National Bank of Umm Al Qaiwain : Financial Results for the Period Ended 31-03-2024

NATIONAL BANK OF UMM AL-QAIWAIN (PSC) AND SUBSIDIARY

Review report and condensed consolidated interim financial statements

For the period ended 31 March 2024

National Bank of Umm Al-Qaiwain (PSC) and Subsidiary

Review report and condensed consolidated interim financial statements

For the three months period ended 31 March 2024 (Unaudited)

Contents	Pages
Report on review of condensed consolidated interim financial statements	3
Condensed consolidated interim statement of financial position	4
Condensed consolidated interim income statement	5
Condensed consolidated interim statement of comprehensive income	6
Condensed consolidated interim statement of changes in equity	7
Condensed consolidated interim statement of cash flows	9
Notes to the condensed consolidated interim financial statements	10 - 25

ERNST & YOUNG - MIDDLE EAST	Tel:	[phone]
(SHARJAH BRANCH)	Fax:	[phone]
P.O. Box 1350	[e-mail]
City Gate Tower, 14th Floor, Office No. 1402	ey.com
Al-Ittihad Street, Emirate of Sharjah
United Arab Emirates	PL No. 2845

REPORT ON REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF NATIONAL BANK OF UMM AL- QAIWAIN PSC AND SUBSIDIARY

Introduction

We have reviewed the accompanying condensed consolidated interim financial statements of National Bank of Umm Al-Qaiwain PSC (the "Bank") and its subsidiary (collectively referred to as the "Group"), which comprise the consolidated interim statement of financial position as at 31 March 2024 and the related consolidated interim income statement, consolidated interim statement of comprehensive income, consolidated interim statement of changes in equity and consolidated interim statement of cash flows for the three-month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting ("IAS 34"). Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with IAS 34.

For Ernst & Young

Signed by:

Anthony O'Sullivan

Partner

Registration No: 687

17 April 2024

Sharjah, United Arab Emirates

A member firm of Ernst & Young Global Limited

National Bank of Umm Al-Qaiwain (PSC) and Subsidiary

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

For the three months period ended 31 March 2024 (Unaudited)

		Three months period ended
		31 March (Unaudited)
		──────────────────
		2024	2023
	Notes	AED '000	AED '000
Interest income		229,786	165,796
Income from Islamic financing products		2,854	3,784
Total interest income and income from		─────────	─────────
Islamic financing products		232,640	169,580
		─────────	─────────
Interest expense		(56,834)	(30,768)
Distribution to depositors - Islamic products		(15)	(156)
Net interest income and income from Islamic		─────────	─────────
products net of distribution to depositors		175,791	138,656
Net fees and commission income		6,761	8,146
Other operating income		62,895	8,658
		─────────	─────────
Gross income		245,447	155,460
Operating expenses		(41,981)	(38,866)
Investment gains		44,801	34,058
		─────────	─────────
Operating income		248,267	150,652
		─────────	─────────
Net impairment losses	16	(59,812)	(11,494)
		─────────	─────────
Profit before tax		188,455	139,158
Income tax expenses		(12,720)	-
		─────────	─────────
Profit for the period		175,735	139,158
		═════════	═════════
Basic and diluted earnings per share (AED)	17	0.09	0.07
		═════════	═════════

The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements.

The independent auditor's report on review of the condensed consolidated interim financial statements is set out on page 3.

5

National Bank of Umm Al-Qaiwain (PSC) and Subsidiary

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the three months period ended 31 March 2024 (Unaudited)

	Three months period ended
	31 March (Unaudited)
	──────────────────
	2024	2023
Notes	AED '000	AED '000
PROFIT FOR THE PERIOD	175,735	139,158
Other comprehensive income
Items that will not be reclassified subsequently to income statement
Net fair value gain/(loss) on investment securities	25,424
carried at FVTOCI - equity	(51,835)
	────────	────────
Other comprehensive income/(loss) for the period	25,424	(51,835)
	────────	────────
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	201,159	87,323
	════════	════════

The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements.

The independent auditor's report on review of the condensed consolidated interim financial statements is set out on page 3.

6

National Bank of Umm Al-Qaiwain (PSC) and Subsidiary

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

For the three months period ended 31 March 2024 (Unaudited)

	Share			Impairment	Cumulative
	change in	Statutory	General	Reserve -	change in	Retained
	capital	reserve	reserve	general	fair values	earnings	Total
	AED '000	AED '000	AED '000	AED '000	AED '000	AED '000	AED '000
Balance as at 1 January 2024 (audited)	2,000,000	1,019,266	6,440	74,797	388,254	2,152,184	5,640,941
Profit for the period	-	-	-	-	-	175,735	175,735
Other comprehensive income for the period	-	-	-	-	25,424	-	25,424
	────────	────────	────────	────────	────────	────────	────────
Total comprehensive income for the period	-	-	-	-	25,424	175,735	201,159
Reversal of provision under U.A.E Central Bank	────────	────────	────────	────────	────────	────────	────────
requirement over IFRS 9 requirement	-	-	-	(2,196)	-	2,196	-
Sale of FVOCI equity	-	-	-	-	(12,894)	12,894	-
Dividend paid (Note 13)	-	-	-	-	-	(300,000)	(300,000)
	────────	────────	────────	────────	────────	────────	────────
Balance as at 31 March 2024 (unaudited)	2,000,000	1,019,266	6,440	72,601	400,784	2,043,009	5,542,100
	════════	════════	════════	════════	════════	════════	════════

The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements.

The independent auditor's report on review of the condensed consolidated interim financial statements is set out on page 3.

7

National Bank of Umm Al-Qaiwain (PSC) and Subsidiary

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (continued)

For the three months period ended 31 March 2024 (Unaudited)

				Impairment	Cumulative
	Share	Statutory	General	reserve -	change in	Retained
	capital	reserve	reserve	general	fair values	earnings	Total
	AED '000	AED '000	AED '000	AED '000	AED '000	AED '000	AED '000
Balance as at 1 January 2023 (audited)	2,000,000	1,019,266	6,440	34,586	383,710	1,883,018	5,327,020
Profit for the period	-	-	-	-	-	139,158	139,158
Other comprehensive loss for the period	-	-	-	-	(51,835)	-	(51,835)
	────────	────────	────────	────────	────────	────────	────────
Total comprehensive (loss)/income for the period	-	-	-	-	(51,835)	139,158	87,323
Additional provision under U.A.E Central Bank	────────	────────	────────	────────	────────	────────	────────
requirement over IFRS 9 requirement	-	-	-	36,080	-	(36,080)	-
Dividend paid (Note 13)	-	-	-	-	-	(200,000)	(200,000)
	────────	────────	────────	────────	────────	────────	────────
Balance as at 31 March 2023 (unaudited)	2,000,000	1,019,266	6,440	70,666	331,875	1,786,096	5,214,343
	════════	════════	════════	════════	════════	════════	════════

The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements.

The independent auditor's report on review of the condensed consolidated interim financial statements is set out on page 3.

8

National Bank of Umm Al-Qaiwain (PSC) and Subsidiary

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

For the three months period ended 31 March 2024 (Unaudited)

		Three months period ended
		31 March (Unaudited)
		────────────────────────
		2024	2023
	Notes	AED '000	AED '000
CASH FLOWS FROM OPERATING ACTIVITIES		175,735
Profit for the period		139,158
Adjustments for:		56,157
Provision for expected credit losses	16	11,494
Depreciation of property and equipment		3,744	3,211
Depreciation of right of use asset		432	432
Provision for impairment of assets acquired in settlement of debt	16	3,655	-
Provision for employee end of service benefits		581	436
Decrease in fair value of investment		2,997
in securities at FVTPL		603
Premium amortised on investment securities		(682)	(264)
Dividend income	22	(47,234)	(34,397)
Profit on disposal of property and equipment		(58)	(11)
Gain on disposal of assets acquired in settlement of debt		(1,348)	-
Share of loss/(profit) from an associate		120	(2)
Finance cost on lease liability		10	18
		────────	────────
Operating cash flows before movements in working capital		194,109	120,678
Increase in deposits with original maturity		(595,026)
greater than 3 months		(146,920)
(Increase)/Decrease in statutory deposit with CBUAE		(15,652)	27,218
Payment of employee end of service benefits		(330)	(309)
Proceeds from disposal of assets acquired in settlement of debt		2,600	-
Decrease in loans and advances and Islamic financing receivables		154,315	48,624
Increase in other assets		9,260	(97,666)
Increase in customers' deposits		122,982	320,327
Increase in other liabilities		49,478	160,429
		────────	────────
Net cash (used in)/generated from operating activities		(78,264)	432,381
CASH FLOWS FROM INVESTING ACTIVITIES		────────	────────
	(4,377)
Purchase of property and equipment		(3,997)
Proceeds from disposal of property and equipment		76	11
Purchase of investment securities		(17,499)	(54,131)
Proceed from maturity and disposal of investment securities		35,637	84,479
Dividend received from investment securities		22,162	12,685
		────────	────────
Net cash generated from investing activities		35,999	39,047
CASH FLOWS FROM FINANCING ACTIVITIES		────────	────────
	(300,000)
Dividend paid	13	(200,000)
Lease payments		(452)	(58)
		────────	────────
Net cash used in financing activities		(300,452)	(200,058)
		────────	────────
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS	(342,717)	271,370
Cash and cash equivalents at the beginning of the period		3,927,853	3,999,860
CASH AND CASH EQUIVALENTS AT THE END		────────	────────
18	3,585,136	4,271,230
OF THE PERIOD
		════════	════════

The attached notes 1 to 25 form an integral part of these condensed consolidated interim financial statements.

The independent auditor's report on review of the condensed consolidated interim financial statements is set out on page 3.

9

National Bank of Umm Al-Qaiwain (PSC) and Subsidiary

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three months period ended 31 March 2024 (Unaudited)

1 GENERAL INFORMATION

National Bank of Umm Al-Qaiwain (PSC) (the "Bank") is a Public Shareholding Company incorporated in the Emirate of Umm Al-Qaiwain ("UAQ") in the United Arab Emirates ("U.A.E.") by Amiri Decree Number (1) on 5 January 1982, issued by His Highness, the Ruler of Umm Al-Qaiwain, and commenced its operations with effect from 1 August 1982. National Bank of Umm Al-Qaiwain (PSC), and its subsidiary, Twin Towns Marketing Management L.L.C. are together referred to as the "Group". The address of the Bank's registered Head Office is P.O. Box 800, Umm Al-Qaiwain, United Arab Emirates.

The Bank is engaged in providing retail and corporate banking services through a network of 11 branches in the U.A.E. The Group carries out Islamic banking operations through Islamic banking window established in 2005 across all its branch network.

The condensed consolidated interim financial statements of the Group for the three months period ended 31 March 2024 were authorised and approved for issue by the Board of Directors on 17 April 2024 by circulation.

2 CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2023, except for those stated below. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. Several amendments apply for the first time in 2024, but do not have any material impacts on the interim condensed consolidated financial statements of the Group.

2.1 Taxation

Income tax expense comprises of current and deferred tax. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date. On 9 December 2022, the UAE Ministry of Finance released Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law or the Law) to enact a Federal corporate tax (CT) regime in the UAE. The CT regime is effective for accounting periods beginning on or after 1 June 2023 and the law is now considered to be substantively enacted from the perspective of IAS 12 - Income taxes. As the Group's accounting year ends on 31 December, the first tax period is 1 January 2024 to 31 December 2024, with the first return to be filed on or before 30 September 2025. A rate of 9% will apply to taxable income exceeding AED 375,000, a rate of 0% will apply to taxable income not exceeding this threshold.

Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from, or paid to, the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, or substantively enacted, by the reporting date. Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income respectively and not in the statement of income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax is recognised in respect of temporary differences at the reporting date between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Based on the assessment conducted by the Group, it has been determined that there are no deferred tax implications as at the reporting date.

10