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1Bahrain Association of Banks
2 Bahrain Association of Banks
ContentChairman’s Message 5
Board Members 7
CEO’s Review 9
Member Banks 10
Summary of Activities 11
Committees & Participants 11-12
List of Events 13
Media Briefings 14
Financial Statements 15 - 27
3Bahrain Association of Banks
H.H Shaikh KhalifaBin Salman Al Khalifa
The Prime Minister
H.M King HamadBin Isa Al Khalifa
The King ofThe Kingdom of Bahrain
H.H Shaikh SalmanBin Hamad Al Khalifa
Crown Prince andDeputy Supreme Commander
4 Bahrain Association of Banks
5Bahrain Association of Banks
Dear Members:
2008 was in many respects a landmark and transformational year for us when the erstwhile
Bankers’ Society became the Bahrain Association of Banks (BAB) – and changed not just in name
but also got a new structure, board, strategy, focus and financing. Upon my election as Chairman
of the Board of Trustees in the second half of last year, one of our key challenges has been
to substantially enhance the relevance and profile of BAB not just internally with its members
– but with our business partners, the Central Bank of Bahrain and the many other key players –
making us more externally focussed and business oriented. Our goal clearly is to meet the prime
objective in our constitution which is to professionally represent the banking industry in Bahrain.
To better serve our members the Association met a large number of CEOs to determine what
their priorities are, revamped the committee structure to focus on key issues and produced a
quarterly newsletter and new website to let you know what we’re doing.
We have also been actively engaged with the Central Bank, and the Board has been having
consultative meetings with the Governor and Executive Directors as we embark upon this new
direction. We have also begun to pace up our activity level with BAB holding ten external events
during the year, issuing 34 press releases and attending five events internationally and locally to
promote Bahrain’s banking sector. Some of the highlights of the year included our Annual Gala
Dinner with the Crown Prince, the Bahrain reception in Washington prior to the IMF / World Bank
Meetings in October and a Networking event for a visiting delegation from Singapore prior to the
WIBC.
We plan to considerably augment these improvements through 2009 among which will be the
recruitment of an expert in Statutory / Regulatory matters and taking over the setting of BHIBOR
so that you recognise value for your subscription fee and sponsorship of our events.
In closing, I would like to thank Shaikh Mohammed bin Essa Al Khalifa for joining BAB’s Board
of Directors and also to express our gratitude to Dr. Farid Al Mulla for the years of service he put
into the predecessor of the Association.
We look forward to your contribution to the working of the Association and wish you a
successful fiscal 2009.
Yours sincerely,
Mayank Malik
Chairman
Chairman’s Message
7Bahrain Association of Banks
Board Members
Mr. Mayank MalikChairman
CEO Citibank
Sh. Moh’d Bin Essa Al-KhalifaChief Executive of EDB
Mr. Saleh Hussain Deputy Chairman
Senior Consultant of Gulf Banking Consultants
Mr. Mohammed Ebrahim Mohammed CEO of Bahrain Islamic Bank
Mr. Adel EllabbanCEO & Managing Director of
Ahli United Bank
Mr. Adnan Ahmed YousifPresident & CEO of Albaraka Banking Group
Mr. Abdulkareem BucheeryCEO of BBK
Mr. Gary LongCOO of Investcorp
8 Bahrain Association of Banks
9Bahrain Association of Banks
Dear Members;
As I wrote in last year’s annual report, “I see 2008 as a year of transformation for the Bankers’
Society. We plan to rebrand it with a new name “Bahrain Association of Banks” or ‘BAB’ to bring
it in line with international practices, work under the governance of the new Board of Trustees,
create a new, fresh logo and website, produce a quarterly newsletter, provide a more well-
rounded service to you and be very proactive in promoting the financial industry in Bahrain and
internationally”
I believe that we accomplished those objectives and more. One of the more difficult challenges
was putting the accounting policies and procedures into proper shape. We retained the services
of KPMG-Fakhro to do all the accounting for the year including preparation of management
reports for the quarterly board meetings. We will continue that through 2009 to provide a solid
two years of credible accounting records.
Financial highlights in 2008 were a surplus for the year of BD 142,344 that erased an
accumulated deficit of BD 54,556 at the end of 2007 leaving a net surplus of BD 87,788. Pre-
payments of subscription fees were lower due to the extensive holidays in December, but by the
end of March 2009 the Association had received BD 227,000 in subscriptions for a good start
to the year with another BD 42,000 yet to be received. Other payables and accruals were lower
from cleaning up the accounts and paying what the old Bankers’ Society owed.
Staff costs were higher with the addition of a CEO, Events and PR Manager and another clerical
staff member. In addition, two pre-existing staff were never registered with GOSI or covered
by medical and life insurance. Advertising had a number of costs allocated to it that will be
segregated in the future. Professional fees represented outstanding legal fees not paid in 2007
for work drafting the new constitution and EGA resolution. Accounting and audit fees were
higher due to the reasons noted above. General and Administrative costs were reduced by
BD 74,362.
The financial affairs of the Association are now in proper shape, and all of us value your
contribution and support as we move forward.
Yours sincerely,
Robert Ainey
Chief Executive Officer
CEO’s Review
10 Bahrain Association of Banks
Bank BankABC Islamic Bank Housing Bank for Trade & FinanceAddax Bank HSBC Bank Middle East LimitedAhli United Bank ICICI Bank LtdArab Banking Corporation ING Bank Al Baraka Banking Group Bsc International Banking Corporation BscAl Salam Bank International Investment Bank BscAllied Banking Corporation Investcorp BankAmerican Express Bank Ltd. Investment Dar Bank Arab Bank Plc (Retail) Investors Bank EcArab Bank Plc (Wholesale) Ithmaar BankArab Financial Services JP Morgan Chase Bank Arab Investment Co Khaleeji Commercial BankArcapita Bank Korea Exchange BankAskari Commercial Bank Ltd Kuwait Finance HouseAwal Bank Kuwait Turkish Participation Bank IncBahrain Development Bank Liquidity Management CentreBahrain International Bank MaybankBahrain Islamic Bank Merrill Lynch International Bank LtdBahraini Saudi Bank Mizuho Corporate Bank Ltd.Bank Al Habib Limited National Bank of Abu DhabiBank Alfalah Limited National Bank of BahrainBank of Bahrain & Kuwait National Bank of Kuwait (Retail)Bank of Tokyo Mitsubishi, UFJ Ltd. National Bank of Kuwait (Wholesale)Bank Muscat International National Bank of PakistanBMB Investment Bank National Finance House BNP Paribas (Retail) Nomura Investment BankingBNP Paribas (Wholesale) Reef Real Estate Finance Company Calyon Robeco Institution Asset Management BVCapital Investment Holding Co Sakana Holistic Housing Solutions Capital Management House Saudi National Commercial BankCapital Union Bank Ec Securities & Investment CoCapivest Shamil Bank of BahrainCiti Islamic Investment Bank Standard Chartered BankCitibank (Retail) State Bank of India (Retail)Citibank (Wholesale) State Bank of India (Wholesale)Deutsche Bank Sumitomo Mitsui Banking CorporationElaf Bank Taib Bank BscEskan Bank UBS AgFinansbank As UBS Global Asset ManagementFirst Investment Bank Unicorn Investment BankFirst Leasing Bank United Bank LtdFuture Bank United Gulf Bank Bsc EcGulf Finance House Bsc United International BankGulf International Bank Venture Capital BankHabib Bank Ltd Woori Bank Hongkong And Shanghai Banking Corp. Ltd. Yapi Ve Kredi Bankasi
Member Banks of The Bahrain Association of Banks -2008
Conventional Banks (Retail) 19Conventional Banks (Wholesale) 44Investment Business Firms 1Islamic Banks (Retail) 5Islamic Banks (Wholesale) 14Representative Offices (Rep) 6Specialised: Financing Companies 3Total Banks 92
Member Banks
11Bahrain Association of Banks
Summary of general issues handled on behalf of banks during 2008
Security Measures
Bank Charges
Bank Holidays
Cheque Clearing
BHIBOR
Business Continuity Plan
Consultation reviewed for CBB
Proposed Pre-funded Deposit Protection Scheme
Cooperation & Exchange of Information with Overseas Authorities
Developing a Capital Market Supervision Directorate Framework for Clearing, Settlement and Depository
Developing a Framework for the Prohibition of Market Abuse and Manipulation
Prohibition of Market Abuse & Manipulation Module
Summary of Activities
Consumer Banking Committee
Bank Member’s Name TitleCitibank Ashish Bhugra Country Business Manager
Bank Muscat International Kumaran Pather Head of Retail
BBK Mohammed Zainalabedin Retail Banking Division
Standard Chartered Bank B. Chandrasekar Regional Head, Consumer Banking
Future Bank Shahram Razavi Assistant to CEO
National Bank of Bahrain Subhodip Ghose Head of Marketing & Planning
HSBC Bank Shakofa Asghar Head of Personal Financial Services
Al Ahli United Bank Abdulla Al-Raeesi DGCEO - Retail Banking
Banking Operations Committee
Bank Member’s Name TitleAl Salam Bank Ahmed Sheikh EVP – COO
Bank Muscat International Marco Wolters COO
BBK Ali Haqiqi Senior Manager - Central Operations
Standard Chartered Bank Stefan Corera CIO
Investcorp Bank Stuart Marshall MD, Head of IT
BNP Paribas Fabien Ribette Regional Head of IT
Future Bank Abbas Fatemi Assistant to CEO
National Bank of Bahrain Jassim Hammadi AGM - Credit Operations
BBK Jamal Al Sabbagh IT Operations
HSBC Bank Hana Sarwani Head of Support Services
Committees & Participants
12 Bahrain Association of Banks
Professional Development Committee
Bank Member’s Name TitleAhli United Bank Neville Pearsall Group Head HR & Development
Bank Muscat International Mohammed Bushehri Head of Human Capital
BBK Ravi Mohanty Manager, Train& Dev.
Gulf International Bank Hassan Abdul Ghani MD Operations & Admin
Investcorp Bank Mufeed Rajab Principal, Head of Admin
BNP Paribas Abdelhakim Doukkali Regional HR Director
Robeco Douglas Hansen-Luke CEO ME
Oasis Capital Bank Malcolm Harris Partner – HR & TM
Statutory / Regulatory Committee
Bank Member’s Name TitleGulf Banking Consultants Saleh Hussain Senior Consultants
Ahli United Bank Sanjeev Baijal DGCEO, Finance, Operations & IT
Citibank Jairaj Nalamutt Compliance Officer
Bank Muscat Int’l El-Tahir Nimir Group Head of Compliance & AML
BBK Dr. Mukund Ballal Compliance Officer & MLRO
Gulf International Bank Georges Djandji Sr. VP & Head of Compliance
Investcorp Bank Stephanie Bess MD, Head of Compliance
BNP Paribas Erik Stroet Regional COO
National Bank of Bahrain Fatima Budhaish Sr. Manager, Head-Credit Review
Oasis Capital Bank Sudha Tilani Principal Compliance & MLRO
Risk Management Committee
Bank Member’s Name TitleAhli United Bank Charles Brody Group Head Risk
Bank Muscat International Huw Evans Risk Director
BBK C. V. Murthy Risk Management Dept
Investcorp Bank Hassan Chehime MD, Head of Risk Management
BNP Paribas Yves Jean Noyalet Head of Internal Audit
Al Salam Bank Ahmed Sheikh EVP - COO
HSBC Bank Arun Fernandes Sr. Manager Credit & Risk Mgmt
Corporate Banking Committee
Bank Member’s Name TitleAhli United Bank Christopher Wilmot Head of Treasury
Bank Muscat International Karl Stumke Wholesale Banking Director
BBK Yaser Sabt Corporate Banking Division
Standard Chartered Bank Vivek Uberoi Head, Orig. & Client Coverage
Investcorp Bank Jonathan Minor MD, Head of Treasury & Investor Relations
BNP Paribas Eric Jesserand Head, Fixed Income Middle East
State Bank of India P. K. Gupta Regional Head & CE
HSBC Bank Dudley Leelananda Senior Manager
Committees & Participants
13Bahrain Association of Banks
Smart Card – Presentation
2nd GCC Regulators’ Summit
Middle East Association, London - Bahrain 2008
Seminar on Integrated Risk and Capital Management
5th World Islamic Funds and Capital Market Conference
Global Finance & Corporate Governance
UN Sanctions Delegation
Annual General Assembly
Annual BAB Gala Dinner
University of Bahrain - Fifth Mentoring Program
Middle East Association, London - City & GCC Conference
World Islamic Banking Conference, London
Personal Assistants Luncheon
IMF/World Bank, Washington
16th World Islamic Banking Conference
Vision 2030
Bahrain & Singapore Networking Event
Bahrain Bankers - UK Inward Visit
List of Events
14 Bahrain Association of Banks
Media Briefings
Mayank Briefing the Press Robert Discussing Our Mission
Singaporean Delegates with Reporters
Briefing and Q&A for Bahrain’s Media
15Bahrain Association of Banks
Financial Statements
16 Bahrain Association of Banks
Financial Statements
31 December 2008
Registration number : 36/6/M (According to the provisions of the Law of Social and
Cultural Societies and Clubs, Associations carrying on Youth and
Sports activities and Private Organisations promulgated by
Legislative Decree no. 21 of 1989)
Board of Trustees Chairman : Mr Mayank Malik
Office : PO Box 1034, Telephone 1782 3000
Fax 1782 0700
Principal bankers : Bank of Bahrain and Kuwait
National Bank of Bahrain
Auditors : KPMG
Financial Statements
for the year ended 31 December 2008
Contents Page
Independent auditors’
report to the members 17
Financial statements
Balance sheet 18
Statement of income and expenses 19
Statement of cash flows 20
Notes to the 2008 Financial Statements 21-27
17Bahrain Association of Banks
Independent Auditors’ Report To The Members of
The Bankers Society of Bahrain 4 March 2009
Manama, Kingdom of Bahrain
Report on the financial statements
We have audited the accompanying financial statements of The Bankers Society of Bahrain (the “Society”), which comprise the
balance sheet as at 31 December 2008, and the statement of income and expenses, statement of cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory notes. On the financial statements for the year ended 31
December 2007, we did not express an opinion as we were unable to satisfy ourselves as to the fairness of the financial statements
due to the inadequacy of the society’s internal controls relevant to the preparation and fair presentation of the financial statements.
Responsibility of the Board of trustees for the financial statements
The Board of trustees of the Society are responsible for the preparation and fair presentation of these financial statements in
accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining
internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatements,
whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Society as at 31 December
2008, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting
Standards.
Auditors’ Report
18 Bahrain Association of Banks
Balance Sheet
Bahraini Dinars
Note 2008 2007
Assets
Furniture and equipment 4 18,209 -
Total non-current assets 18,209 -
Receivables 5,297 4,157
Cash and cash equivalents 81,505 120,809
Total current assets 86,802 124,966
Total assets 105,011 124,966
Members fund and liabilities
Accumulated fund / (deficiency) 5 87,789 (54,556)
Provision for employees’ benefits 6 2,635 -
Total non-current liabilities 2,635 -
Accrued expenses and advances 7 14,587 179,522
Total current liabilities 14,587 179,522
Total liabilities 17,222 179,522
Total member fund and liabilities 105,011 124,966
Mayank Malik Robert Ainey
Chairman Chief Executive
Officer
The Board of trustees approved the financial statements consisting of pages 18 to 27 on 27 April 2009
as at 31 December 2008
19Bahrain Association of Banks
Bahraini Dinars
Note 2008 2007
Income 8 358,499 190,847
Staff cost 9 102,895 58,890
General and administrative expenses 10 65,658 06,036
Functions and event expenses 11 47,601 50,081
Total expenses 216,154 215,007
Net surplus/(deficit) for the year 142,345 (24,160)
Mayank Malik Robert Ainey
Chairman Chief Executive Officer
The Board of trustees approved the financial statements consisting of pages 18 to 27 on 27 April 2009
Statement of Income and Expensesfor the year ended 31 December 2008
20 Bahrain Association of Banks
Bahraini Dinars
Note 2008 2007
Operating activities
Receipts from subscriptions 215,599 327,347
Payments for operating cost and overheads (234,734) (210,935)
Cash flows from operating activities (19,135) 116,412
Investing activities
Acquisition of furniture and equipment 4 (20,169) -
Cash flows from investing activities (20,169) -
Net (decrease)/increase in cash and cash equivalents (39,304) 116,412
Cash and cash equivalents at 1 January 120,809 4,397
Cash and cash equivalents at 31 December 81,505 120,809
The financial statements consist of pages 18 to 27.
Statement of Cash Flows for the year ended 31 December 2008
21Bahrain Association of Banks
1 Status and Operations
The Bankers’ Society of Bahrain was established in the Kingdom of Bahrain in 1979 and re-registered on 27 January 1991 under regis-
tration no. 36/6/M according to the provisions of the Law of Social and Cultural Societies and Clubs, Associations carrying on Youth and
Sports activities and Private Organisations promulgated by Legislative Decree no 21 of 1989.
The principal activity of the Society is to promote the interests of the Bahrain banking community in Bahrain and abroad.
2 Basis of Preparation
a) Statement of compliance
The financial statements have been prepared in accordance with the International Financial Reporting Standards.
b) Basis of measurement
The financial statements are drawn up from the accounting records of the Society and are prepared under the historical cost conven-
tion. The accounting policies of the Society have been consistently applied and are consistent with those used in the previous year.
c) Functional and presentation currency
Items included in the financial statements of the Society are measured using the currency of the primary economic environment in
which the entity operates (‘the functional currency’). The financial statements are presented in Bahraini dinars, which is the Society’s
functional and presentation currency.
3 Significant Accounting Policies
a) Furniture and equipment
(i) Owned assets
Items of furniture and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost includes all costs
directly attributable to bringing the assets to their present location and condition for their intended use. An asset’s carrying amount is
written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
The residual value and useful life are reviewed at each financial year end and adjusted where appropriate.
(ii) Subsequent measurement
Expenditure incurred to replace a component of an item of furniture and equipment that are accounted for separately, is capitalised.
Other subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the item of furniture and
equipment. All other expenditure is recognised in the income and expense statement as an expense as incurred.
(iii) Depreciation
Depreciation is provided on a straight-line method at annual rates which are intended to write off the cost of the assets over their esti-
mated useful lives of 4 years.
b) Receivables
Receivables are carried at the invoiced amount, being the fair value, less impairment allowances.
c) Cash and cash equivalents
Cash and cash equivalents represent cash on hand and bank balances
Bahraini Dinars
for the year ended 31 December 2008
Notes to the 2008 Financial Statements
22 Bahrain Association of Banks
Bahraini Dinars
3 Significant accounting policies (continued)
d) Impairment
The carrying amounts of the Society’s assets are reviewed at each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the
carrying amount of an asset exceeds its recoverable amount. All impairment losses are recognised in the income statement.
e) Foreign currency transactions
Transactions in foreign currencies are translated to Bahraini dinars at the foreign exchange rates ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Bahraini dinars at the
foreign exchange rate ruling at that date. All foreign exchange differences arising on conversion and translation are recognised in the
income statement.
f) Provision
A provision is recognised in the balance sheet when the Society has a legal or constructive obligation as a result of a past event, and it
is probable that an outflow of economic benefits will be required to settle the obligation.
g Employee benefits
Pensions and other social benefits for Bahraini employees are covered by the General Organisation for Social Insurance scheme to
which employees and employers contribute monthly on a fixed-percentage-of-salaries basis. The entity’s contribution to this scheme,
which represents a defined contribution scheme under International Accounting Standard 19 – Employee Benefits, is expensed as
incurred.
Expatriate employees are entitled to leaving indemnities payable under the Bahrain Labour Law for the Private Sector of 1976, based
on length of service and final remuneration. Provision for this unfunded commitment which represents a defined benefit plan under
International Accounting Standard 19 – Employee Benefits, has been made by calculating the notional liability had all employees left at
the balance sheet date.
h) Income
Membership subscriptions are accounted for on an accrual basis and subscription received in advance are included in current liabilities.
Income from event sponsorship is accounted for on an accrual basis when the event is conducted.
i) Operating lease
Operating lease is recognised in the statement of income and expenses on a straight-line basis over the term of the lease.
Notes to the 2008 Financial Statements
23Bahrain Association of Banks
Bahraini Dinars
4 Furnitures and Equipment 2008 2007
Cost
At 1 January 39,590 41,545
Additions 20,169 -
Impairment - (1,955)
At 31 December 59,759 39,590
Depreciation
At 1 January 39,590 39,590
Charge for the year 1,960 -
At 31 December 41,550 39,590
Net carrying value at 31 December 18,209 -
5 Accumulated Fund/(Deficiency) 2008 2007
At 1 January (54,556) (30,396)
Net surplus/(deficit) for the year (page 18) 142,345 (24,160)
At 31 December 87,789 (54,556)
6 Provision for Employees’ Benefits 2008 2007
At 1 January - 24,257
Charge for the year 2,635 1,672
Indemnities paid during the year - (25,929)
At 31 December 2,635 -
7 Accrued Expenses and Advances 2008 2007
Accrued expenses 9,587 30,522
Subscriptions received in advance 5,000 149,000
14,587 179,522
8 Income 2008 2007
Membership subscription 272,875 67,178
Event income 65,519 103,380
Donations 20,000 20,000
Other 105 289
358,499 190,847
Notes to the 2008 Financial Statements
24 Bahrain Association of Banks
Bahraini Dinars
9 Staff Cost 2008 2007
Salaries 77,474 39,740
Bonus 5,610 6,225
Training 4,345 -
Social insurance 8,321 2,552
Leaving indemnity 2,635 1,672
Others 4,510 8,701
102,895 58,890
10 General and Administrative Expenses 2008 2007
Advertising 12,247 1,495
Repairs and maintenance 816 1,015
Utilities 5,714 6,809
Depreciation 1,960 -
Office expenses 4,801 4,114
Magazines and publications - 3,957
Business travel expenses 7,580 -
Office rent 3,600 -
Professional fees 24,247 10,688
Miscellaneous expenses 4,693 -
Impairment of furniture and equipment - 1,955
Other expenses - 76,003
65,658 106,036
Other expenses in 2007 relate to unauthorised expenses that were not part of the operations of the society due to the inadequacy of
the society’s internal controls. The board of trustees have concluded its review and satisfied itself as to the completeness of the pay-
ments and were charged off in the year in which they arose.
11 Functions and Event Expenses
These represents expenses incurred for conducting various functions and events in Bahrain and abroad by the Society during the year.
12 Critical Accounting Estimates and Judgement In Applying Accounting Policies
The Society makes estimates and assumptions that affect the reporting amounts of assets and liabilities within the next financial year.
Estimates and judgements are continually evaluated and are based on among other factors historical experience and other factors,
including expectation of the future events that are believed to be reasonable under the circumstances.
Impairment of receivables
The Society reviews the carrying amounts of the receivables at each reporting date to determine whether the receivables have been
impaired. The Society identifies the receivables, which have been impaired based on among other factors, the age of the receivables,
the receivables recoverable amount is estimated based on past experience and estimated cash flow.
Notes to the 2008 Financial Statements
25Bahrain Association of Banks
Useful life and residual value of furniture and equipment
The Society reviews the useful life and residual value of the furniture and equipment at each reporting date to determine whether an
adjustment to the useful life and residual value is required. The useful life and residual value is estimated based on the similar assets of
the industry, and future economic benefit expectations of the management.
Bahraini Dinars
13 Financial Instruments and Risk Management
The table below sets out the Society’s classification of each class of financial assets and financial liabilities:
31 December 2008
Assets
Receivables 5,297 - 5,297
Cash and bank balances 81,505 - 81,505
86,802 - 86,802
Liabilities
Accrued expenses and advances - 14,587 14,587
- 14,587 14,587
31 December 2007
Assets
Receivables 4,157 - 4,157
Cash and bank balances 120,809 - 120,809
124,966 - 124,966
Liabilities
Accrued expenses and advances - 179,522 179,522
- 179,522 179,522
The Society has exposure to the following risks from its use of financial instruments:
Credit risk Liquidity risk Market risk
This note presents information about the Society’s exposure to each of the above risks, the Society’s objectives, policies and processes
for measuring and managing risk. The note also presents certain quantitative disclosures in addition to the disclosures throughout the
financial statements. The Board of trustees has overall responsibility for the establishment and oversight of the Society’s risk manage-
ment framework.
The Society’s risk management policies are established to identify and analyse the risks faced by the Society, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Society’s activities. The accounting policies for financial assets and liabilities are described
in note 3.
Loans and receivables
Others at amortised cost
Total carrying amount
Notes to the 2008 Financial Statements
26 Bahrain Association of Banks
Bahraini Dinars
Credit risk
Credit risk is the risk that one party to the financial instrument will fail to discharge an obligation and cause the other party to incur a
financial loss. The Society is exposed to credit risk on its receivables and bank balances.
a) Credit risk on receivable is minimised as these are mainly membership subscription fees receivable from the Society’s members.
Appropriate procedures for follow-up and recovery are in place to monitor credit risk.
b) The Society limits its exposure to credit risk on bank balances by maintaining balances with banks having high credit ratings. Given
these high credit ratings, the Society does not expect any bank to fail to meet its obligations.
The maximum exposure to credit risk at the reporting date was:
2008 2007
Subscription and sponsorship fees receivable 2,900 4,000
Bank balances 81,505 120,683
At 31 December 84,405 124,683
The Society is not exposed to significant credit risk based on geographic area as the Society has no exposure outside Bahrain.
Liquidity risk
Liquidity risk is the risk that the Society will encounter difficulty in raising funds to meet commitments associated with financial
instruments.
The Society’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Society’s reputation.
The Society does not have any significant financial liabilities other than accrued expenses and advances.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Society’s income
or the value of its holdings of financial instruments.
(a) Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to a change in foreign exchange rates.
The Society does not have any significant currency risk as majority of the transactions are in Bahraini dinars.
(b) Interest rate risk
Interest rate risk is the risk that the Society’s earnings will be affected as a result of fluctuations in the value of financial instruments
due to changes in market interest rates.
The Society is not exposed to significant interest rate risk.
Notes to the 2008 Financial Statements
27Bahrain Association of Banks
Fair values of financial instruments
Fair value is the amount for which an asset could be exchanged or a liability settled, between knowledgeable willing parties in an arm’s
length transaction. Differences can therefore arise between book values under the historical cost method and fair value estimates.
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.
The fair values of the financial assets and liabilities of the Society are not materially different from their carrying values.
14 New Standards and Interpretation Issued but not yet applied
During the year, the following new/amended IFRSs’ and interpretations relevant to the activities of the Society have been issued which
are not effective for early adoption by the Society.
IAS 1 – Presentation of Financial Statements (annual periods commencing on or after 1 January 2009).
The adoption of these standards and interpretations are not expected to have material impact on the financial statements.
Bahraini Dinars
Notes to the 2008 Financial Statements
28 Bahrain Association of Banks