial information of
GFH Financial Group BSC (GFH or the "Bank") and its subsidiaries
(together referred to as "the Group").
The following are the principal subsidiaries consolidated in the
condensed consolidated interim financial information.
Effective
ownership
Investee name Country of interests Activities
incorporation as at 30 June
2022
GFH Capital Limited United Arab 100% Investment
Emirates management
---------------------- ---------------- -------------------
GFH Capital S.A. Saudi Arabia 100% Investment
management
---------------------- ---------------- -------------------
Khaleeji Commercial Bank 85.14% Islamic retail
BSC ('KHCB') bank
---------------------- ---------------- -------------------
Al Areen Project companies 100% Real estate
development
---------------- -------------------
GBCORP Tower Real Estate 62.91% Islamic investment
WLL firm
---------------- -------------------
Residential South Real 100% Real estate
Estate Development Company development
(RSRED)
---------------- -------------------
Britus International School 100% Educational
for Special Education W.L.L Kingdom of Bahrain institution
---------------------- ---------------- -------------------
Gulf Holding Company KSCC State of Kuwait 53.63% Investment
in real estate
---------------------- ---------------- -------------------
SQ Topco II LLC (Note 23) United States 51% Property asset
management
Company
---------------------- ---------------- -------------------
Roebuck A M LLP United Kingdom 60% Property asset
management
Company
---------------------- ---------------- -------------------
The Bank has other investment holding companies, SPV's and
subsidiaries, which are set up to supplement the activities of the
Bank and its principal subsidiaries.
GFH Group has carried out a group restructuring program (the
'program') which involves the spinning out of its infrastructure
and real estate assets under a new entity "Infracorp B.S.C."
("Infracorp"), which has been capitalized with more than US$1
billion in infrastructure and development assets. Infracorp will
specialise in investments focusing on accelerating growth and
development of sustainable infrastructure assets and environments
across the gulf and global markets.
Under this program certain real estate and infrastructure assets
as well as certain investments in securities, equity accounted
investees and subsidiaries have been transferred from the Group to
Infracorp for an in-kind consideration in the form of Sukuk and/ or
equity shares issued by Infracorp. A majority stake of 60% in
Infracorp equity was divested during the period ended 31 March
2022. See note 22 for more details.
2 Basis of preparation
The condensed consolidated interim financial information of the
Group has been prepared in accordance with applicable rules and
regulations issued by the Central Bank of Bahrain ("CBB"). These
rules and regulations require the adoption of all Financial
Accounting Standards (FAS) issued by the Accounting and Auditing
Organisation of Islamic Financial Institutions (AAOIFI).
The accounting policies used in the preparation of annual
audited consolidated financial information of the Group for the
year ended 31 December 2020 and 31 December 2021 were in accordance
with FAS as modified by CBB (refer to the Group's audited financial
statements for the year ended 31 December 2021 for the details of
the COVID-19 related modifications applied). Since the CBB
modification were specific to the financial year 2020 and no longer
apply to both the current and comparative periods presented, the
Group's interim financial information for the six months ended 30
June 2022 has been prepared in accordance with FAS issued by AAOIFI
(without any modifications).
These condensed consolidated interim financial information are
reviewed and not audited. The condensed consolidated interim
financial information does not include all the information required
for full annual financial statements and should be read in
conjunction with the Group's last audited consolidated financial
statements for the year ended 31 December 2021. However, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
audited consolidated financial statements as at and for the year
ended 31 December 2021.
3 Significant accounting policies
The accounting policies and methods of computation applied by
the Group in the preparation of the condensed consolidated interim
financial information are the same as those used in the preparation
of the Group's last audited consolidated financial statements as at
and for the year ended 31 December 2021, except those arising from
adoption of the following standards and amendments to standards
effective from 1 January 2022. The impact of adoption of these
standards and amendments is set out below.
a. New standards, amendments and interpetations issued and
effective for annual periods beginning on or after 1 January
2022:
FAS 38 Wa'ad, Khiyar and Tahawwut
AAOIFI has issued FAS 38 Wa'ad, Khiyar and Tahawwut in 2020. The
objective of this standard is to prescribe the accounting and
reporting principles for recognition, measurement and disclosures
in relation to shariah compliant Wa'ad (promise), Khiyar (option)
and Tahawwut (hedging) arrangements for Islamic financial
institutions. This standard is effective for the financial
reporting periods beginning on or after 1 January 2022.
This standard classifies Wa'ad and Khiyar arrangements into two
categories as follows: a)"ancillary Wa'ad or Khiyar" which is
related to a structure of transaction carried out using other
products i.e. Murabaha, Ijarah Muntahia Bittamleek, etc.;
and
b) "product Wa'ad and Khiyar" which is used as a stand-alone
Shariah compliant arrangement.
Further, the standard prescribes accounting for constructive
obligations and constructive rights arising from the stand-alone
Wa'ad and Khiyar products.
There was no material impact on the Group upon adoption of this
standard.
3 Significant accounting policies (continued)
b. New standards, amendments and interpretations issued but not yet effective
(i) FAS 39 Financial Reporting for Zakah
AAOIFI has issued FAS 39 Financial Reporting for Zakah in 2021.
The objective of this standard is to establish principles of
financial reporting related to Zakah attributable to different
stakeholders of an Islamic financial Institution. This standard
supersedes FAS 9 Zakah and is effective for the financial reporting
periods beginning on or after 1 January 2023 with an option to
early adopt.
This standard shall apply to institution with regard to the
recognition, presentation and disclosure of Zakah attributable to
relevant stakeholders. While computation of Zakah shall be
applicable individually to each institution within the Group, this
standard shall be applicable on all consolidated and separate /
standalone financial statements of an institution.
This standard does not prescribe the method for determining the
Zakah base and measuring Zakah due for a period. An institution
shall refer to relevant authoritative guidance for determination of
Zakah base and to measure Zakah due for the period.
The Group is assessing the impact of adoption of this
standard.
(ii) FAS 1 General Presentation and Disclosures in the Financial
Statements
AAOIFI has issued the revised FAS 1 General Presentation and
Disclosures in the Financial Statements in 2021. This standard
describes and improves the overall presentation and disclosure
requirements prescribed in line with the global best practices and
supersedes the earlier FAS 1. It is applicable to all the Islamic
Financial Institutions and other institutions following AAOIFI
FAS's. This standard is effective for the financial reporting
periods beginning on or after 1 January 2023 with an option to
early adopt.
The revision of FAS 1 is in line with the modifications made to
the AAOIFI conceptual framework for financial reporting. Some of
the significant revisions to the standard are as follows:
a) Revised conceptual framework is now integral part of the
AAOIFI FAS's;
b) Definition of Quasi equity is introduced;
c) Definitions have been modified and improved;
d) Concept of comprehensive income has been introduced;
e) Institutions other than Banking institutions are allowed to
classify assets and liabilities as current and non-current;
f) Disclosure of Zakah and Charity have been relocated to the
notes;
g) True and fair override has been introduced;
h) Treatment for change in accounting policies, change in
estimates and correction of errors has been introduced;
i) Disclosures of related parties, subsequent events and going
concern have been improved;
j) Improvement in reporting for foreign currency, segment
reporting;
k) Presentation and disclosure requirements have been divided
into three parts. First part is applicable to all institutions,
second part is applicable only to banks and similar IFI's and third
part prescribes the authoritative status, effective date an
amendments to other AAOIFI FAS's; and
l) The illustrative financial statements are not part of this
standard and will be issued separately.
The Group is assessing the impact of adoption of this standard
and expects changes in certain presentation and disclosures in its
consolidated financial statements.
4 Estimates and judgements
Preparation of condensed consolidated interim financial
information 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. Actual results may differ from these estimates. The areas
of significant judgments made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were similar to those applied to the audited consolidated financial
statements as at and for the year ended 31 December 2021.
Russia-Ukraine conflict
On 24 February 2022, a military conflict between Russia and
Ukraine emerged (the "conflict"). Owing to this various countries
and international bodies have imposed trade and financial sanctions
on Russia and Belarus. Further, various organisations have
discontinued their operations in Russia. This conflict has resulted
in an economic downturn and increased volatility in commodity
prices due to disruption of supply chain.
The management has carried out an assessment of its portfolio
and has concluded that it does not have any direct exposures to /
from the impacted countries. However, indirect impact is pervasive
in the market and at this stage it is difficult to quantify the
full impact of this conflict since it depends largely on the nature
and duration of uncertain and unpredictable events, such as further
military action, additional sanctions, and reactions to ongoing
developments by global financial markets. The management will
continue to closely monitor impact of this evolving situation on
its portfolio to assess indirect impact, if any. During the period
ended 30 June 2022, the Group's investment portfolio reduced in
market value by US$ 69,084 thousand for investments carried as FVTE
and US$ 22,005 thousand for investments carried as FVTPL due to
volatile market movements. However, the Group does not trade in
such securities and does not expect to liquidate any of it's market
portfolio in short term.
5 Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the audited consolidated
financial statements for the year ended 31 December 2021.
Regulatory ratios
a. Net stable funding Ratio (NSFR)
The objective of the NSFR is to promote the resilience of banks'
liquidity risk profiles and to incentivise a more resilient banking
sector over a longer time horizon. The NSFR limits overreliance on
short-term wholesale funding, encourages better assessment of
funding risk across all on-balance sheet and off-balance sheet
items, and promotes funding stability.
NSFR as a percentage is calculated as "Available stable funding"
divided by "Required stable funding".
The Consolidated NSFR calculated as per the requirements of the
CBB rulebook, is as follows:
As at 30 June 2022
No Specified More than Total weighted
Maturity Less 6 months and Over value
than 6 less than one year
No. Item months one year
Available Stable Funding (ASF):
1 Capital:
---------------------------------------------------------------------------------------------------------------
2 Regulatory Capital 1,059,069 - - 50,851 1,109,920
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
3 Other Capital Instruments
- - - - -
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
4 Retail deposits and deposits from small business customers:
---------------------------------------------------------------------------------------------------------------
5 Stable deposits - 176,266 24,769 4,177 195,160
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
6 Less stable deposits - 1,498,093 275,805 132,219 1,728,727
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
7 Wholesale funding:
---------------------------------------------------------------------------------------------------------------
8 Operational deposits - - - - -
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
Other Wholesale
9 funding - 3,022,773 814,421 1,018,189 2,126,084
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
10 Other liabilities:
---------------------------------------------------------------------------------------------------------------
11 NSFR Shari'a-compliant
hedging contract - - -
liabilities
-------------------------- ----------- ---------------- ------------
All other liabilities
not included in
12 the above categories - 316,756 17,775 52,570 52,570
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
13 Total ASF 5,212,461
-------------------------- --------------------
Required Stable Funding (RSF):
Total NSFR high-quality
14 liquid assets (HQLA) 1,664,881 85,576
-------------------------- ---------------- --------------------
15 Deposits held at
other financial - - - - -
institutions for
operational purposes
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
Performing financing
16 and sukuk/ securities: - 702,253 - 749,801 742,669
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
17 Performing financial
to financial institutions - - - - -
by level 1 HQLA
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
Performing financing
to financial institutions
secured by non-level
1 HQLA and unsecured
performing financing
18 to financial institutions - - 5,026 1,025,947 874,568
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
Performing financing
to non- financial
corporate clients,
financing to retail
and small business
customers, and financing
to sovereigns, central
banks and PSEs,
of
19 which: - 268,059 161,157 253,571 379,429
-------------------------- ---------------- ----------- ---------------- ------------ --------------------
No More than Total
Specified Less 6 months Over weighted
No. Item Maturity than 6 and one value
," months less than year
one year
20 With a risk
weight
of less than or - - - - -
equal to 35% as
per the CBB
Capital
Adequacy Ratio
guidelines
------------------ ------------------- ---------- ------------------ --------------- --------------------
21 Performing
residential - - - - -
mortgages, of
which:
------------------ ------------------- ---------- ------------------ --------------- --------------------
22 With a risk
weight
of less than or - - - - -
equal to 35%
under
the CBB Capital
Adequacy Ratio
Guidelines
------------------ ------------------- ---------- ------------------ --------------- --------------------
Securities/sukuk
that are not in
default and do
not
qualify as HQLA,
including
exchange-
23 traded equities - 848,827 290,784 488,423 1,058,228
------------------ ------------------- ---------- ------------------ --------------- --------------------
24 Other assets:
------------------ ------------------- ---------- ------------------ --------------- --------------------
25 Physical traded
commodities, - -
including
gold
------------------ ------------------- --------------------
26 Assets posted as
initial margin
for
Shari'a-compliant - - - -
hedging contracts
and
contributions to
default funds of
CCPs
------------------ ---------- ------------------ --------------- --------------------
27 NSFR
Shari'a-compliant - - - -
hedging assets
------------------ ---------- ------------------ --------------- --------------------
28 NSFR
Shari'a-compliant
hedging contract - - - -
liabilities
before
deduction of
variation
margin posted
------------------ ---------- ------------------ --------------- --------------------
All other assets
not included in
the above
29 categories 1,903,173 - - - 1,903,173
------------------ ------------------- ---------- ------------------ --------------- --------------------
30 OBS items - - - 44,723
------------------ ---------- ------------------ --------------- --------------------
31 Total RSF 1,819,140 456,966 2,517,741 5,088,366
------------------ ---------- ------------------ --------------- --------------------
32 NSFR (%) 102%
------------------ --------------------
As at 31 December 2021
More than
No Specified Less than 6 months Over one Total weighted
No. Item Maturity 6 months and less year value
than one
year
Available Stable Funding (ASF):
1 Capital:
------------------------ ----------------- ------------- ----------- ------------- --------------------
2 Regulatory Capital 1,070,314 - - 49,953 1,120,267
------------------------ ----------------- ------------- ----------- ------------- --------------------
Other Capital
3 Instruments - - - - -
------------------------ ----------------- ------------- ----------- ------------- --------------------
Retail deposits
and deposits from
4 small business
customers:
------------------------ ----------------- ------------- ----------- ------------- --------------------
5 Stable deposits - 182,112 25,962 2,749 200,420
------------------------ ----------------- ------------- ----------- ------------- --------------------
6 Less stable deposits - 1,314,514 430,372 90,957 1,661,355
------------------------ ----------------- ------------- ----------- ------------- --------------------
7 Wholesale funding:
------------------------ ----------------- ------------- ----------- ------------- --------------------
8 Operational deposits - - - - -
------------------------ ----------------- ------------- ----------- ------------- --------------------
Other Wholesale
9 funding - 2,860,814 861,346 773,058 1,896,078
------------------------ ----------------- ------------- ----------- ------------- --------------------
10 Other liabilities:
------------------------ ----------------- ------------- ----------- ------------- --------------------
NSFR Shari'a-compliant
hedging contract
11 liabilities - - -
------------------------ ------------- ----------- -------------
All other liabilities
not included in
12 the above categories - 136,864 18,759 71,437 71,437
------------------------ ----------------- ------------- ----------- ------------- --------------------
13 Total ASF 4,949,558
------------------------ --------------------
Required Stable Funding (RSF):
Total NSFR high-quality
liquid assets
14 (HQLA) 1,493,881 73,941
------------------------ ----------------- --------------------
More than
No Specified Less than 6 months Over one Total weighted
No. Item Maturity 6 months and less year value
than one
year
Deposits held
at other financial
15 institutions for
operational purposes
------------------------- ----------------- ------------- ----------- ------------- --------------------
Performing financing
16 and sukuk/ securities: - 636,283 - 720,739 708,071
------------------------- ----------------- ------------- ----------- ------------- --------------------
17 Performing financial
to financial
institutions - - - - -
by level 1 HQLA
------------------------- ----------------- ------------- ----------- ------------- --------------------
Performing financing
to financial
institutions
secured by non-level
1 HQLA and unsecured
performing financing
to financial
18 institutions - 5,000 - 174,023 150,419
------------------------- ----------------- ------------- ----------- ------------- --------------------
Performing financing
to non- financial
corporate clients,
financing to retail
and small business
customers, and
financing to sovereigns,
central banks
19 and PSEs, of which: - 320,720 91,696 205,595 339,845
------------------------- ----------------- ------------- ----------- ------------- --------------------
20 With a risk weight
of less than or
equal to 35% as
per the CBB Capital
Adequacy Ratio - - - - -
guidelines
------------------------- ----------------- ------------- ----------- ------------- --------------------
21 Performing residential
mortgages, of - - - - -
which:
------------------------- ----------------- ------------- ----------- ------------- --------------------
22 With a risk weight
of less than or
equal to 35% under
the CBB Capital
Adequacy Ratio - - - - -
Guidelines
------------------------- ----------------- ------------- ----------- ------------- --------------------
Securities/sukuk
that are not in
default and do
not qualify as
HQLA, including
exchange- traded
23 equities - 615,521 634,536 291,421 916,449
------------------------- ----------------- ------------- ----------- ------------- --------------------
24 Other assets:
------------------------- ----------------- ------------- ----------- ------------- --------------------
25 Physical traded
commodities, including
gold - -
------------------------- ----------------- --------------------
26 Assets posted
as initial margin
for Shari'a- compliant
hedging contracts
and contributions
to default funds - - - -
of CCPs
------------------------- ------------- ----------- ------------- --------------------
27 NSFR Shari'a-compliant
hedging assets - - - -
------------------------- ------------- ----------- ------------- --------------------
28 NSFR Shari'a-compliant
hedging contract
liabilities before
deduction of variation
margin posted - - - -
------------------------- ------------- ----------- ------------- --------------------
All other assets
not included in
29 the above categories 2,672,214 - - - 2,672,214
------------------------- ----------------- ------------- ----------- ------------- --------------------
30 OBS items - - - 27,946
------------------------- ------------- ----------- ------------- --------------------
31 Total RSF 1,577,524 726,232 1,391,778 4,888,886
------------------------- ------------- ----------- ------------- --------------------
32 NSFR (%) 101%
------------------------- --------------------
5 Financial risk management (continued)
b. Liquidity Coverage Ratio (LCR)
LCR has been developed to promote short-term resilience of a
bank's liquidity risk profile. The LCR requirements aim to ensure
that a bank has an adequate stock of unencumbered high-quality
liquidity assets (HQLA) that consists of assets that can be
converted into cash immediately to meet its liquidity needs for a
30-calendar day stressed liquidity period. The stock of
unencumbered HQLA should enable the Bank to survive until day 30 of
the stress scenario, by which time appropriate corrective actions
would have been taken by management to find the necessary solutions
to the liquidity crisis.
LCR is computed as a ratio of Stock of HQLA over the Net cash
outflows over the next 30 calendar days.
Average balance
30 June 2022 31 December 2021
------------------ ----------------
Stock of HQLA 259,086 292,998
Net cashflows 221,628 148,599
LCR % 122% 221%
Minimum required by CBB 80% 80%
------------------ ----------------
c. Capital Adequacy Ratio
30 June 2022 31 December 2021
CET 1 Capital before regulatory
adjustments 998,476 1,063,515
Less: regulatory adjustments - -
CET 1 Capital after regulatory
adjustments 998,476 1,063,515
T 2 Capital adjustments 46,462 53,374
Regulatory Capital 1,044,938 1,116,889
Risk weighted exposure:
Credit Risk Weighted Assets 6,967,411 7,574,496
Market Risk Weighted Assets 39,045 38,325
Operational Risk Weighted Assets 655,034 655,034
Total Regulatory Risk Weighted
Assets 7,661,490 8,267,855
Investment risk reserve (30% only) 2 2
Profit equalization reserve (30%
only) 3 3
Total Adjusted Risk Weighted Exposures 7,661,490 8,267,850
Capital Adequacy Ratio (CAR) 13.64% 13.51%
Tier 1 Capital Adequacy Ratio 13.03% 12.86%
Minimum CAR required by CBB 12.50% 12.50%
---------------------------------------- ------------------ ----------------
6 Seasonality
Due to the inherent nature of the Group's business (investment
banking, commercial banking and leisure and hospitality management
business), the six-month results reported in this condensed
consolidated interim financial information may not represent a
proportionate share of the overall annual results.
7 Comparatives
The comparative figures have been regrouped in order to conform
with the presentation for current year. Such regrouping did not
affect previously reported profit for the period or total
equity.
8
30 June
2022
(reviewed)
128,162
324,481
882,594
1,987,956
3,494
(12,625)
3,314,062
======================
31 December
2021
(audited)
180,000
403,986
1,656,088
860,616
3,486
(14,251)
3,089,925
====================
30 June
2021
(reviewed)
180,736
452,040
981,894
770,936
3,494
(9,342)
2,379,758
======================
Treasury portfolio
Placements with financial institutions Equity type
investments
At fair value through income statement
- Structured notes
Debt type investments
At fair value through equity
- Quoted sukuk
At amortised cost
- Quoted sukuk *
- Unquoted sukuk
Less: Impairment allowances
* Short-term and medium-term facilities of US$ 1,690,298
thousand (31 December 2021: US$ 1,417,800 thousand) are secured by
quoted sukuk of US$ 2,234,966 thousand (31 December 2021: US$
2,070,315 thousand), structured notes of US$ 324,481 thousand (31
December 2021: US$
403,986 thousand).
Reclassification
During the period, based on completion of the Group
re-organization and on review of the overall balance sheet funding
structure the Bank has reassessed its business model of managing
its yielding treasury portfolio. In anticipation of the short-term
and long-term liquidity needs, during the first quarter of 2022,
the Bank has re-assessed the objective of its treasury portfolio
wherein it would manage the underlying assets the following
distinct business models:
i) Held-to-collect business model
This portfolio includes short-term and long-term Sukuk and
treasury instruments that are held to meet core liquidity
requirements of high-quality liquid assets and are typically held
to their contractual maturity. Assets under this model are
classified and measured at amortised cost. Although management
considers fair value information, it does so from a liquidity
perspective, and the main focus of its review of financial
information under this business model is on the credit quality and
contractual returns.
8. Treasury portfolio (continued) Reclassification
(contined)
ii) Classified as fair value through P&L
These include instruments that do not meet the contractual cash
flow characteristic and include embedded option features or
instruments held under an active trading portfolio for short-term
profit taking. This portfolio includes structured notes and other
hybrid debt-type instruments that are do not have a typical
constant yield features.
iii) Both held-to-collect and for sale business model
The remaining fixed income treasury portfolio is held under
active treasury management to collect both contract cash flows and
for sale. These include Sukuk and other treasury instruments where
yield is determinable. The key management personnel consider both
of these activities as integral in achieving the objectives set for
the Treasury business unit. This portfolio, while generating
returns primarily through yield, is also held to meet expected or
unexpected commitments, or to fund anticipated acquisitions or
growth in other business units. Assets under this model are
classified and measured at fair value through equity.
Until 31 December 2021, the Bank classified its whole Sukuk
portfolio as FVTE only under a 'both held- to-collect and for sale'
business model. The Board of Directors have assessed that the group
re- organisation has significantly changed the liquidity management
and strategy within the Bank and the above classification of the
treasury portfolio best reflects the way the assets will be managed
in order to meet the objectives of the new business model and the
way information is provided to management. Due to the above change
in the business model, the Bank has reclassified its treasury
portfolio as at 1 January 2022 as follows:
US$ 000's
Assets subject to Fair value through Reversal Reclassified
reclassification equity (FVTE) of amounts to Amortised
recognized cost
in
investment
fair
value
reserve
Sukuk 894,194 41,320 935,514
--------------------------- ------------------------------- ---------------------------
9 Financing assets
30 June 31 December 30 June
2022 2021 2021
(reviewed) (audited) (reviewed)
Murabaha 1,066,393 995,324 949,930
Musharaka - - 277
Wakala 239 239 239
Mudharaba 12,436 2,576 2,624
Istisnaa - - 37
Assets held-for-leasing 449,360 384,312 366,886
-------------- -------------- --------------
1,528,428 1,382,451 1,319,993
Less: Impairment allowances (70,670) (71,449) (67,057)
-------------- -------------- --------------
1,457,758 1,311,002 1,252,936
============== ============== ==============
Murabaha financing receivables are net of deferred profits of
US$ 55,215 thousands (31 December 2021: US$ 44,979 thousands).
The movement on financing assets is as follows:
30 June 2022 (reviewed) Stage 1 Stage 2 Stage 3 Total
Financing assets (gross) 1,293,478 140,040 94,910 1,528,428
Expected credit loss (22,245) (6,162) (42,263) (70,670)
------------ ------------ ------------- ------------
Financing assets (net) 1,271,233 133,878 52,647 1,457,758
============ ============ ============= ============
31 December 2021 (audited) Stage 1 Stage 2 Stage 3 Total
Financing assets (gross) 1,015,953 251,500 114,998 1,382,451
Expected credit loss (19,995) (7,109) (44,345) (71,449)
------------- ------------- ------------- ------------
Financing assets (net) 995,958 244,391 70,653 1,311,002
============= ============= ============= ============
30 June 2021 (reviewed) Stage 1 Stage 2 Stage 3 Total
Financing assets (gross) 1,010,224 180,066 129,703 1,319,993
Expected credit loss (22,065) (4,732) (40,260) (67,057)
------------- ------------- ------------- ------------
Financing assets (net) 988,159 175,334 89,443 1,252,936
============= ============= ============= ============
The movement on impairment allowances is as follows:
Stage 1 Stage 2 Stage 3 Total
At 1 January 2022 19,995 7,109 44,345 71,449
Net movement between stages 1,859 (1,302) (557) -
Net charge for the period 391 355 870 1,616
Writeoffs - - (2,395) (2,395)
------------ ------------ ------------- ------------
At 30 June 2022 (reviewed) 22,245 6,162 42,263 70,670
============ ============ ============= ============
Stage 1 Stage 2 Stage 3 Total
At 1 January 2021 20,841 6,255 28,914 56,010
Net movement between stages 796 822 (1,618) -
Net charge for the period (1,640) (64) 18,080 16,376
Transfer to off balance
sheet - - (12) (12)
Disposal (2) 96 (1,019) (925)
------------- ------------- ------------- ------------
At 31 December 2021 (audited) 19,995 7,109 44,345 71,449
============= ============= ============= ============
Stage 1 Stage 2 Stage 3 Total
At 1 January 2021 20,841 6,255 28,914 56,010
Net movement between
stages 984 (862) (122) -
Net charge for the period 240 (661) 11,468 11,047
------------- ------------- ------------- ------------
At 30 June 2021 (reviewed) 22,065 4,732 40,260 67,057
============= ============= ============= ============
10 Investment in real estate
30 June 31 December 30 June
2022 2021 2021
(reviewed) (audited) (reviewed)
Investment Property
- Land 520,773 529,076 481,370
- Building 165,716 63,758 63,854
-------------- -------------- --------------
686,489 592,834 545,224
-------------- -------------- --------------
Development Property
- Land 100,405 592,926 761,206
- Building 399,011 719,838 511,069
-------------- -------------- --------------
499,416 1,312,764 1,272,275
-------------- -------------- --------------
1,185,905 1,905,598 1,817,499
============== ============== ==============
11 Proprietary investments
30 June 31 December 30 June
2022 2021 2021
(reviewed) (audited) (reviewed)
Equity type investments
At fair value through income
statement
- Structured notes 41,483 41,197 -
- Listed securities 7,464 - -
- Unlisted fund 10,000 10,000 10,000
-------------- -------------- --------------
58,947 51,197 10,000
-------------- -------------- --------------
At fair value through equity
- Listed securities 13 13 13
- Unquoted securities * 959,190 91,425 84,902
-------------- -------------- --------------
959,203 91,438 84,915
-------------- -------------- --------------
Equity-accounted investees
* 123,509 69,003 76,442
-------------- -------------- --------------
1,141,659 211,638 171,357
============== ============== ==============
* Comprises of Bank's 40% equity stake in issued share capital
of Infracorp B.S.C. (c) ("IC") and holdings in perpetual sukuk
issued by IC.
12 Co-investments
30 June 31 December 30 June
2022 2021 2021
(reviewed) (audited) (reviewed)
At fair value through equity
- Unquoted securities 125,439 164,547 120,689
At fair value through income
statement
- Unquoted securities 10,630 7,330 7,583
-------------- -------------- --------------
136,069 171,877 128,272
============== ============== ==============
13 Receivables and other assets
30 June 31 December 30 June
2022 2021 2021
(reviewed) (audited) (reviewed)
Investment banking receivables 142,120 148,985 147,784
Financing to projects, net 45,034 42,383 42,890
Receivable on sale of development
properties 45,368 59,914 30,691
Advances and deposits 81,537 58,222 63,038
Employee receivables 18,508 18,898 5,326
Profit on sukuk receivable 11,423 17,273 15,455
Lease rentals receivable 2,549 2,175 3,261
Re-possessed assets - - 29,572
Prepayments and other receivables 204,765 194,313 245,789
Less: Impairment allowances
net of write-off (11,107) (10,675) (5,470)
-------------- -------------- --------------
540,197 531,488 578,336
============== ============== ==============
14 Term financing
30 June 31 December 30 June
2022 2021 2021
(reviewed) (audited) (reviewed)
Murabaha financing * 1,719,685 1,449,852 885,289
Sukuk ** 248,743 250,943 308,995
Ijarah financing 18,862 20,093 45,914
Other borrowings 1,557 29,779 29,221
-------------- -------------- --------------
1,988,847 1,750,667 1,269,419
============== ============== ==============
* Murabaha financing comprise:
Short-term and medium-term facilities of US$ 1,690,298 thousand
(31 December 2021: US$ 1,417,800 thousand) are secured by quoted
sukuk of US$ 2,234,966 thousand (31 December 2021: US$
2,070,315 thousand), structured notes of US$ 324,481 thousand
(31 December 2021: US$ 403,986 thousand).
** Sukuk
During 2020, the Group raised US$ 500,000 thousand through
issuance of unsecured sukuk certificates with a profit rate of 7.5%
p.a. repayable by 2025. The Bank has repurchased cumulative sukuk
of US$ 258,511 thousand during the year ended 31 December 2020 and
2021 and the period ended 30 June 2022. The outstanding sukuk also
includes accrued profit of US$ 7,254 thousand.
15
Six months ended
30 June 30 June
2022 2021
(reviewed) (reviewed)
11 13
(1,626) 3,238
1,616 11,047
(3,263) (1,394)
1 470
392 335
-------------
(2,869) 13,709
============== =============
Impairment allowances
Expected credit loss on: Bank balances Treasury portfolio
Financing assets, net (note 9) Other receivables
Impairment on investment in equity securities Commitments and
financial guarantees
16 Earnings per share
The calculation of basic earning per share has been based on the
following profit attributable to the ordinary shareholders and
weighted-average number of ordinary shares outstanding. The Group
does not have any diluted potentially ordinary shares as of the
reporting dates. Hence, the basic and diluted earning per share is
similar.
Six months ended Three months ended
30 June 2022 30 June 2021 30 June 2022 30 June 2021
(reviewed) (reviewed) (reviewed) (reviewed)
Profit for the
period attributable
to shareholders
of the Bank 42,180 37,044 23,062 20,922
Weighted average
number of shares
outstanding during
the period (in
thousands) 3,457,589 3,056,479 3,418,599 3,056,605
Basic and diluted
earning per share
(US Cents) 1.22 1.21 0.67 0.68
17 Related party transactions
Related parties as per FAS 1 Assets under
management
(including
special purpose
and other
entities)
Significant
shareholders
Associates and Key management / entities
joint venture personnel in which
directors Total
are interested
- - - 13,726 13,726
- - - 37,743 37,743
- 8,210 38,871 17,429 64,510
1,003,350 - 149,748 11,963 1,165,061
- - 5,430 119,420 124,850
11,729 813 846 106,795 120,183
- 7,477 - 108,680 116,157
2,061 653 6,179 14,776 23,669
48,500 - - 129,206 177,706
1,093 1,037 79,803 626 82,559
- - - 20,419 20,419
- 300 626 - 926
(1,809) - - - (1,809)
(13) (13) (9,599) (5) (9,630)
- (101) - - (101)
10,500 - - 27,077 37,577
- - - 536 536
- 3,020 - - 3,020
- 4,545 - - 4,545
- - - 2,162 2,162
The significant related party balances and transactions as at 30
June 2022 are given below:
30 June 2022 (reviewed)
Assets
Cash and bank balances Treasury portfolio Financing assets
Proprietary investments
Co-investments Receivables and prepayments
Liabilities
Placements from financial, non-financial institutions and
individuals
Customer accounts Payables and accruals
Equity of investment account holders
Income
Income from Investment banking
Income from commercial banking
- Income from financing
- Fee and other income
- Less: Return to investment account holders
- Less: Finance expense Income from proprietary and co-investments
Treasury and other income Real estate income
Expenses
Operating expenses
- Staff cost Finance cost
17
Related parties as per FAS 1
Significant Assets under
shareholders management
Associates and Key management / entities (including
joint venture personnel in which special purpose
directors and other Total
are interested entities)
- - - 14,725 14,725
- - 37,148 - 37,148
- 7,817 33,407 16,482 57,706
114,387 - 20,328 48,011 182,726
- - - 76,794 76,794
8,060 623 300 171,559 180,542
- 4,430 - 231,117 235,547
1,488 366 872 14,725 17,451
- 2,688 1,528 33,678 37,894
1,088 355 54,276 772 56,491
- - - 29,637 29,637
- 109 1,575 56 1,740
(1,833) - - 698 (1,135)
16 3 1,925 11 1,955
- 48 1,403 - 1,451
(45) - 8,017 10,457 18,429
- 120 - - 120
- - (698) 635 (63)
- 4,509 - - 4,509
- 2,400 - - 2,400
- - - 10,632 10,632
Related party transactions (continued)
31 December 2021 (audited)
Assets
Cash and bank balance Treasury portfolio Financing assets
Proprietary investments
Co-investments Receivables and prepayments
Liabilities
Placements from financial, non-financial institutions and
individuals
Customer accounts Payables and accruals
Equity of investment account holders
30 June 2021 (reviewed) Income
Income from Investment banking
Income from commercial banking
- Income from financing
- Fee and other income
- Less: Return to investment account holders
- Less: Finance expense Income from proprietary and co-investments
Income from real estate Treasury and other income
Operating expenses
- Staff cost
- Board remuneration Finance Cost
-
18 Segment reporting
Investment banking Commercial banking Corporate
and treasury
Total
45,098 36,859 100,806 182,763
(36,040) (18,625) (82,722) (137,387)
9,058 18,234 18,084 45,376
1,229,036 3,278,897 4,012,296 8,520,229
843,336 1,282,141 4,103,137 6,228,614
- 1,140,258 109,286 1,249,544
(3,763) 2,196 (1,302) (2,869)
3,330 34,446 85,733 123,509
56,400 165,125 39,573 261,098
The Group is organised into business units based on their nature
of operations and independent reporting entities and has four
reportable operating segments namely investment banking, commercial
banking and corporate and treasury.
30 June 2022 (reviewed) Segment revenue Segment expenses Segment
result
Segment assets Segment liabilities
Equity of investment account holders Other segment information
Impairment allowance
Proprietary investments (Equity-accounted investees)
Commitments
18
Investment banking Commercial banking Corporate Total
and treasury
34,737 41,713 104,560 181,010
(36,437) (25,731) (74,697) (136,865)
(1,700) 15,982 29,863 44,145
1,043,102 2,761,279 3,252,747 7,057,128
679,654 1,162,469 2,818,083 4,660,206
(519) 10,968 3,260 13,709
18,290 52,388 5,764 76,442
- 1,062,868 158,686 1,221,554
- 126,180 27,038 153,218
Segment reporting (continued)
30 June 2021 (reviewed) Segment revenue Segment expenses Segment
result
Segment assets Segment liabilities
Other segment information
Impairment allowance
Proprietary investments (Equity-accounted investees)
Equity of investment account holders Commitments
for the six months ended 30 June 2022 US$ 000's
19 Commitments and contingencies
The commitments contracted in the normal course of business of
the Group:
30 June 31 December 30 June
2022 2021 2021
US$ 000's US$ 000's US$ 000's
(reviewed) (audited) (reviewed)
Undrawn commitments to extend
finance 122,480 95,347 86,412
Financial guarantees 76,562 39,995 41,788
Capital commitment for infrastructure
development projects 60,446 16,171 20,104
Commitment to invest 1,610 3,915 4,914
261,098 155,428 153,218
Performance obligations
During the ordinary course of business, the Group may enter
performance obligations in respect of its infrastructure
development projects. It is the usual practice of the Group to pass
these performance obligations, wherever possible, on to the
companies that own the projects. In the opinion of the management,
no liabilities are expected to materialise on the Group at 30 June
2022 due to the performance of any of its projects.
Litigations, claims and contingencies
The Group has several claims and litigations filed against it in
connection with projects promoted by the Bank in the past and with
certain transactions. Further, claims against the Group entities
also have been filed by former employees and customers. Based on
the advice of the Bank's external legal counsel, the management is
of the opinion that the Bank has strong grounds to successfully
defend itself against these claims. Where applicable, appropriate
provision has been made in the books of accounts. No further
disclosures regarding contingent liabilities arising from any such
claims are being made by the Bank as the directors of the Bank
believe that such disclosures may be prejudicial to the Bank's
legal position.
20 Financial instruments Fair values
Fair value is an amount for which an asset could be exchanged,
or a liability settled, between
knowledgeable, willing parties in an arm's length transaction.
This represents 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.
The fair value of quoted Sukuk carried at amortised cost (net of
impairment allowances) of USD 1,987,956 thousand (31 December 2021:
USD 860,616 thousand) is USD 1,816,788 thousand as
at 30 June 2022 (31 December 2021: USD 883,618 thousand). There
are no material changes in the fair values of the Sukuk's carried
at amortised cost subsequent to the reporting date until the date
of signing the condensed consolidated interim financial information
for the period ended 30 June 2022.
Underlying the definition of fair value is a presumption that an
enterprise is a going concern without any intention or need to
liquidate, curtail materially the scale of its operations or
undertake a transaction on adverse terms.
for the six months ended 30 June 2022 US$ 000's
20 Financial instruments (continued)
Fair value hierarchy
The different levels have been defined as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
-- Level 2: 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: inputs for the asset or liability that are not based
on observable market data
(unobservable inputs).
The following table shows the valuation techniques used in
measuring Level 3 fair values, as well as the significant
unobservable inputs used:
Significant Inter-relationship
Type Valuation technique unobservable between significant
inputs unobservable inputs
and fair value measurement
Structured Fair value of underlying Credit risk of Ability of the Group
note reference portfolio adjusted counterparty to hold the structure
for embedded derivatives and volatility note to maturity
that protect downside assumptions for and impact of the
risk and cap upside potential time to maturity value of embedded
over the period of the derivatives (strike
contract. prices and barriers
for coupon and principal).
Equity investments Discounted cash flow Marketability Ability of Group
factor and Discount to exit these investments
rate and their impact
on the overall value
as these are unquoted
investments.
30 June 2022 (reviewed)
Profit or loss FVTE
+/-1,809 +/-18,463
+/-18,798 -
30 June 2021 (reviewed)
Profit or Loss FVTE
+/- 758 +/-20,559
+/-23,102 -
The potential effect of change in assumptions used above would
have the following effects.
Equity instruments- marketability factor (+/-10%) Structure
notes- impact in underlying index (+/-5%)
for the six months ended 30 June 2022 US$ 000's
20 Financial instruments (continued)
The table below analyses the financial instruments carried at
fair value, by valuation method.
30 June 2022 (reviewed) Level 1 Level Level Total
2 3
i) Proprietary investments
Investment securities carried
at fair value through:
- income statement - 58,947 - 58,947
- equity 900,013 - 59,190 959,203
900,013 58,947 59,190 1,018,150
ii) Treasury portfolio
Investment securities carried
at fair value through:
- income statement - 184,080 140,401 324,481
- equity 882,594 - - 882,594
882,594 184,080 140,401 1,207,075
iii) Co-investments
Investment securities carried
at fair value through
- equity - - 125,439 125,439
- income statement - - 10,630 10,630
- - 136,069 136,069
1,782,607 243,027 335,660 2,361,294
31 December 2021 (audited) Level 1 Level 2 Level 3 Total
i) Proprietary investments
Investment securities carried
at fair value through:
- income statement - 51,197 - 51,197
- equity 13 - 91,425 91,438
13 51,197 91,425 142,635
ii) Treasury portfolio
Investment securities carried
at fair value through:
- income statement - 224,086 179,900 403,986
- equity 1,656,088 - - 1,656,088
1,656,088 224,086 179,900 2,060,074
iii) Co-investments
Investment securities carried
at fair value through
- equity - - 164,547 164,547
- income statement - - 7,330 7,330
171,877 171,877
1,656,101 275,283 443,202 2,374,586
for the six months ended 30 June 2022 US$ 000's
20 Financial instruments (continued)
The following table analyses the movement in Level 3 financial
assets during the period:
30 June 2022 31 December
2022 2021
(reviewed) (audited)
At beginning of the period 443,202 390,567
Total gains / (losses) in income statement (22,005) (17,223)
Transfer from Level 2 (39,499) 24,650
Disposals at carrying value (45,382) (27,532)
Purchases (656) 69,129
Fair value changes during the period - 3,611
-----------
At end of the period 335,660 443,202
===========
21 Assets under management and custodial assets
The Group provides corporate administration, investment
management and advisory services to its project companies, which
involve the Group making decisions on behalf of such entities.
Assets that are held in such capacity are not included in these
consolidated financial statements. At the reporting date, the Group
had assets under management of US$ 6,679 million (31 December 2021:
US$ 5,297 million). During the period, the Group had charged
management fees amounting to US$ 3,584 thousands (30 June 2021: US$
1,599 thousands) to its assets under management.
Assets under management includes funds under discretionary
portfolio management ('DPM') accepted from investors amounting to
US$ 701,211 thousands (31 December 2021: US$639,599 thousand) out
of which US$ 592,531 thousands (31 December 2021: US$407,877
thousand) has been invested in to Bank's own investment
products.
22 Deconsolidation of subsidiaries
During the period, GFH Group has carried out a group
restructuring program (the 'program') which involves the spinning
off of its infrastructure and real estate assets under a new entity
"Infracorp" ("the Company"), which wase capitalized with US$1.1
billion in infrastructure and development assets. Infracorp will
specialise in investments focusing on accelerating growth and
development of sustainable infrastructure assets and environments
across the Gulf and global markets.
Under this program certain real estate and infrastructure assets
were transferred from the group entities, including the Bank, to
Infracorp for an in-kind consideration financed by US$ 200 million
of equity shares and US$ 900m of Hybrid Sukuk (perpetual equity)
issued by Infracorp.
The transfer of these assets were affected in the quarter ended
31 March 2022. Subsequent to the transfer of these assets GFH sold
60% of its equity in Infracorp to third party investors, resulting
in loss of controlling stake and this resulted in Infracorp no
longer being a subsidiary of GFH as at 30 June 2022 and has been
accounted for as an equity accounted investee. The results of
operation of Infracorp till the date of its disposal are
consolidated in these condensed interim consolidated financial
statements. The impact of the disposal of Infracorp is presented
below:
for the six months ended 30 June 2022 US$ 000's
22. Deconsolidation of subsidiaries (continued)
30 June
2022
(reviewed)
ASSETS
Cash and bank balances 80,119
Treasury portfolio 50,912
Financing assets 38,100
Real estate investment 847,221
Proprietary investment 67,861
Co-Investments 120,735
Receivables & prepayments 87,645
Property and equipments 81,201
Total 1,373,794
LIABILITIES
Term financing 24,467
Payables and accruals 108,032
Total 132,499
Non-controlling interest 141,295
Net assets transferred 1,100,000
Consideration on the date of transfer:
Equity in Infracorp 200,000
Hybrid perpetual sukuk 900,000
1,100,000
30 June
2022
(reviewed)
Net profit included in the current period condensed
consolidated income statement ** (438)
** Net profits includes cumulative profit from all the assets
and subsidiaries transferred as part of the consolidation of
subsidiaries
Discontinuing operations :
The assets of the business forming part of Infracorp were not
necessarily operated as stand-alone segment and largely reflect
land bank and infrastructure development projects of the Bank that
were carved-out under a new business model. Hence, the net assets
transferred in infracorp were not classified as discountinued
operations other than as disclosed below in relation to its
industrial operations.
for the six months ended 30 June 2022 US$ 000's
22. Deconsolidation of subsidiaries (continued)
A. Results of discontinued operation
30 June 30 June
2022 2021
Revenue 5,391 5,226
Expenses 5,347 5,305
Net profit 44 (79)
B. Cash flows used in discontinued operation
30 June 30 June
2022 2021
Net cash flow from operating activities 182 (863)
Net cash flow used in investing activities (317) (1)
Net cash flow from financing activities 3 266
Net cash flows used in discontinued operation (132) (598)
23 Acquisition of subsidiaries
% stake acquired Place of incorporation Nature of activities
51% United States Property asset
management Company
During the year, the Group acquired controlling stake in the
following subsidiaries.
SQ Topco II LLC
Consideration transferred and non-controlling interests
The consideration transferred for the acquisition was in the
form of cash and in-kind for the services rendered by the Group.
The consideration transferred is generally measured at fair value
and the stake held by shareholders other than the Group in the
subsidiaries is recognised in the consolidated financial statements
under "Non-controlling interests" based on the proportionate share
of non-controlling shareholders' in the recognised amounts of the
investee's net assets or fair value at the date of acquisition of
the investee on a transaction by transaction basis based on the
accounting policy choice of the Group. Where consideration includes
contingent consideration payable in future based on performance and
service obligations of continuing employees, these are accounted
under IFRS 2 - Share based payments.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
INFORMATION
for the six months ended 30 June 2022 US$000
23 Acquisition of subsidiaries (continued)
Identifiable assets acquired and liabilities assumed
Entity acquired was considered as a business. The fair value of
assets, liabilities, equity interests have been reported on a
provisional basis. If new information, obtained within one year
from the acquisition date about facts and circumstances that
existed at the acquisition date, identifies adjustments to the
above amounts, or any additional provisions that existed at the
acquisition date, then the acquisition accounting will be revised.
Revisions to provisional acquisition accounting are required to be
done on a retrospective basis.
The reported amounts below represent the adjusted acquisition
carrying values of the acquired entities at the date of acquisition
reported on a provisional basis as permitted by accounting
standards.
Total
Receivables 337
Cash and bank balances 407
Total assets 744
Accruals and other liabilities 2
Total liabilities 2
Total net identifiable assets and liabilities (A) 742
Total
Consideration 5,125
Non-controlling interests recognised 363
Total consideration (B) 5,488
Intangibles recognised (A-B) (4,746)
For the purpose of consolidated statement of cash flows, net
cash acquired on business combination is given below:
Total
Cash and bank balances acquired as part of business
combination 407
Less: Cash consideration (5,125)
Net cash flows from acquisition of subsidiaries (4,718)
The Group has also acquired assets under management of USD 1,196
thousand along with the above acquisition. Income for the first six
months assuming the transaction was done at the beginning of the
year would have been USD 802 thousand.
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END
IR FLFFDTIIILIF
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