Al Juraid & Company
BANK ALBILAD (A Saudi Joint Stock Company) UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2012
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION(Unaudited)
Notes ASSETS Cash and balances with SAMA Due from banks and other financial institutions, net Investments Financing, net Property and equipment, net Other assets Total assets
5 6
June 30, 2012 SAR’000 (Unaudited)
December 31, 2011 SAR‟000 (Audited)
June 30, 2011 SAR‟000 (Unaudited)
3,329,540
5,834,702
2,226,579
8,674,840 347,956 16,208,141 343,774 153,883 29,058,134
6,454,366 951,458 13,779,746 328,436 378,461 27,727,169
4,626,915 1,903,052 13,012,884 314,182 376,265 22,459,877
97,143 23,611,422 1,260,372 24,968,937
421,837 23,037,934 851,148 24,310,919
1,152,318 17,302,639 775,222 19,230,081
3,000,000 (37,165) 134,653 10,284 981,425 4,089,197
3,000,000 (41,097) 134,653 6,236 316,458 3,416,250
3,000,000 (42,136) 52,246 13,221 206,366 3,229,697
29,058,134
27,727,169
22,459,877
LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Due to banks and other financial institutions Customer deposits Other liabilities Total liabilities Shareholders’ equity Share capital Employee share plan Statutory reserve Other reserve Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity
7
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
1
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED INCOME STATEMENT (Unaudited) For the three month period ended
Note
INCOME: Income from investing and financing assets Return on deposits and financial liabilities Net income from investing and financing assets Fees and commission income, net Exchange income, net Dividend income Gains on non-trading investments, net Other operating income Total operating income EXPENSES: Salaries and employee related benefits Rent and premises related expenses Depreciation and amortization Other general and administrative expenses Impairment charge for financing, net Total operating expenses Net operating income for the period Non-operating income Net income for the period Basic and diluted earnings per share (Saudi Riyals)
9
For the six month period ended
June 30, 2012 SAR’000
June 30, 2011 SAR‟000
210,520
184,769
409,190
357,598
(4,898)
(6,314)
(9,667)
(14,218)
205,622
178,455
399,523
343,380
173,192 60,521 2,339 2,659 184 444,517
107,055 46,596 1,916 3,295 662 337,979
334,075 120,736 3,895 5,892 204 864,325
202,338 86,700 2,886 6,481 4,631 646,416
133,719 32,849 22,226 44,433 57,836 291,063 153,454 153,454
110,150 26,952 21,622 47,321 50,261 256,306 81,673 81,673
259,766 65,807 44,711 78,661 123,580 572,525 291,800 373,167 664,967
224,320 53,347 44,930 85,414 101,279 509,290 137,126 137,126
0.51
0.27
2.22
0.46
June 30, 2012 SAR’000
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
2
June 30, 2011 SAR‟000
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
For the three month period ended
For the six month period ended
June 30, 2012
June 30, 2011
June 30, 2012
June 30, 2011
SAR’000
SAR‟000
SAR’000
SAR‟000
Net income for the period
153,454
81,673
664,967
137,126
Other comprehensive income: -Available for sale financial assets Net changes in fair value -Transfer to income statements
(23,167)
(5,095)
(1,844)
(16,871)
2,659
3,295
5,892
6,481
Total comprehensive income for the period
132,946
79,873
669,015
126,736
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
3
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30 , 2012 SAR ‘000’ Share capital
Employee share plan
Statutory reserve
Other reserve
Retained earnings
Total
3,000,000
(41,097)
134,653
6,236
316,458
3,416,250
3,000,000
34433 (364666)
134,653
,40,4 60434,
66,4466 4464,36
6644066 34433 ,4049,197
Share capital
Employee share plan
3,000,000
(42,136)
52,246
23,611
69,240
3,102,961
3,000,000
(42,136)
52,246
(10,390) 13,221
137,126 206,366
126,736 3,229,697
2012 Balance at the beginning of the period Total comprehensive income for the period Employee share plan reserve Balance at end of the period
2011 Balance at the beginning of the period Total comprehensive income for the period Balance at end of the period
Statutory reserve
Other reserve
Retained earnings
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
4
Total
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012
Notes OPERATING ACTIVITIES Net income for the period Adjustments to reconcile net income to net cash from (used in) operating activities: Gains on non-trading investments, net Gains from disposal of property and equipment, net Depreciation and amortization Impairment charge for financing, net Non-operating income Operating profit before changes in operating assets and liabilities
June 30, 2012 SAR' 000
June 30, 2011 SAR' 000
664,967
137,126
(5,892) (173) 44,711 123,580 (373,167) 454,026
(6,481) (2,203) 44,930 101,279 274,651
(317,039)
(140,095)
(971,946) 600,371 (2,048,933) (55,297)
(778,247) (299,851) (824,337) (31,900)
(324,694) 573,488 409,224 (1,680,800)
769,889 370,224 76,342 (583,324)
(88,144) 101,266 (60,614) 738 150,000 103,646
(110,652) 114,461 (25,443) 10,422 (11,212)
3,932 3,932 (1,573,673) 9,007,824 7,434,151
(594,536) 3,841,864 3,247,328
Return paid on deposits and financial liabilities
,60436, 34666
288,848 )7,972(
Supplemental non cash information Net changes in fair value reserve Financing provided towards sale of land
4,048 503,042
(10,390) -
9
Net (increase) / decrease in operating assets: Statutory deposits with SAMA Due from banks and other financial institutions maturing after ninety days from the date of acquisition Investments Financing Other assets Net increase/ (decrease) in operating liabilities: Due to banks and other financial institutions Customer deposits Other liabilities Net cash used in operating activities INVESTING ACTIVITIES Purchase of non-trading investments Proceeds from sales of non-trading investments Purchase of property and equipment Proceeds from sale of property and equipment Proceeds from sale of land Net cash from (used in) investing activities FINANCING ACTIVITIES shares for employee share plan, net Net cash from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period
9
10
Income received from investing and financing assets
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
5
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 1.
GENERAL
a) Incorporation and operation Bank AlBilad (the “Bank”), a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia, was formed and licensed pursuant to Royal Decree No. M/48 dated 21 Ramadan 1425H (corresponding to November 4, 2004), in accordance with the Counsel of Ministers‟ resolution No. 258 dated 18 Ramadan 1425 H (corresponding to November 1, 2004). The Bank operates under Commercial Registration No. 1010208295 dated 10 Rabi Al Awal 1426H (corresponding to April 19, 2005) and its Head Office is located at the following address: Bank AlBilad P.O. Box 140 Riyadh 11411 Kingdom of Saudi Arabia The interim condensed consolidated financial statements comprise the financial statements of the Bank and its subsidiaries, „AlBilad Investment Company‟ and „AlBilad Real Estate Company‟ (collectively referred to as “The Group”). The Group‟s objective is to provide full range of banking services, financing and investing activities through various Islamic instruments. The activities of the Group are conducted in accordance with Islamic Shariah and within the provisions of the Articles and Memorandum of Association, by-laws and the Banking Control Law. The activities are monitored by an independent Shariah authority established by the Bank. The Bank provides these services through 83 banking branches (June 2011: 78) and 136 exchange and remittance centers (June 2011: 110) in the Kingdom of Saudi Arabia. b) Shariah Authority The Bank established a Shariah authority (“the Authority”). It ascertains that all the Group‟s activities are subject to its approvals and control. 2.
BASIS OF PREPARATION The interim condensed consolidated financial statements are prepared in accordance with the Accounting Standards for financial institutions promulgated by the Saudi Arabian Monetary Agency (“SAMA”) and IAS 34 – Interim Financial Reporting. The Bank also prepares its interim condensed consolidated financial statements to comply with the requirements of Banking Control Law and the Regulations of Companies in the Kingdom of Saudi Arabia. The interim condensed consolidated financial statements do not include all information and disclosure required in the annual consolidated financial statements, and should be read in conjunction with the annual financial statements of the bank for the year ended December 31, 2000. The preparation of interim financial statements 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 expense. Actual results may differ from these estimates
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BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group‟s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2011 These interim condensed consolidated financial statements are expressed in Saudi Arabian Riyals (SAR) which is the Bank's functional currency and are rounded off to the nearest thousands.
3.
BASIS OF CONSOLIDATION The interim condensed consolidated financial statements comprise the financial statements of the Bank and its subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting period as that of the Bank, using consistent accounting policies. Subsidiaries are all entities over which the Bank has the power to govern the financial and operating policies, so as to obtain benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are consolidated from the date on which the control is transferred to the Bank and cease to be consolidated from the date on which the control is transferred from the Bank. The results of subsidiaries acquired or disposed off during the period are included in the interim condensed consolidated income statement from the date of the acquisition or up to the date of disposal, as appropriate. Non- controlling interests represent the portion of net income and net assets attributable to interests which are not owned, directly or indirectly, by the Bank in its subsidiaries. Non- controlling interest is 1% of AlBilad Investment Company‟s net assets and is owned by representative shareholders and hence not presented separately in the interim condensed consolidated statement of financial position, interim condensed consolidated income statement and interim condensed consolidated statement of change in shareholders‟ equity. AlBilad Real Estate Company is 100% owned by the Bank. Inter-group balances and any income and expenses arising from intra-group transactions, are eliminated in preparing these interim condensed consolidated financial statements.
4.
SIGNIFICANT ACCOUNTING POLICIES The accounting policies used in the preparation of these interim condensed consolidated financial statements are consistent with those used in the preparation of the annual consolidated financial statements for the year ended December 31, 2011 except for the adoption of amendment to IAS 12: Deferred Tax: Recovery of underlying assets and IFRS 7: Enhanced Derecognition Disclosures Requirements, which have had no material financial impact on the interim condensed consolidated financial statements of the Group.
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BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 5.
INVESTMENTS June 30, 2012 SAR' 000 (Unaudited) Available-for-sale investments Equities Mutual fund Sukuk Held at amortized cost Commodity Murabaha with SAMA, at amortized cost Total
6.
June 30, 2011 SAR' 000 (Unaudited)
269,313 20,643 58,000
272,296 20,791 58,000
278,957 23,386 -
347,956
600,371 951,458
1,600,709 1,903,052
FINANCING, NET June 30, 2012 SAR'000 (Unaudited) Held at amortized cost Bei Ajel Installment Sales Ijarah Musharaka Credit Card Performing financing Non-performing financing Gross financing Allowance for impairment Financing, net
7.
December 31, 2011 SAR' 000 (Audited)
8,392,359 6,600,682 338,120 1,191,102 22,154 16,544,417 671,381 17,215,798 (1,007,657) 16,208,141
December 31, 2011 SAR'000 (Audited) 7,037,464 8,892,782 352,968 991,113 4,202 13,978,610 685,215 14,663,825 (884,079) 13,779,746
June 30, 2011 SAR'000 (Unaudited) 6,468,756 8,228,222 364,003 1,007,263 9,410 13,077,645 668,371 13,746,016 (733,132) 13,012,884
CUSTOMER DEPOSITS June 30, 2012 SAR'000 (Unaudited) Current Account Albilad Account Time Deposit Other Total
18,344,794 3,175,472 1,685,990 405,166 23,611,422
-8-
December 31, 2011 SAR'000 (Audited) 18,582,336 2,929,251 1,192,169 334,178 23,037,934
June 30, 2011 SAR'000 (Unaudited) 12,950,319 2,492,939 1,580,262 279,129 17,302,639
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 8.
COMMITMENTS AND CONTINGENCIES a) The Bank’s commitments and contingencies are as follows: June 30, 2012 SAR' 000 (Unaudited) Letters of credit Letters of guarantee Acceptances Total
627,220 2,270,936 328,792 3,226,948
December 31, 2011 SAR' 000 (Audited) 619,542 0,847,468 278,284 2,745,394
June 30, 2011 SAR' 000 (Unaudited) 567,185 1,706,514 236,443 2,510,142
b) Restricted investment accounts June 30, 2012 SAR' 000 (Unaudited) Under Wakalah arrangement
75,998
December 31, 2011 SAR' 000 (Audited) 1,189,256
June 30, 2011 SAR' 000 (Unaudited) 346,525
The Bank accepts restricted investment accounts from customers under Wakalah arrangements. The amounts received as placements are invested by the Bank in commodity Murabaha with banks and other financial institutions. Management fees is charged on these accounts. c) Zakat The Bank received Zakat assessments from the Department of Zakat and Income Tax (DZIT) in respect of prior years from 2006 to 2008. The assessments resulted in additional Zakat liability of SR 62, SR 60 and SR 55 million for years 2006, 2007 and 2008 respectively and is primarily due to the disallowance of financing and other financial assets from the Zakat base of the Bank and disallowance of certain expenses. The Bank has filed appeals against all the assessments‟ years. The DZIT upheld the assessment for the year 2006.The Bank has now filed an appeal against the decision with the Appeal Committee. Further, the Bank in consultation with its advisors has contested the assessment made by DZIT and along with the Saudi banking industry has raised this issue with SAMA for a satisfactory resolution. The Bank has accordingly not recognised the additional zakat liability as assessed by DZIT for the years 2006, 2007 and 2008 in the consolidated financial statements. Zakat due from the shareholders for the year ended December 31, 2011 amounted to SAR 10 million (2010: SAR 3.6 million). Zakat will be paid by the Bank on behalf of the shareholders and will be deducted from their future dividends. Moreover, Zakat return for the years 2009, 2010 and 2011 have been filed on basis consistent with prior years.
-9-
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 9.
NON-OPERATING INCOME
During the period the Bank sold a parcel of land included under other assets at carrying value of SAR 280 million. The Bank acquired the land in 2007 for its own use. The land was sold for a total consideration of SAR 653 million. The Bank issued Bei Ajel facility for the amount of SAR 503 million to Company acquiring the land (the"Company"), which had fully utilized the issued facility. Based on the facility terms, the financed amount is repayable in two installments on February 2013 and August 2013. As a result of the sale, the Bank recognized non-operating income of SAR 373 million, with income per share amounting to SAR 1.2 per share. The financing is secured by personal guarantee of borrowing Company‟s shareholders and also the title of land, which has been retained by the bank pending the collection of the full facility. 10.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the interim condensed consolidated statement of cash flows comprise the following: June 30, June 30, December 31, 2012 SAR' 000 (Unaudited)
11.
2011 SAR' 000 (Audited)
2011 SAR' 000 (Unaudited)
Cash Due from banks and other financial institutions (maturing within 90 days from acquisition) Balances with SAMA excluding statutory deposits
1,194,377
1,115,535
918,032
5,602,458
4,353,930
2,151,303
637,316
3,538,359
177,993
Total
7,434,151
9,007,824
3,247,328
SEGMENT INFORMATION
Operating segments, based on customers, groups are identified on the basis of internal reports about components of the Bank that are regularly reviewed by the Assets and Liabilities Committee (ALCO), the Chief Operating Decision Maker, in order to allocate resources to the segments and to assess its performance. The Bank‟s main business is conducted in the Kingdom of Saudi Arabia. For management purposes, the Bank is divided into the following five segments: Retail banking Services and products to individuals, including deposits, financing, remittances and currency exchange. Corporate banking Services and products including deposits, financing and trade services to corporate and commercial customers. Treasury Dealing with other financial institutions and providing treasury services to all segments.
- 10 -
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 Investment banking and brokerage Investment management services and asset management activities related to dealing, managing, arranging, advising and custody of securities. Other All other support functions. Transactions between the above segments are under the terms and conditions of the approved Fund Transfer Pricing (FTP) system. The support segments and Head Office expenses are allocated to business segments, based on approved criteria. The Bank‟s total assets and liabilities, together with its total operating income and expenses, and net income, for the six month period ended June 30, for each segment are as follows:
SAR’000
Total assets Total liabilities Net income from investing and financing assets Fee, commission and other income, net Total operating income Impairment charge for financing ,net Depreciation and amortization Total operating expenses including impairments and depreciation Net operating income for the period Non-operating income Net income for the period
SAR‟000
Total assets Total liabilities Net income from investing and financing assets Fee, commission and other income, net Total operating income Impairment charge for financing ,net Depreciation and amortization Total operating expenses including impairments and depreciation Net income for the period
June 30, 3012 Treasury Investment banking and brokerage 8,533,541 786 37,523 4,152
Retail Banking
Corporate Banking
8,769,699 15,785,118
10,962,413 7,904,621
179,379 323,456 502,835 56,872 38,117
190,799 47,225 238,024 66,708 5,782
16,017 47,468 63,485 677
378,457 124,378 124,378
160,102 77,922 77,922
18,658 44,827 44,827
Retail Banking
Corporate Banking 8,273,682 4,397,470
175,049 196,964 372,013 43,068 40,969
153,111 34,791 187,902 58,211 2,772
9,047 33,863 42,910 299
333,619 38,394
145,272 42,630
17,670 25,240
- 11 -
Total
791,695 1,237,523
29,058,134 24,968,937
36,694 36,694 135
13,328 9,959 23,287 -
399,523 464,802 864,325 123,580 44,711
15,308 21,386 21,386
23,287 373,167 396,454
572,525 291,800 373,167 664,967
Other
Total
June 30, 2111 Treasury Investment banking and brokerage 6,193,680 950 1,125,071 396,703
6,995,939 12,535,712
Other
995,626 775,224
22,459,877 19,230,180
24,468 24,468 890
6,173 12,950 19,123 -
343,380 303,036 646,416 101,279 44,930
12,729 11,739
19,123
509,290 137,126
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 12. CAPITAL ADEQUACY The Bank maintains an actively managed capital base to cover risks inherent in the business. The adequacy of the Bank's capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision and adopted by SAMA in supervising the Bank. June 30, 2012
December 31, 2011
June 30, 2011
SAR' 000
SAR' 000
SAR' 000
Credit Risk RWA Operational Risk RWA Market Risk RWA Total Pillar-I RWA Tier I Capital Tier II Capital Total Tier I & II Capital Capital Adequacy Ratio % Tier I ratio Tier I + Tier II ratio
16,175,596 2,020,542 548,650 18,744,788
3,424,230 920,549 4,344,779
17,182,708 2,167,026 631,838 19,981,572 3,086,625 572,528 3,659,153
%14.44 %18.32
15.45% 18.31%
06.81% 18.18%
20,446,523 2,391,889 873,150 23,711,562
3,092,572 295,779 3,388,351
13. COMPARATIVE FIGURES Comparative figures have been reclassified wherever necessary to conform to the current period presentation. 14. BASEL II PILLAR III DISCLOSURES Under Basel II Pillar 3 certain quantitative and qualitative disclosures are required. These disclosures will be made available on the Bank‟s website (www.bankalbilad.com.sa) within 60 days after June 30, 2012 as required by SAMA. Such disclosures are not subject to review or audit by the external auditors of the Bank.
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BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION(Unaudited)
Notes ASSETS Cash and balances with SAMA Due from banks and other financial institutions, net Investments Financing, net Property and equipment, net Other assets Total assets
5 6
June 30, 2012 SAR’000 (Unaudited)
December 31, 2011 SAR‟000 (Audited)
June 30, 2011 SAR‟000 (Unaudited)
3,329,540
5,834,702
2,226,579
8,674,840 347,956 16,208,141 343,774 153,883 29,058,134
6,454,366 951,458 13,779,746 328,436 378,461 27,727,169
4,626,915 1,903,052 13,012,884 314,182 376,265 22,459,877
97,143 23,611,422 1,260,372 24,968,937
421,837 23,037,934 851,148 24,310,919
1,152,318 17,302,639 775,222 19,230,081
3,000,000 (37,165) 134,653 10,284 981,425 4,089,197
3,000,000 (41,097) 134,653 6,236 316,458 3,416,250
3,000,000 (42,136) 52,246 13,221 206,366 3,229,697
29,058,134
27,727,169
22,459,877
LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Due to banks and other financial institutions Customer deposits Other liabilities Total liabilities Shareholders’ equity Share capital Employee share plan Statutory reserve Other reserve Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity
7
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
1
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED INCOME STATEMENT (Unaudited) For the three month period ended
Note
INCOME: Income from investing and financing assets Return on deposits and financial liabilities Net income from investing and financing assets Fees and commission income, net Exchange income, net Dividend income Gains on non-trading investments, net Other operating income Total operating income EXPENSES: Salaries and employee related benefits Rent and premises related expenses Depreciation and amortization Other general and administrative expenses Impairment charge for financing, net Total operating expenses Net operating income for the period Non-operating income Net income for the period Basic and diluted earnings per share (Saudi Riyals)
9
For the six month period ended
June 30, 2012 SAR’000
June 30, 2011 SAR‟000
210,520
184,769
409,190
357,598
(4,898)
(6,314)
(9,667)
(14,218)
205,622
178,455
399,523
343,380
173,192 60,521 2,339 2,659 184 444,517
107,055 46,596 1,916 3,295 662 337,979
334,075 120,736 3,895 5,892 204 864,325
202,338 86,700 2,886 6,481 4,631 646,416
133,719 32,849 22,226 44,433 57,836 291,063 153,454 153,454
110,150 26,952 21,622 47,321 50,261 256,306 81,673 81,673
259,766 65,807 44,711 78,661 123,580 572,525 291,800 373,167 664,967
224,320 53,347 44,930 85,414 101,279 509,290 137,126 137,126
0.51
0.27
2.22
0.46
June 30, 2012 SAR’000
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
2
June 30, 2011 SAR‟000
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
For the three month period ended
For the six month period ended
June 30, 2012
June 30, 2011
June 30, 2012
June 30, 2011
SAR’000
SAR‟000
SAR’000
SAR‟000
Net income for the period
153,454
81,673
664,967
137,126
Other comprehensive income: -Available for sale financial assets Net changes in fair value -Transfer to income statements
(23,167)
(5,095)
(1,844)
(16,871)
2,659
3,295
5,892
6,481
Total comprehensive income for the period
132,946
79,873
669,015
126,736
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
3
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30 , 2012 SAR ‘000’ Share capital
Employee share plan
Statutory reserve
Other reserve
Retained earnings
Total
3,000,000
(41,097)
134,653
6,236
316,458
3,416,250
3,000,000
34433 (364666)
134,653
,40,4 60434,
66,4466 4464,36
6644066 34433 ,4049,197
Share capital
Employee share plan
3,000,000
(42,136)
52,246
23,611
69,240
3,102,961
3,000,000
(42,136)
52,246
(10,390) 13,221
137,126 206,366
126,736 3,229,697
2012 Balance at the beginning of the period Total comprehensive income for the period Employee share plan reserve Balance at end of the period
2011 Balance at the beginning of the period Total comprehensive income for the period Balance at end of the period
Statutory reserve
Other reserve
Retained earnings
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
4
Total
BANK ALBILAD (A Saudi Joint Stock Company) INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012
Notes OPERATING ACTIVITIES Net income for the period Adjustments to reconcile net income to net cash from (used in) operating activities: Gains on non-trading investments, net Gains from disposal of property and equipment, net Depreciation and amortization Impairment charge for financing, net Non-operating income Operating profit before changes in operating assets and liabilities
June 30, 2012 SAR' 000
June 30, 2011 SAR' 000
664,967
137,126
(5,892) (173) 44,711 123,580 (373,167) 454,026
(6,481) (2,203) 44,930 101,279 274,651
(317,039)
(140,095)
(971,946) 600,371 (2,048,933) (55,297)
(778,247) (299,851) (824,337) (31,900)
(324,694) 573,488 409,224 (1,680,800)
769,889 370,224 76,342 (583,324)
(88,144) 101,266 (60,614) 738 150,000 103,646
(110,652) 114,461 (25,443) 10,422 (11,212)
3,932 3,932 (1,573,673) 9,007,824 7,434,151
(594,536) 3,841,864 3,247,328
Return paid on deposits and financial liabilities
,60436, 34666
288,848 )7,972(
Supplemental non cash information Net changes in fair value reserve Financing provided towards sale of land
4,048 503,042
(10,390) -
9
Net (increase) / decrease in operating assets: Statutory deposits with SAMA Due from banks and other financial institutions maturing after ninety days from the date of acquisition Investments Financing Other assets Net increase/ (decrease) in operating liabilities: Due to banks and other financial institutions Customer deposits Other liabilities Net cash used in operating activities INVESTING ACTIVITIES Purchase of non-trading investments Proceeds from sales of non-trading investments Purchase of property and equipment Proceeds from sale of property and equipment Proceeds from sale of land Net cash from (used in) investing activities FINANCING ACTIVITIES shares for employee share plan, net Net cash from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period
9
10
Income received from investing and financing assets
The accompanying notes 1 to 14 form an integral part of these interim condensed consolidated financial statements.
5
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 1.
GENERAL
a) Incorporation and operation Bank AlBilad (the “Bank”), a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia, was formed and licensed pursuant to Royal Decree No. M/48 dated 21 Ramadan 1425H (corresponding to November 4, 2004), in accordance with the Counsel of Ministers‟ resolution No. 258 dated 18 Ramadan 1425 H (corresponding to November 1, 2004). The Bank operates under Commercial Registration No. 1010208295 dated 10 Rabi Al Awal 1426H (corresponding to April 19, 2005) and its Head Office is located at the following address: Bank AlBilad P.O. Box 140 Riyadh 11411 Kingdom of Saudi Arabia The interim condensed consolidated financial statements comprise the financial statements of the Bank and its subsidiaries, „AlBilad Investment Company‟ and „AlBilad Real Estate Company‟ (collectively referred to as “The Group”). The Group‟s objective is to provide full range of banking services, financing and investing activities through various Islamic instruments. The activities of the Group are conducted in accordance with Islamic Shariah and within the provisions of the Articles and Memorandum of Association, by-laws and the Banking Control Law. The activities are monitored by an independent Shariah authority established by the Bank. The Bank provides these services through 83 banking branches (June 2011: 78) and 136 exchange and remittance centers (June 2011: 110) in the Kingdom of Saudi Arabia. b) Shariah Authority The Bank established a Shariah authority (“the Authority”). It ascertains that all the Group‟s activities are subject to its approvals and control. 2.
BASIS OF PREPARATION The interim condensed consolidated financial statements are prepared in accordance with the Accounting Standards for financial institutions promulgated by the Saudi Arabian Monetary Agency (“SAMA”) and IAS 34 – Interim Financial Reporting. The Bank also prepares its interim condensed consolidated financial statements to comply with the requirements of Banking Control Law and the Regulations of Companies in the Kingdom of Saudi Arabia. The interim condensed consolidated financial statements do not include all information and disclosure required in the annual consolidated financial statements, and should be read in conjunction with the annual financial statements of the bank for the year ended December 31, 2000. The preparation of interim financial statements 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 expense. Actual results may differ from these estimates
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BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group‟s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2011 These interim condensed consolidated financial statements are expressed in Saudi Arabian Riyals (SAR) which is the Bank's functional currency and are rounded off to the nearest thousands.
3.
BASIS OF CONSOLIDATION The interim condensed consolidated financial statements comprise the financial statements of the Bank and its subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting period as that of the Bank, using consistent accounting policies. Subsidiaries are all entities over which the Bank has the power to govern the financial and operating policies, so as to obtain benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are consolidated from the date on which the control is transferred to the Bank and cease to be consolidated from the date on which the control is transferred from the Bank. The results of subsidiaries acquired or disposed off during the period are included in the interim condensed consolidated income statement from the date of the acquisition or up to the date of disposal, as appropriate. Non- controlling interests represent the portion of net income and net assets attributable to interests which are not owned, directly or indirectly, by the Bank in its subsidiaries. Non- controlling interest is 1% of AlBilad Investment Company‟s net assets and is owned by representative shareholders and hence not presented separately in the interim condensed consolidated statement of financial position, interim condensed consolidated income statement and interim condensed consolidated statement of change in shareholders‟ equity. AlBilad Real Estate Company is 100% owned by the Bank. Inter-group balances and any income and expenses arising from intra-group transactions, are eliminated in preparing these interim condensed consolidated financial statements.
4.
SIGNIFICANT ACCOUNTING POLICIES The accounting policies used in the preparation of these interim condensed consolidated financial statements are consistent with those used in the preparation of the annual consolidated financial statements for the year ended December 31, 2011 except for the adoption of amendment to IAS 12: Deferred Tax: Recovery of underlying assets and IFRS 7: Enhanced Derecognition Disclosures Requirements, which have had no material financial impact on the interim condensed consolidated financial statements of the Group.
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BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 5.
INVESTMENTS June 30, 2012 SAR' 000 (Unaudited) Available-for-sale investments Equities Mutual fund Sukuk Held at amortized cost Commodity Murabaha with SAMA, at amortized cost Total
6.
June 30, 2011 SAR' 000 (Unaudited)
269,313 20,643 58,000
272,296 20,791 58,000
278,957 23,386 -
347,956
600,371 951,458
1,600,709 1,903,052
FINANCING, NET June 30, 2012 SAR'000 (Unaudited) Held at amortized cost Bei Ajel Installment Sales Ijarah Musharaka Credit Card Performing financing Non-performing financing Gross financing Allowance for impairment Financing, net
7.
December 31, 2011 SAR' 000 (Audited)
8,392,359 6,600,682 338,120 1,191,102 22,154 16,544,417 671,381 17,215,798 (1,007,657) 16,208,141
December 31, 2011 SAR'000 (Audited) 7,037,464 8,892,782 352,968 991,113 4,202 13,978,610 685,215 14,663,825 (884,079) 13,779,746
June 30, 2011 SAR'000 (Unaudited) 6,468,756 8,228,222 364,003 1,007,263 9,410 13,077,645 668,371 13,746,016 (733,132) 13,012,884
CUSTOMER DEPOSITS June 30, 2012 SAR'000 (Unaudited) Current Account Albilad Account Time Deposit Other Total
18,344,794 3,175,472 1,685,990 405,166 23,611,422
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December 31, 2011 SAR'000 (Audited) 18,582,336 2,929,251 1,192,169 334,178 23,037,934
June 30, 2011 SAR'000 (Unaudited) 12,950,319 2,492,939 1,580,262 279,129 17,302,639
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 8.
COMMITMENTS AND CONTINGENCIES a) The Bank’s commitments and contingencies are as follows: June 30, 2012 SAR' 000 (Unaudited) Letters of credit Letters of guarantee Acceptances Total
627,220 2,270,936 328,792 3,226,948
December 31, 2011 SAR' 000 (Audited) 619,542 0,847,468 278,284 2,745,394
June 30, 2011 SAR' 000 (Unaudited) 567,185 1,706,514 236,443 2,510,142
b) Restricted investment accounts June 30, 2012 SAR' 000 (Unaudited) Under Wakalah arrangement
75,998
December 31, 2011 SAR' 000 (Audited) 1,189,256
June 30, 2011 SAR' 000 (Unaudited) 346,525
The Bank accepts restricted investment accounts from customers under Wakalah arrangements. The amounts received as placements are invested by the Bank in commodity Murabaha with banks and other financial institutions. Management fees is charged on these accounts. c) Zakat The Bank received Zakat assessments from the Department of Zakat and Income Tax (DZIT) in respect of prior years from 2006 to 2008. The assessments resulted in additional Zakat liability of SR 62, SR 60 and SR 55 million for years 2006, 2007 and 2008 respectively and is primarily due to the disallowance of financing and other financial assets from the Zakat base of the Bank and disallowance of certain expenses. The Bank has filed appeals against all the assessments‟ years. The DZIT upheld the assessment for the year 2006.The Bank has now filed an appeal against the decision with the Appeal Committee. Further, the Bank in consultation with its advisors has contested the assessment made by DZIT and along with the Saudi banking industry has raised this issue with SAMA for a satisfactory resolution. The Bank has accordingly not recognised the additional zakat liability as assessed by DZIT for the years 2006, 2007 and 2008 in the consolidated financial statements. Zakat due from the shareholders for the year ended December 31, 2011 amounted to SAR 10 million (2010: SAR 3.6 million). Zakat will be paid by the Bank on behalf of the shareholders and will be deducted from their future dividends. Moreover, Zakat return for the years 2009, 2010 and 2011 have been filed on basis consistent with prior years.
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BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 9.
NON-OPERATING INCOME
During the period the Bank sold a parcel of land included under other assets at carrying value of SAR 280 million. The Bank acquired the land in 2007 for its own use. The land was sold for a total consideration of SAR 653 million. The Bank issued Bei Ajel facility for the amount of SAR 503 million to Company acquiring the land (the"Company"), which had fully utilized the issued facility. Based on the facility terms, the financed amount is repayable in two installments on February 2013 and August 2013. As a result of the sale, the Bank recognized non-operating income of SAR 373 million, with income per share amounting to SAR 1.2 per share. The financing is secured by personal guarantee of borrowing Company‟s shareholders and also the title of land, which has been retained by the bank pending the collection of the full facility. 10.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the interim condensed consolidated statement of cash flows comprise the following: June 30, June 30, December 31, 2012 SAR' 000 (Unaudited)
11.
2011 SAR' 000 (Audited)
2011 SAR' 000 (Unaudited)
Cash Due from banks and other financial institutions (maturing within 90 days from acquisition) Balances with SAMA excluding statutory deposits
1,194,377
1,115,535
918,032
5,602,458
4,353,930
2,151,303
637,316
3,538,359
177,993
Total
7,434,151
9,007,824
3,247,328
SEGMENT INFORMATION
Operating segments, based on customers, groups are identified on the basis of internal reports about components of the Bank that are regularly reviewed by the Assets and Liabilities Committee (ALCO), the Chief Operating Decision Maker, in order to allocate resources to the segments and to assess its performance. The Bank‟s main business is conducted in the Kingdom of Saudi Arabia. For management purposes, the Bank is divided into the following five segments: Retail banking Services and products to individuals, including deposits, financing, remittances and currency exchange. Corporate banking Services and products including deposits, financing and trade services to corporate and commercial customers. Treasury Dealing with other financial institutions and providing treasury services to all segments.
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BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 Investment banking and brokerage Investment management services and asset management activities related to dealing, managing, arranging, advising and custody of securities. Other All other support functions. Transactions between the above segments are under the terms and conditions of the approved Fund Transfer Pricing (FTP) system. The support segments and Head Office expenses are allocated to business segments, based on approved criteria. The Bank‟s total assets and liabilities, together with its total operating income and expenses, and net income, for the six month period ended June 30, for each segment are as follows:
SAR’000
Total assets Total liabilities Net income from investing and financing assets Fee, commission and other income, net Total operating income Impairment charge for financing ,net Depreciation and amortization Total operating expenses including impairments and depreciation Net operating income for the period Non-operating income Net income for the period
SAR‟000
Total assets Total liabilities Net income from investing and financing assets Fee, commission and other income, net Total operating income Impairment charge for financing ,net Depreciation and amortization Total operating expenses including impairments and depreciation Net income for the period
June 30, 3012 Treasury Investment banking and brokerage 8,533,541 786 37,523 4,152
Retail Banking
Corporate Banking
8,769,699 15,785,118
10,962,413 7,904,621
179,379 323,456 502,835 56,872 38,117
190,799 47,225 238,024 66,708 5,782
16,017 47,468 63,485 677
378,457 124,378 124,378
160,102 77,922 77,922
18,658 44,827 44,827
Retail Banking
Corporate Banking 8,273,682 4,397,470
175,049 196,964 372,013 43,068 40,969
153,111 34,791 187,902 58,211 2,772
9,047 33,863 42,910 299
333,619 38,394
145,272 42,630
17,670 25,240
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Total
791,695 1,237,523
29,058,134 24,968,937
36,694 36,694 135
13,328 9,959 23,287 -
399,523 464,802 864,325 123,580 44,711
15,308 21,386 21,386
23,287 373,167 396,454
572,525 291,800 373,167 664,967
Other
Total
June 30, 2111 Treasury Investment banking and brokerage 6,193,680 950 1,125,071 396,703
6,995,939 12,535,712
Other
995,626 775,224
22,459,877 19,230,180
24,468 24,468 890
6,173 12,950 19,123 -
343,380 303,036 646,416 101,279 44,930
12,729 11,739
19,123
509,290 137,126
BANK ALBILAD (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2012 12. CAPITAL ADEQUACY The Bank maintains an actively managed capital base to cover risks inherent in the business. The adequacy of the Bank's capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision and adopted by SAMA in supervising the Bank. June 30, 2012
December 31, 2011
June 30, 2011
SAR' 000
SAR' 000
SAR' 000
Credit Risk RWA Operational Risk RWA Market Risk RWA Total Pillar-I RWA Tier I Capital Tier II Capital Total Tier I & II Capital Capital Adequacy Ratio % Tier I ratio Tier I + Tier II ratio
16,175,596 2,020,542 548,650 18,744,788
3,424,230 920,549 4,344,779
17,182,708 2,167,026 631,838 19,981,572 3,086,625 572,528 3,659,153
%14.44 %18.32
15.45% 18.31%
06.81% 18.18%
20,446,523 2,391,889 873,150 23,711,562
3,092,572 295,779 3,388,351
13. COMPARATIVE FIGURES Comparative figures have been reclassified wherever necessary to conform to the current period presentation. 14. BASEL II PILLAR III DISCLOSURES Under Basel II Pillar 3 certain quantitative and qualitative disclosures are required. These disclosures will be made available on the Bank‟s website (www.bankalbilad.com.sa) within 60 days after June 30, 2012 as required by SAMA. Such disclosures are not subject to review or audit by the external auditors of the Bank.
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