12
1 Interim Condensed Consolidated Financial Information (Unaudited) 30 September 2012
1
Interim Condensed Consolidated Financial Information (Unaudited)Ahlan Ahli 1 899 899
www.eahli.com 30 September 2012
2
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) 30 September 2012
30 September2012
(Audited)31 December
201130 September
2011
Notes KD 000 KD 000 KD 000
ASSETS
Cash and balances with banks 306,879 317,728 347,365
Kuwait Government treasury bills and bonds 211,678 237,048 200,159
Central Bank of Kuwait bonds 249,497 199,828 129,683
Loans and advances 1,997,506 2,066,379 2,076,593
Investment securities 160,371 191,658 188,401
Investment in associate 3 10,554 - -
Other assets 37,130 38,299 38,646
Premises and equipment 28,396 28,861 29,239
TOTAL ASSETS 3,002,011 3,079,801 3,010,086
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Due to banks and other financial institutions 474,291 422,991 487,490
Customers’ deposits 1,949,846 2,102,433 1,976,859
Other liabilities 65,240 63,434 67,882
TOTAL LIABILITIES 2,489,377 2,588,858 2,532,231
SHAREHOLDERS’ EQUITY
Share capital 4 151,324 144,118 144,118
Proposed bonus shares 4 - 7,206 -
Share premium 108,897 108,897 108,897
Treasury shares (72) (8,556) (8,532)
Reserves 252,485 217,884 233,372
Proposed dividend 4 - 21,394 -
TOTAL SHAREHOLDERS’ EQUITY 512,634 490,943 477,855
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 3,002,011 3,079,801 3,010,086
Ali Hilal Al MutairiDeputy Chairman and Managing Director
Colin PlowmanChief General Manager and Chief Executive Officer
The attached notes 1 to 25 form part of these consolidated financial statement
3
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED) For the period ended 30 September 2012
NotesThree months ended
30 SeptemberNine months ended
30 September
2012 2011 2012 2011
KD 000 KD 000 KD 000 KD 000
Interest income 30,310 29,375 93,254 89,154
Interest expense (8,010) (8,967) (26,193) (27,502)
NET INTEREST INCOME 22,300 20,408 67,061 61,652
Net fees and commission income 5,423 5,983 17,710 19,850
Net foreign exchange gain 644 931 2,662 2,531
Net gain (loss) on sale of investment securities 20 (591) 1,311 (864)
Dividend income 416 686 1,864 2,989
Share of results of associate 449 - 449 -
Other income 227 244 898 657
OPERATING INCOME 29,479 27,661 91,955 86,815
Staff expenses (5,888) (6,233) (17,478) (17,223)
Other operating expenses and depreciation (3,396) (3,879) (10,561) (10,855)
OPERATING EXPENSES (9,284) (10,112) (28,039) (28,078)
OPERATING PROFIT FOR THE PERIOD BEFORE PROVISION / IMPAIRMENT LOSSES 20,195 17,549 63,916 58,737
Release (charge) for credit losses - general (5,652) (1,895) (18,181) (9,773)
Charge for credit losses - specific (3,838) (3,004) (7,259) (5,138)
Impairment losses on investments and others 5 (836) (323) (5,696) (910)
PROFIT FOR THE PERIOD BEFORE TAXATION 9,869 12,327 32,780 42,916
Taxation 6 (707) (886) (2,427) (3,031)
NET PROFIT FOR THE PERIOD 9,162 11,441 30,353 39,885
BASIC AND DILUTED EARNINGS PER SHARE 7 6 fils 8 fils 20 fils 27 fils
The attached notes 1 to 25 form part of these consolidated financial statement
4
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) For the period ended 30 September 2012
Three months ended30 September
Nine months ended30 September
2012 2011 2012 2011
KD 000 KD 000 KD 000 KD 000
NET PROFIT FOR THE PERIOD 9,162 11,441 30,353 39,885
Other comprehensive income (expense)
Effect of changes in fair values of investments available for sale 1,588 (2,013) 2,344 (3,118)
Net gain on sale / impairment losses on investments available for sale 916 776 242 1,161
Exchange difference on translation of foreign operations 16 (6) 70 (59)
Other comprehensive income (expense) for the period 2,520 (1,243) 2,656 (2,016)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 11,682 10,198 33,009 37,869
The attached notes 1 to 25 form part of these consolidated financial statement
5
Rese
rves
Shar
e ca
pita
lSh
are
prem
ium
Prop
osed
bo
nus
shar
esTr
easu
ry
shar
esSt
atut
ory
rese
rve
Gen
eral
re
serv
e
Trea
sury
sh
ares
re
serv
e
Cum
ulat
ive
chan
ges
in
fair
valu
e
Prop
erty
re
valu
atio
n su
rplu
s
Fore
ign
curr
ency
tr
ansl
atio
n re
serv
eRe
tain
ed
earn
ings
Tota
l re
serv
esPr
opos
ed
divi
dend
To
tal
KD 0
00KD
000
KD 0
00KD
000
KD 0
00KD
000
KD 0
00KD
000
KD 0
00KD
000
KD 0
00KD
000
KD 0
00KD
000
Bala
nce
as a
t 1
Janu
ary
2012
14
4,11
87,
206
108,
897
(8,5
56)
53,7
0653
,259
6,47
318
,637
5,03
6(4
0)80
,813
217,
884
21,3
9449
0,94
3
Net
pro
fit f
or t
he p
erio
d-
- -
- -
- -
- -
- 30
,353
30,3
53-
30,3
53
Oth
er c
ompr
ehen
sive
inco
me
for
the
peri
od-
- -
- -
- -
2,58
66
64-
2,65
6-
2,65
6
Tota
l com
preh
ensi
ve in
com
e fo
r th
e pe
riod
- -
- -
- -
- 2,
586
664
30,3
5333
,009
- 33
,009
Bonu
s sh
ares
issu
ed (
Not
e 4)
7,20
6(7
,206
)-
- -
- -
- -
- -
- -
-
Div
iden
ds p
aid
(Not
e 4)
- -
- -
- -
- -
- -
- -
(21,
394)
(21,
394)
Net
mov
emen
t in
tre
asur
y sh
ares
- -
- 8,
484
- -
1,59
2-
- -
- 1,
592
- 10
,076
Bala
nce
as
at 3
0 Se
pte
mb
er
2012
151,
324
- 10
8,89
7(7
2)53
,706
53,2
598,
065
21,2
235,
042
2411
1,16
625
2,48
5-
512,
634
Bala
nce
as a
t 1
Janu
ary
2011
144,
118
- 10
8,89
7(8
,410
)48
,413
47,9
666,
473
17,5
685,
487
(67)
69,6
6119
5,50
128
,530
468,
636
Net
pro
fit f
or t
he p
erio
d-
- -
- -
- -
- -
- 39
,885
39,8
85-
39,8
85
Oth
er c
ompr
ehen
sive
exp
ense
for
th
e pe
riod
-
- -
- -
- -
(1,9
57)
(11)
(48)
- (2
,016
)-
(2,0
16)
Tota
l com
preh
ensi
ve
(exp
ense
)/ in
com
e fo
r th
e p
erio
d-
- -
- -
- -
(1,9
57)
(11)
(48)
39,8
8537
,869
- 37
,869
Div
iden
ds p
aid
- -
- -
- -
- -
- -
- -
(28,
528)
(28,
528)
Trea
sury
sha
res
purc
hase
d-
- -
(122
)-
- -
- -
- -
- -
(122
)
Div
iden
d on
tre
asur
y sh
ares
-
- -
- -
- -
- -
- 2
2(2
)-
Bala
nce
as
at 3
0 Se
pte
mb
er
2011
144,
118
- 10
8,89
7(8
,532
)48
,413
47,9
666,
473
15,6
115,
476
(115
)10
9,54
823
3,37
2-
477,
855
INTE
RIM
CO
ND
ENSE
D C
ON
SOLI
DAT
ED S
TATE
MEN
T O
F CH
AN
GES
IN S
HA
REH
OLD
ERS’
EQ
UIT
Y (U
NA
UD
ITED
) Fo
r th
e pe
riod
end
ed 3
0 Se
ptem
ber
2012
The
atta
ched
not
es 1
to
25 f
orm
par
t of
the
se c
onso
lidat
ed fi
nanc
ial s
tate
men
t
6
INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) For the period ended 30 September 2012
Note Nine months ended 30 September2012 2011
KD 000 KD 000
OPERATING ACTIVITIES Net profit for the period 30,353 39,885
Adjustments for: Net (loss) gain on sale of investments available for sale (1,722) 251
Dividend income (1,864) (2,989)
Depreciation 1,184 1,162
Share of results of associate (449) -
Charge for credit losses - general 18,181 9,773
Charge for credit losses - specific 7,259 5,138
Impairment losses on investments and others 5 1,964 910
Operating profit before changes in operating assets and liabilities 54,906 54,130
Changes in operating assets and liabilities Deposits with banks (80,051) (28,382)
Kuwait Government treasury bills and bonds 25,370 58,841
Central Bank of Kuwait bonds (49,669) 235
Investments at fair value through profit or loss 807 593
Loans and advances 42,605 (85,698)
Other assets 1,663 (5,545)
Due to banks and other financial institutions 51,300 90,156
Customers› deposits (152,587) (45,193)
Other liabilities 2,634 6,785
Net cash flows (used in) from operating activities (103,022) 45,922
INVESTING ACTIVITIESPurchase of investments available for sale (41,152) (38,914)
Proceeds from sale of investments available for sale 63,377 26,384
Net purchase of premises and equipment (719) (941)
Dividend income received 1,864 2,989
Net cash flows from (used in) investing activities 23,370 (10,482)
FINANCING ACTIVITIES Dividends paid (21,394) (28,528)
Treasury shares purchased (58) (122)
Treasury shares sold 10,134 -
Net cash flows used in financing activities (11,318) (28,650)
Foreign currency translation difference 70 (59)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (90,900) 6,731
Cash and cash equivalents at 1 January 216,506 204,725
cash and cash equivalents at 30 september 125,606 211,456
Cash and cash equivalents comprise:Balances with the Central Bank of Kuwait 32,962 107,687
Cash in hand and in current account with other banks 30,331 24,523
Deposits with banks with original maturity up to thirty days 62,313 79,246
125,606 211,456
The attached notes 1 to 25 form part of these consolidated financial statement
7
1 ACTIVITIES
Al Ahli Bank of Kuwait K.S.C. (“the Bank”) is a public shareholding company incorporated in Kuwait on 23 May 1967, and is registered as a Bank with the Central Bank of Kuwait. Its registered office is at Al Safat Square, Ahmed Al Jaber Street, Kuwait City. It is engaged in banking, primarily in Kuwait and in the United Arab Emirates.
The Bank has a wholly owned subsidiary, Ahli Capital Investment Company K.S.C. (Closed) (“the Subsidiary”) which is engaged in investment management and advisory activities, regulated by Capital Markets Authority, Kuwait.
The interim condensed consolidated financial information of the Bank and its Subsidiary (collectively “the Group”) were approved by the Board of Directors on 22 October 2012.
2 BASIS OF PRESENTATION
(a) The interim condensed consolidated financial information of the Group has been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” except as noted below.
The annual consolidated financial statements for the year ended 31 December 2011, were prepared in accordance with the regulations of the State of Kuwait for financial services institutions regulated by the Central Bank of Kuwait. These regulations require adoption of all International Financial Reporting Standards (IFRS) except for the IAS 39 requirement for collective impairment provision, which has been replaced by the Central Bank of Kuwait’s requirement for a minimum general provision.
The accounting policies used in the preparation of the interim condensed consolidated financial information are consistent with those used in the preparation of the annual consolidated financial statements for the year ended 31 December 2011, except for the adoption of a new policy for “Investment in Associate” (Note 3):
Investment in associate:The Group’s investment in its associate is accounted for using the equity method. An associate is an entity in which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Under the equity method, the investment in associate is carried in the consolidated statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.
The Group’s share of its associate’s post-acquisition profits or losses is recognised in the consolidated income statement and its share of post-acquisition movements in other comprehensive income of associate is recognised in the consolidated statement of changes in equity. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.
Where applicable, adjustments are made to bring the accounting policies of the associate in line with those of the Group. The difference in reporting date of the associate and the Group is not more than three months. Adjustments are made for the effects of significant transactions or events that occur between that date and the date of the Group’s consolidated financial statements.
At each reporting date, the Group determines if there is any objective evidence that the investment in the associate is impaired, in which case the Group calculates the amount of impairment loss as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the consolidated income statement.
8
2 BASIS OF PRESENTATION (continued)
Investment in associate (continued)Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in the consolidated income statement.
The Group has not early adopted any other standard, interpretation or amendment that has been issued and is not effective.
The interim condensed consolidated financial information does not contain all information and disclosures required for full financial statements prepared in accordance with IFRS, and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2011. Further, results for the nine months period ended 30 September 2012, are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2012.
3 INVESTMENT IN ASSOCIATE
During the period, Credit One Kuwait Holding Company K.S.C. (“Credit One”), an unquoted holding company incorporated in Kuwait engaged in providing credit facilities to customers on instalment sale of goods and services has become an associate of the Bank and is accounted for using the equity method of accounting.
4 SHAREHOLDERS’ EQUITY
The shareholders at the Annual General Meeting held on 10 March 2012 approved the distribution of cash dividend of 15 per cent amounting to KD 21,394 thousand which was paid subsequently and bonus shares of 5 per cent for the year ended 31 December 2011 (cash dividend of 20 per cent for the year ended 31 December 2010). The issue of bonus shares resulted in an increase in the number of authorised and issued shares by 72,059,022 shares and share capital by KD 7,206 thousand. Treasury shares are not entitled to any cash dividends.
5 IMPAIRMENT LOSSES ON INVESTMENTS AND OTHERS
This includes KD 3,732 thousand (nine months ended 30 September 2011: Nil) representing amount paid in settlement of a customer legal claim.
6 TAXATION
Three months ended 30 September
Nine months ended 30 September
2012 2011 2012 2011
KD 000 KD 000 KD 000 KD 000
Kuwait Foundation for the Advancement of Sciences 87 107 286 375
National Labour Support Tax 240 299 794 1,043
Zakat 96 119 318 417
Tax on overseas branches 284 361 1,029 1,196
707 886 2,427 3,031
9
7 BASIC AND DILUTED EARNINGS PER SHARE
Basic and diluted earnings per share are computed by dividing the net profit for the period by the weighted average number of shares outstanding during the period, calculated as follows:
Three months ended 30 September
Nine months ended 30 September
2012 2011 2012 2011
Net profit for the period (KD 000) 9,162 11,441 30,353 39,885
Weighted average number of the Bank’s issued and paid-up shares 1,513,239,471 1,513,239,471 1,513,239,471 1,513,239,471
Less: weighted average number of treasury shares (4,833,035) (15,597,911) (12,028,387) (15,539,937)
Adjusted weighted average number of shares outstanding during the period 1,508,406,436 1,497,641,560 1,501,211,084 1,497,699,534
Basic and diluted earnings per share 6 fils 8 fils 20 fils 27 fils
The prior period comparative information has been restated for the effect of bonus shares issued during the current period.
8 SEGMENTAL INFORMATION
The Group is organised into segments that engage in business activities which earns revenue and incurs expenses. These segments are regularly reviewed by the chief operating decision maker for resource allocation and performance assessment. For the purposes of segment reporting the management has grouped the products and services into the following operating segments:
Commercial Banking - Comprising a full range of credit, deposit and related banking services provided to its commer-cial customers.
Treasury and Investment - Comprising money market, foreign exchange, treasury bonds, surplus fund management invest-ment securities and associates.
Operating income includes operating revenue directly attributable to a segment. Segment results include revenue and expenses directly attributable
to a segment. Segment assets comprise those operating assets that are directly attributable to the segment.
10
8 SEGMENTAL INFORMATION (continued)
Segmental information for the nine month period ended 30 September is as follows:
Commercial Banking Treasury and Investment Total
2012 2011 2012 2011 2012 2011
KD 000 KD 000 KD 000 KD 000 KD 000 KD 000
Operating income 80,003 75,378 11,952 11,437 91,955 86,815
Segment result 36,982 47,987 9,764 9,079 46,746 57,066
Unallocated expenses (13,966) (14,150)
Profit for the period before taxation 32,780 42,916
Segmental assets 2,074,237 2,208,088 862,248 734,113 2,936,485 2,942,201
Unallocated assets 65,526 67,885
Total assets 3,002,011 3,010,086
9 RELATED PARTY TRANSACTIONS
These represent transactions with certain related parties (major shareholders, directors and senior management of the Group, close members of their families and companies of which they are principal owners or over which they are able to exercise significant influence and any associate en-tity) who were customers of the Group during the period. The terms of these transactions are approved by the Group’s management.
In the normal course of business, these related parties have deposits with the Bank and credit facilities granted to them by the Bank. The balances included in the interim condensed consolidated financial information are as follows:
(Audited)
30 September 31 December 30 September
2012 2011 2011
KD 000 KD 000 KD 000
Loans and advances 17,799 400 495
Customers’ deposits 12,896 12,311 9,645
Commitments and contingent liabilities 310 905 889
10 COMMITMENTS AND CONTINGENT LIABILITIES
Financial instruments with contractual amounts representing credit risk.
(Audited)
30 September 31 December 30 September
2012 2011 2011
KD 000 KD 000 KD 000
Acceptances 43,256 50,656 45,727
Letters of credit 189,101 213,445 224,121
Guarantees 634,313 635,524 634,356
866,670 899,625 904,204
11
10 COMMITMENTS AND CONTINGENT LIABILITIES (continued)
Commitments to extend credit at the statement of financial position date amounted to KD 214,462 thousand (31 December 2011: KD 232,567 thousand and 30 September 2011: KD 235,199 thousand).
11 DERIVATIVE INSTRUMENTS
The notional or contractual amounts of outstanding derivative instruments together with the fair values are as follows :
30 September 2012
(Audited)31 December 2011
30 September2011
Positivefair value
Negative fair value Notional
Positivefair value
Negative fair value Notional
Positivefair value
Negative fair value Notional
KD 000 KD 000 KD 000 KD 000 KD 000 KD 000 KD 000 KD 000 KD 000
Held for hedging:
Interest rate swaps - (747) 16,866 11 (373) 16,713 - (406) 12,398
Held for trading:
Forward foreign exchange contracts 4,892 (1,834) 178,097 2,895 (733) 101,942 3,428 (90) 124,535
Interest rate swaps - (443) 113,883 687 - 100,000 1,755 - 100,000
4,892 (3,024) 308,846 3,593 (1,106) 218,655 5,183 (496) 236,933
12
Annual Report 2012Ahlan Ahli 1 899 899
www.eahli.com
Al A
hli Bank of K
uwait K
.S.C. A
nnual Report 2012
