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Part (XIII) – Tables, Forms and Filling Up Instructions

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Fifteenth Edition 886 September 2013

Consolidated Financial Statements for Islamic Banks Annex No. (131)

AAOIFI ILLUSTRATIVE CONSOLIDATED FINANCIAL STATEMENTS

FOR ISLAMIC BANKS [NAME OF THE BANK] Q.S.C. / S.A.Q.

FOR THE YEAR ENDED

31 DECEMBER

887

ABOUT THESE AAOIFI ILLUSTRATIVE CONSOLIDATED FINANCIAL STATEMENTS These illustrative consolidated financial statements of [Name of the Bank] Q.S.C. / S.A.Q. (“the Bank”,

together with its subsidairies referred to as “the Group”) as at the year ended 31 December 2012 are intended to illustrate the presentation and disclosure requirements of Financial Accounting Standards (“FAS”) as issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (“AAOIFI”) effective as at 1 January 2012, International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (IASB) where a relevant AAOIFI standard is not issued, and the applicable provisions of Qatar Central Bank (“QCB”) regulations, together referred as (“the Applicable Standards”).

This publication illustrates the format for consolidated financial statements for Islamic banks in Qatar

involved in general Islamic banking activities, and which are not adopting FAS as a first time adopter. FASs and their interpretation change over time, accordingly, these illustrative consolidated financial statements should not be used as a substitute for referring to the standards and interpretation themselves.

These illustrative consolidated financial statements are not considered to be a definitive guide, as certain

standards can be applied in a different manner depending on the circumstances of the Group.

Suggested disclosures are cross-referenced to the underlying requirements in the texts of the relevant FAS / IFRS and interpretations or relevant QCB regulations. References are generally to the most recent version of the relevant FAS / IFRS or interpretation (unless specified otherwise) where the FAS / IFRS or interpretation has been adopted by the Group.

Part (XIII) – Tables, Forms and Filling Up Instructions

888

CAVEATS / NOTES These illustrative consolidated financial statements include line items and disclosures to illustrate items that,

although not applicable to the Group, are encountered in general practice. This does not mean that all possible disclosures have been covered.

The accounting policies disclosed in these illustrative consolidated financial statements reflect the facts and

circumstances of the fictitious Islamic banking group on which these consolidated financial statements are based. They should not be relied upon for a complete understanding of the requirements of AAOIFI or QCB regulations. The accounting policy disclosures appropriate for the Group depend on the facts and circumstances of that Group, including the accounting policy choices that Group makes, and may differ from the disclosures presented in these illustrative consolidated financial statements.

The presentation of line items for the primary statements is based on the format generally used by Islamic

banks in Qatar and is in compliance with QCB regulations. Items that are material in nature should be disclosed separately on the face of the relevant main statement in accordance with AAOIFI.

The consolidated statement of financial position has been presented in the broad order of liquidity because

such presentation usually provides reliable and more relevant information for a Bank, rather than separate current and non-current classification.

The ‘indirect’ method for the preparation of the statement of cashflows has been followed in these illustrative

consolidated financial statements based on QCB requirements.

These illustrative consolidated financial statements have excluded any impact of Zakah on the basis that this is borne by the owners directly. We have included a proforma of consolidated statement of ‘sources and uses of funds in zakah and charity funds’ for those instances where zakah is borne by the Bank.

Notes to these illustrative consolidated financial statements do not incorporate the bifurcation of balances

between jointly financed and self financed assets as illustrated in Annexure E of FAS 1 – ‘Example of the financial statements and disclosures’.

For ‘listed’ banks, the social and sports fund contribution should be accounted for through the statement of

changes in owners’ equity. These illustrative consolidated financial statements have been prepared on the basis that no financial liabilities

have been classified as fair value through profit and loss.

Expenses in the consolidated income statement have been presented according to their ‘nature’ as opposed to their ‘function’ in accordance with QCB requirements.

The equity method of accounting should be followed as the accounting policy for interests in joint ventures

based is based on QCB requirements.

For the purpose of these illustrative consolidated financial statements we have not considered any impairment related to non-financial assets. Any such impairment should be disclosed based on IFRS requirements, based on the fact that AAOIFI is silent on this.

In terms of presentation and where applicable, the most recent AAOIFI wordings / format has been followed, even if the actual standard has not yet been issued.

Earnings per share disclosure is mandatory for ‘listed’ banks.

889

CONTENTS AAOIFI ILLUSTRATIVE CONSOLIDATED FINANCIAL STATEMENTS

Page Consolidated statement of financial position 890 Consolidated income statement 891 Consolidated statement of changes in owners’ equity 892 Consolidated statement of cash flows 894 Consolidated statement of changes in restricted investments 895 Consolidated statement of sources and uses of charity funds 897 Consolidated statement of sources and uses of Qard Funds 898 Notes to the consolidated financial statements 899

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF FINANCIAL POSITION QAR ‘000s

The attached notes __ to __ form an integral part of these consolidated financial statements. 890

Reference As at 31 December Note 2012 2011

ASSETS FAS 1.30-38 Cash and balances with central banks 9 XXXX XXXX Due from banks 10 XXXX XXXX Financing assets 11 XXXX XXXX Investment securities 12 XXXX XXXX Investment in associates and joint ventures 13 XXXX XXXX Investment property 14 XXXX XXXX Fixed assets 15 XXXX XXXX Intangible assets 16 XXXX XXXX Other assets 17 XXXX XXXX TOTAL ASSETS XXXX XXXX

FAS 1.41-45 LIABILITIES Due to banks 18 XXXX XXXX Customer current accounts 19 XXXX XXXX Financing liabilities 20 XXXX XXXX Other liabilities 21 XXXX XXXX TOTAL LIABILITIES XXXX XXXX

FAS 1.41-45 EQUITY OF INVESTMENT ACCOUNT HOLDERS 22 XXXX XXXX FAS 1.41-45 OWNERS’ EQUITY Share capital 23(a) XXXX XXXX Legal reserve 23(b) XXXX XXXX Risk reserve 23(c) XXXX XXXX Fair value reserves 23(d) XXXX XXXX Foreign currency translation reserve 23(e) XXXX XXXX Other reserves 23(f) XXXX XXXX Retained earnings XXXX XXXX TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS

OF THE BANK

XXXX XXXX Non-controlling interests 24 XXXX XXXX TOTAL OWNERS’ EQUITY XXXX XXXX TOTAL LIABILITIES, EQUITY OF INVESTMENT ACCOUNT

HOLDERS AND OWNERS’ EQUITY

XXXX XXXX

These consolidated financial statements were approved by the Board of Directors on DD/MM/YYYY and were signed on its behalf by:

-------------------------------------------- ------------------------------------------- Name, Title Name, Title

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED INCOME STATEMENT QAR ‘000s


Reference For the year ended 31 December Note 2012 2011

FAS 1.46 - 52 Net income from financing activities 25 XXXX XXXX

Net income from investing activities 26 XXXX XXXX Total income from financing and investing activities XXXX XXXX

Fee and commission income 27 XXXX XXXX Fee and commission expense 27 XXXX XXXX Net fee and commission income XXXX XXXX

Foreign exchange gain / (loss) 28 XXXX XXXX Share of results of associates and joint ventures 13 XXXX XXXX Other income XXXX XXXX Total income XXXX XXXX

Staff costs 29 (XXXX) (XXXX) Depreciation and amortisation 15,16 (XXXX) (XXXX) Finance expense (XXXX) (XXXX) Other expenses 30 (XXXX) (XXXX) Total expenses (XXXX) (XXXX)

Net Impairment loss on investment securities 12 (XXXX) (XXXX) Net impairment loss on financing assets 11 (XXXX) (XXXX) Profit / (loss) for the year before return to investment

account holders

XXXX XXXX Return to investment account holders before the Bank’s

share as Mudarib

(XXXX) (XXXX) Bank’s share as Mudarib XXXX XXXX Net return to investment account holders (XXXX) (XXXX) Net profit / (loss) for the year before tax XXXX XXXX Tax expense 31 (XXXX) (XXXX) Net profit / (loss) for the year XXXX XXXX

Net profit / (loss) for the year attributable to:

Equity holders of the Bank XXXX XXXX Non-controlling interests 23 (XXXX) (XXXX) Profit / (loss) for the year XXXX XXXX

Earnings per share Basic earnings per share (QAR per share) 36 X.XX X.XX

Diluted earnings per share (QAR per share) 36 X.XX X.XX

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY QAR ‘000s

The attached notes __ to __ form an integral part of these consolidated financial statements.892

Reference

Note Share

capital

Legal

reserve

Risk

reserve

Fair

value

reserves

Foreign

currency

translation

reserve

Other

reserves Retained

earnings

Total

equity

ttributable to

quity holders

of the Bank

Non-

controlling

interests

Total

owners’

equity

FAS 1. 58

-60

Balance at 1 January 2011 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Change in foreign currency

translation reserve

23e - - - - XXXX - XXXX - XXXX

Fair value reserve movement 23d - - - XXXX - - - XXXX - XXXX

Profit / (loss) for the year - - - - - - XXXX XXXX XXXX XXXX

Total recognised income and

expense for the year

XXXX XXXX XXXX XXXX XXXX


Change in other reserves 23f - - - - - XXXX (XXXX) - - -

Dividends to owners - - - - - - (XXXX) (XXXX) - (XXXX)

Transfer to legal reserve 23b - XXXX - - - - (XXXX) - - -

Transfer to risk reserve 23c - - XXXX - - - (XXXX) - - -

Social and sports funds

appropriation

- - - - - - (XXXX) - - (XXXX)

Balance at 31 December 2011 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY (CONTINUED) QAR ‘000s

The attached notes __ to __ form an integral part of these consolidated financial statements.893

Reference

Note Share

capital

Legal

reserve

Risk

reserve

Fair

value

reserves

Foreign

currency

translation

reserve

Other

reserves Retained

earnings

Total

equity

ttributable to

quity holders

of the Bank

Non-

controlling

interests

Total

owners’

equity

FAS 1. 58

-60

Balance at 1 January 2012 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Change in foreign currency

translation reserve

23e - - - - XXXX - XXXX - XXXX

Fair value reserve movement 23d - - - XXXX - - - XXXX - XXXX

Profit / (loss) for the year - - - - - - XXXX XXXX XXXX XXXX

Total recognised income and

expense for the year



Change in other reserves 23f - - - - - XXXX (XXXX) - - -

Dividends to owners - - - - - - (XXXX) (XXXX) - (XXXX)

Transfer to legal reserve 23b - XXXX - - - - (XXXX) - - -

Transfer to risk reserve 23c - - XXXX - - - (XXXX) - - -

Social and sports funds

appropriation

- - - - - - (XXXX) - - (XXXX)

Balance at 31 December 2012 XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF CASH FLOWS QAR ‘000s


Reference For the year ended 31 December Note 2012 2011

FAS 1. 53 - 57

Cash flows from operating activities

Net profit / (loss) for the year XXXX XXXX Adjustments for: Net impairment loss on financing assets 11 XXXX XXXX Impairment loss on investment securities 12 XXXX XXXX Depreciation and amortisation 15,16 XXXX XXXX Net loss / (gain) on sale of investment securities 26 XXXX (XXXX) Dividend income 26 XXXX XXXX Share of results of associates and joint ventures 13 XXXX XXXX Loss / (gain) on disposal of fixed assets XXXX XXXX

Profit / (loss) before changes in operating assets and liabilities XXXX XXXX

Change in reserve account with central banks

XXXX XXXX Change in due from banks XXXX XXXX Change in financing assets XXXX XXXX Change in other assets XXXX XXXX Change in due to banks XXXX XXXX Change in customer current accounts XXXX XXXX Change in other liabilities XXXX XXXX

XXXX XXXX Dividends received 26 XXXX XXXX Tax paid (XXXX) (XXXX)

Net cash from / (used in) operating activities XXXX (XXXX)

Cash flows from investing activities Acquisition of investment securities (XXXX) (XXXX) Proceed from sale of investment securities XXXX XXXX Acquisition of fixed assets 15 (XXXX) (XXXX) Proceed from sale of fixed assets XXXX XXXX Acquisition of investment property 14 (XXXX) (XXXX) Proceed from sale of investment property XXXX XXXX

Net cash from / (used in) investing activities XXXX (XXXX)

Cash flows from financing activities Change in investment accounts XXXX XXXX Proceeds from issuance of share capital 24 XXXX XXXX Proceeds from financing liabilities 20 XXXX XXXX Dividends paid (XXXX) (XXXX)

Net cash from / (used in) financing activities XXXX (XXXX)

Net increase / (decrease) in cash and cash equivalents XXXX (XXXX) Cash and cash equivalents at 1 January XXXX XXXX Effects of exchange rate changes on cash and cash equivalents

held

XXXX XXXX

Cash and cash equivalents at 31 December 37 XXXX XXXX

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF CHANGES IN RESTRICTED INVESTMENT ACCOUNTS QAR ‘000s


At 1 January

2011

Movements during the year At 31 December 2011

Reference

No. of

Units

(‘000)

Value

per unit

in QAR

Total

value

Investment /

(withdrawals) Revaluation

Gross

income/

(loss)

Dividends

paid

Admin

expense

Bank’s

fee as an

agent

No. of

Units

(‘000)

Value

per unit

in QAR

Total

value

XXX XX XXXX XXXX XXXX XXXX XXXX (XXXX) (XXXX) XXX XX XXXX

FAS 1.61 -

64

Name of investment (e.g.

ABC Property fund / ABC

Investment W.L.L.)

XXX XX

XXXX

XXXX XXXX

XXXX

XXXX

(XXXX) (XXXX) XXX XX

XXXX

XXX XXXX XXXX XXXX XXXX XXXX (XXXX) (XXXX) XXX XXXX

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF CHANGES IN RESTRICTED INVESTMENT ACCOUNTS (CONTINUED) QAR ‘000s


At 1 January 2012

Movements during the year At 31 December 2012

Reference

No. of

Units

(‘000)

Value

per unit

in QAR

Total

value

Investment /

(withdrawals) Revaluation

Gross

income/

(loss)

Dividends

paid

Admin

expense

Bank’s

fee as an

agent

No. of

Units

(‘000)

Value per

unit in

QAR

Total

value

XXX XX XXXX XXXX XXXX XXXX XXXX (XXXX) (XXXX) XXX XX XXXX

FAS 1.61 -

64

Name of investment (e.g.

ABC Property fund / ABC

Investment W.L.L.)

XXX XX

XXXX

XXXX XXXX

XXXX

XXXX

(XXXX) (XXXX) XXX XX

XXXX

XXX XXXX XXXX XXXX XXXX XXXX (XXXX) (XXXX) XXX XXXX

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF SOURCES AND USES OF CHARITY FUNDS QAR ‘000s

The attached notes __ to __ form an integral part of these consolidated financial statements.

897

Reference For the year ended 31 December 2012 2011 FAS 1.65 - 68 Sources of charity funds Contributions by the Bank XXXX XXXX Earnings prohibited by Sharia’a XXXX XXXX Total sources during the year XXXX XXXX Uses of charity funds Contributions to charitable organisations (XXXX) (XXXX) Other uses (XXXX) (XXXX) Total uses during the year (XXXX) (XXXX) Excess of sources over uses XXXX XXXX Balance at 1 January XXXX XXXX Undistributed charity funds at 31 December XXXX XXXX

NAME OF THE BANK (Q.S.C. / S.A.Q.) CONSOLIDATED STATEMENT OF SOURCES AND USES OF QARD FUNDS QAR ‘000s

The attached notes __ to __ form an integral part of these consolidated financial statements.

898

Reference For the year ended 31 December 2012 2011 FAS 1.69 - 73 Opening balance Good financings XXXX XXXX Funds available for financings XXXX XXXX XXXX XXXX Sources of Qard fund Allocation from current accounts XXXX XXXX Allocation from earnings prohibited by Shari’a XXXX XXXX Source outside the Bank XXXX XXXX Total of sources during the year XXXX XXXX Uses of Qard fund Financings to students XXXX (XXXX) Financingsto craftsmen XXXX (XXXX) Settlement of current accounts XXXX (XXXX) Total uses during the year XXXX (XXXX) Balance at 31 December Good Financings XXXX XXXX Funds available for financings XXXX XXXX XXXX XXXX

NAME OF THE BANK (Q.S.C. / S.A.Q.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for the year ended 31 December 2012 QAR ‘000s

899

Reference

FAS 1.9

FAS 1.12

1.

REPORTING ENTITY

[Name] (“the Bank”) is an entity domiciled in the State of Qatar and was incorporated on

____ as _____ (nature of legal entity) under Emiri Decree no. __ of __. The commercial

registration number of the Bank is _____. The address of the Bank’s registered office is

[address]. The consolidated financial statements of the Bank for the year ended 31

December 2012 comprise the Bank and its subsidiaries (together referred to as “the

Group” and individually as ”Group entities”). The Bank is primarily involved in corporate,

retail and investment banking, and has ___ branches in Qatar and ___ internationally.

The Parent Company / Ultimate Controlling Party of the Group is ____.

The principal subsidiaries of the Group are as follows:

Company’s Name

Country of Incorportaion

Company’s Capital

Company’sActivities

Percentage of

ownership 2012

Percentage of ownership

2011 Sub 1 XXX XXX XXX XXX XXX Sub 2 XXX XXX XXX XXX XXX

FAS 1.12 2. BASIS OF PREPARATION

(a) Statement of compliance The consolidated financial statements have been prepared in accordance with Financial

Accounting Standards (“FAS”) issued by the Accounting and Auditing Organisation for

Islamic Financial Institutions (“AAOIFI”) and the applicable provisions of Qatar Central

Bank (“QCB”) regulations. In line with the requirements of AAOIFI, for matters that are

not covered by FAS, the Group uses guidance from the relevant International Financial

Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board

(“IASB”). FAS 1.12 (b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis

except for the following material items on the consolidated statement of financial position:

[State the assets and liabilities that are not measured on an historical cost basis]. FAS 1.10 (c) Functional and presentation currency These consolidated financial statements are presented in Qatari Riyals (“QAR”), which is

the Bank’s functional currency. Except as otherwise indicated, financial information

presented in QAR has been rounded to the nearest thousands. The functional currencies

for the Bank’s subsidiaries have been assessed as [........].



900

Reference

2.

BASIS OF PREPARATION (CONTINUED)

(d) Use of estimates and judgments IAS 1.122, 125

The preparation of the consolidated financial statements in conformity with FAS requires

management to make judgements, estimates and assumptions that affect the application of

accounting policies and the reported amounts of assets, liabilities, income and expenses.

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised and in any

future periods affected. Information about significant areas of estimation uncertainty and critical judgements in applying

accounting policies that have the most significant effect on the amounts recognised in the

consolidated financial statements are described in note 5.

3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented

in these consolidated financial statements, and have been applied consistently by Group

entities. [The Group is required to amend / disclose appropriately when there is a change in accounting

policies in accordance with FAS 1].

(a) Basis of consolidation IFRS 3.3 (i) Business combinations Accounting for business combinations only applies if it is considered that a business has been

acquired. Under IFRS 3, ‘Business Combinations’, a business is defined as an integrated set of

activities and assets conducted and managed for the purpose of providing a return to investors

or lower costs or other economic benefits directly and proportionately to policyholders or

participants. A business generally consists of inputs, processes applied to those inputs, and

resulting outputs that are, or will be, used to generate revenues. If goodwill is present in a

transferred set of activities and assets, the transferred set is presumed to be a business. For acquisitions meeting the definition of a business, the acquisition method of accounting is

used as at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill at the acquisition date as the total of:

the fair value of the consideration transferred; plus

the recognised amount of any non-controlling interests in the acquiree; plus if the business

combination is achieved in stages, the fair value of the existing equity interest in the

acquiree; less

the net recognised amount (generally fair value) of the identifiable assets acquired and

liabilities assumed. When this total is negative, a bargain purchase gain is recognised immediately in consolidated

income statement. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in consolidated income statement.



901

Reference

IFRS 3.3

3. (a) (i)

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of consolidation (continued) Business combinations (continued) Costs related to the acquisition, other than those associated with the issue of debt or equity

securities, that the Group incurs in connection with a business combination are expensed as

incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the

contingent consideration is classified as equity, it is not remeasured and settlement is

accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent

consideration are recognised in consolidated income statement. For acquisitions not meeting the definition of a business, the Group allocates the cost between

the individual identifiable assets and liabilities. The cost of acquired assets and liabilities is

determined by: (a) accounting for financial assets and liabilities at their fair value at the

acquisition date; and (b) allocating the remaining balance of the cost of purchasing the assets

and liabilities to the individual assets and liabilities, other than financial instruments, based on

their relative fair values at the acquisition date.

(ii)

Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are

included in the consolidated financial statements from the date that control commences until

the date that control ceases. Control is the power to govern the financial and operating policies of an entity so as to obtain

benefits from its activities and is generally assumed when the Group holds, directly or

indirectly, majority of the voting rights of the entity. In assessing control, the Group takes into

consideration potential voting rights that currently are exercisable. The accounting policies of subsidiaries have been changed when necessary to align them with

the policies adopted by the Group.

(iii) Special purpose entities Special purpose entities (“SPEs”) are entities that are created to accomplish a narrow and well-

defined objective such as the securitisation of particular assets, or the execution of a specific

borrowing or financing transaction. An SPE is consolidated if, based on an evaluation of the

substance of its relationship with the Group and the SPE’s risks and rewards, the Group

concludes that it controls the SPE. The following circumstances may indicate a relationship in

which, in substance, the Group controls and consequently consolidates an SPE:

The activities of the SPE are being conducted on behalf of the Group according to its

specific business needs so that the Group obtains benefits from the SPE’s operation;

The Group has the decision-making powers to obtain the majority of the benefits of the

activities of the SPE or, by setting up an ‘autopilot’ mechanism, the Group has delegated

these decision-making powers;

The Group has rights to obtain the majority of the benefits of the SPE and therefore may be

exposed to risks incident to the activities of the SPE;

The Group retains the majority of the residual or ownership risks related to the SPE or its

assets in order to obtain benefits from its activities.



902

Reference

3.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IFRS 3.3 (a) Basis of consolidation (continued) (iii) Special purpose entities (continued)

The assessment of whether the Group has control over an SPE is carried out at inception and

normally no further reassessment of control is carried out in the absence of changes in the

structure or terms of the SPE, or additional transactions between the Group and the SPE. Day-to-

day changes in market conditions normally do not lead to a reassessment of control. However,

sometimes changes in market conditions may alter the substance of the relationship between the

Group and the SPE and in such instances the Group determines whether the change warrants a

reassessment of control based on the specific facts and circumstances. Where the Group’s

voluntary actions, such as financing amounts in excess of existing liquidity facilities or extending

terms beyond those established originally, change the relationship between the Group and an SPE,

the Group performs a reassessment of control over the SPE.

(iv) Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any

non-controlling interests and the other components of equity related to the subsidiary. Any surplus

or deficit arising on the loss of control is recognised in consolidated income statement. If the Group

retains any interest in the previous subsidiary, then such interest is measured at fair value at the

date that control is lost. Subsequently it is accounted for as an equity-accounted investee or in

accordance with the Group’s accounting policy for financial instruments depending on the level of

influence retained.

(v) Non-controlling interests FAS 1.43 IAS 27.34

Interests in the equity of subsidiaries not attributable to the parent are reported in consolidated

statement of financial position in owners’ equity. Profits or losses attributable to non-controlling

interests are reported in the consolidated income statement as income attributable to non-

controlling interests. Losses applicable to the non-controlling interests in a subsidiary are allocated

to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit

balance. The Group treats transactions with non-controlling interests as transactions with equity owners of

the Group. For purchases from non-controlling interests, the difference between any consideration

paid and the relevant share acquired of the carrying value of net assets of the subsidiary is

recorded in owners’ equity. Gains or losses on disposals to non-controlling interests are also

recorded in owners’ equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is

remeasured to its fair value, with the change in carrying amount recognised in consolidated income

statement. The fair value is the initial carrying amount for the purposes of subsequently accounting

for the retained interest as an associate, joint venture or financial asset. In addition, any amounts

previously recognised in owners’ equity in respect of that entity are accounted for as if the Group

had directly disposed of the related assets or liabilities. This may mean that amounts previously

recognised in other equity are reclassified to consolidated income statement.

If the ownership interest in an associate is reduced but significant influence is retained, only a

proportionate share of the amounts previously recognised in equity is reclassified to consolidated

income statement where appropriate.



903

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of consolidation (continued) (vi) Transactions eliminated on consolidation IAS 27.21

Intra-group balances, income and expenses (except for foreign currency transaction gains or

losses) arising from intra-group transactions, are eliminated in preparing the consolidated financial

statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the

extent that there is no evidence of impairment.

(vii) Associates Associates are entities over which the Group has significant influence but not control, generally

accompanying a shareholding of between 20% and 50% of the voting rights.

Investments in associates are accounted for by the equity method of accounting and are initially

recognised at cost (including transaction costs directly related to acquisition of investment in

associate). The Group’s investment in associates includes goodwill (net of any accumulated

impairment loss) identified on acquisition.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the

consolidated income statement; its share of post-acquisition movements in reserve is recognised in

equity. The cumulative post-acquisition movements are adjusted against the carrying amount of the

investment. When the Group’s share of losses in an associate equals or exceeds its interest in the

associate, including any other unsecured receivables, the Group does not recognise further losses,

unless it has incurred obligations or made payments on behalf of the associate.

IAS 28.25

Intergroup gains on transactions between the Group and its associates are eliminated to the extent

of the Group’s interest in the associates. Intragroup losses are also eliminated unless the

transaction provides evidence of an impairment of the asset transferred. For preparation of these

consolidated financial statements, equal accounting policies for similar transactions and other

events in similar circumstances are used. Dilution gains and losses in associates are recognised in

the consolidated income statement.

The Group’s share of the results of associates is based on financial statements made up to a date

not earlier than three months before the date of the consolidated statement of financial position,

adjusted to conform to the accounting policies of the Group.

The accounting policies of associates have been changed where necessary to ensure consistency

with policies adopted by the Group.

(viii) Joint ventures

Joint ventures are entities where the Group has a contractual arrangement with one or more parties

to undertake activities typically, through entities that are subject to joint control.

The Group recognises interests in a jointly controlled entity using the equity method of accounting.

The accounting policy given in Note 3(a) (vi) therefore applies for investments in joint ventures as

well.



904

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of consolidation (continued) (viii) Joint ventures (continued)

The Group’s share of the results of joint ventures is based on financial statements made up to

a date not earlier than three months before the date of the statement of financial position,

adjusted to conform with the accounting policies of the Group. Intragroup gains on transactions

are eliminated to the extent of the Group’s interest in the investee. Intragroup losses are also

eliminated unless the transaction provides evidence of impairment in the asset transferred.

(ix) Funds management

The Group manages and administers assets held in unit trusts and other investment vehicles

on behalf of investors. The financial statements of these entities are not included in these

consolidated financial statements except when the Group controls the entity. Information

about the Group’s funds management is set out in note [x].

(b) Foreign currency (i) Foreign currency transactions and balances IAS 21.21,

23(a)

Foreign currency transactions are denominated, or that require settlement in a foreign currency

are translated into the respective functional currencies of the operations at the spot exchange

rates at the transaction dates.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are

translated into the functional currency at the spot exchange rate at that date. Non-monetary

assets and liabilities denominated in foreign currencies that are measured at fair value are

retranslated into the functional currency at the spot exchange rate at the date that the fair value

was determined. Non-monetary assets and liabilities that are measured in terms of historical

cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences resulting from the settlement of foreign currency transactions and

arising on translation at period end exchange rates of monetary assets and liabilities

denominated in foreign currencies are recognised in consolidated income statement.

(ii) Foreign operations

The results and financial position of all the Group’s entities that have a functional currency

different from the presentation currency are translated into the presentation currency as

follows:



905

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Foreign currency (continued) (ii) Foreign operations (continued)

assets and liabilities for each statement of financial position presented are translated at the

closing rate at the reporting date;

income and expenses for each income statement are translated at average exchange rates

(unless this average is not a reasonable approximation of the cumulative effect of the rates

prevailing on the transaction dates, in which case income and expenses are translated at

the dates of the transactions); and

all resulting exchange differences are recognised in equity Exchange differences arising from the above process are reported in owners’ equity as ‘foreign

currency translation reserve’.

On consolidation, exchange differences arising from the translation of the net investment in

foreign entities, and of borrowings and other currency instruments designated as hedges of

such investments, are taken to ‘equity’. When a foreign operation is disposed of, or partially

disposed of, such exchange differences are recognised in the consolidated income statement

as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as

assets and liabilities of the foreign entity and translated at the spot closing rate. When the settlement of a monetary item receivable from or payable to a foreign operation is

neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising

from such a monetary item are considered to form part of the net investment in the foreign

operation and are recognised in owners’ equity, and presented in the foreign exchange

translation reserve in owners’ equity.

(c) Investment securities

FAS 25.4-14

Investment securities comprise investments in debt-type and equity-type financial instruments.

(i) Classification FAS 25.4-14

Debt-type instruments are investments that have terms that provide fixed or determinable

payments of profits and capital. Equity-type instruments are investments that do not exhibit

features of debt-type instruments and include instruments that evidence a residual interest in

the assets of an entity after deducting all its liabilities. Debt-type instruments

Investments in debt-type instruments are classified into the following categories: 1) at

amortised cost or 2) at fair value through income statement.

A debt-type investment is classified and measured at amortised cost only if the instrument is

managed on a contractual yield basis or the instrument is not held for trading and has not been

designated at fair value through the income statement.



906

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Investment securities (continued)

(i) Classification (continued) Debt-type investments classified and measured at fair value through income statement include

investments held for trading or designated at fair value through income statement. At inception, a

debt-type investment managed on a contractual yield basis, can only be designated at fair value

through income statement if it eliminates an accounting mismatch that would otherwise arise on

measuring the assets or liabilities or recognising the gains or losses on them on different bases. Equity-type instruments

Investments in equity type instruments are classified into the following categories: 1) at fair value

through income statement or 2) at fair value through equity. Equity-type investments classified and measured at fair value through income statement include

investments held for trading or designated at fair value through income statement.

An investment is classified as held for trading if acquired or originated principally for the purpose

of generating a profit from short-term fluctuations in price or dealer’s margin. Any investments

that form part of a portfolio where there is an actual pattern of short-term profit taking are also

classified as ‘held for trading’.

Equity-type investments designated at fair value through income statement include investments

which are managed and evaluated internally for performance on a fair value basis.

On initial recognition, the Bank makes an irrevocable election to designate certain equity

instruments that are not designated at fair value through income statement to be classified as

investments at fair value through equity.

(ii) Recognition and derecognition FAS 25.16

Investment securities are recognised at the trade date i.e. the date that the Group contracts to

purchase or sell the asset, at which date the Group becomes party to the contractual provisions

of the instrument. Investment securities are derecognised when the rights to receive cash flows

from the financial assets have expired or where the Group has transferred substantially all risk

and rewards of ownership.

(iii) Measurement FAS 25.15-27

Initial recognition Investment securities are initially recognised at fair value plus transaction costs, except for

transaction costs incurred to acquire investments at fair value through income statement which

are charged to consolidated income statement.



907

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Investment securities (continued) (iii) Measurement (continued)

Subsequent measurement Investments at fair value through income statement are remeasured at fair value at the end of

each reporting period and the resultant remeasurement gains or losses is recognised in the

consolidated income statement in the period in which they arise. Subsequent to initial

recognition, investments classified at amortised cost are measured at amortised cost using the

effective profit method less any impairment allowance. All gains or losses arising from the

amoritisation process and those arising on de-recognition or impairment of the investments, are

recognised in the consolidated income statement.

Investments at fair value through equity are remeasured at their fair values at the end of each

reporting period and the resultant gain or loss, arising from a change in the fair value of

investments are recognised in the consolidated statement of changes in owners’ equity and

presented in a separate fair value reserve within equity. When the investments classified as fair

value through equity are sold, impaired, collected or otherwise disposed of, the cumulative gain

or loss previously recognised in the consolidated statement of changes in equity is transferred to

the consolidated income statement.

Investments which do not have a quoted market price or other appropriate methods from which to

derive a reliable measure of fair value when on a continuous basis cannot be determined, are

stated at cost less impairment allowance, (if any). (iv) Measurement principles

FAS. 25.15-27

Amortised cost measurement The amortised cost of a financial asset or liability is the amount at which the financial asset or

liability is measured at initial recognition, minus capital repayments, plus or minus the cumulative

amortisation using the effective profit method of any difference between the initial amount

recognised and the maturity amount, minus any reduction for impairment. The calculation of the

effective profit rate includes all fees and points paid or received that are an integral part of the

effective profit rate.

Fair value measurement Fair value is the amount for which an asset could be exchanged or an obligation settled between

well informed and willing parties (seller and buyer) in an arm’s length transaction. The Group

measures the fair value of quoted investments using the market closing price for that instrument.

For unlisted investments, the Group recognises any increase in the fair value when they have

reliable indicators to support such an increase and to evaluate the fair value of these

investments. These reliable indicators are limited to the most recent transactions for the specific

investment or similar investments made in the market on a commercial basis between willing and

informed parties.

(d) Financing assets

Financing assets comprise Shari’a compliant financing provided by the Group with fixed or

determinable payments. These include financing provided through Murabaha, Mudaraba,

Musharaka, Musawama, Ijarah, Istisna’a, Wakala and other modes of Islamic financing.

Financing assets are stated at their amortised cost less impairment allowances (if any)



908

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Financing assets (continued) FAS 2.2-11 FAS 3.3-18 and, FAS 4.3-16 FAS 8.4

Murabaha and Musawama Murabaha and Musawama receivables are sales on deferred terms. The Group arranges a

Murabaha and Musawama transaction by buying a commodity (which represents the object of the

Murabaha) and selling it to the Murabeh (a beneficiary) at a margin of profit over cost. The sales

price (cost plus the profit margin) is repaid in installments by the Murabeh over the agreed period.

Murabaha and Musawama receivables are stated net of deferred profits and impairment

allowance (if any).

Based on QCB instructions Chapter VII, Section D, Para 3/2/1, The Bank applies the rule of

binding the purchase orderer to its promise in the Murabaha sale, and not enters into any

Murabaha transaction in which the purchase orderer does not undertake to accept the goods if

they meet the specifications.

Mudaraba Mudaraba financing are partnerships in which the Group contributes the capital and work. These

contracts are stated at fair value of consideration given less impairment allowance (if any). Musharaka Musharaka financing are partnerships in which the Group contributes the capital. These contracts

are stated at fair value of consideration given less impairment allowance (if any).

Ijarah Ijarah receivables arise from financing structures when the purchase and immediate lease of an

asset are at cost plus an agreed profit (in total forming fair value). The amount is settled on a

deferred payment basis. Ijarah receivables are carried at the aggregate of the minimum lease

payments, less deferred income (in total forming amortised cost) and impairment allowance (if

any). Istisna’a Istisna’a is a sales contract in which the Group acts as ‘al-sani’ (a seller) with an ‘al-mustasni’ (a

purchaser) and undertakes to manufacture or otherwise acquire a product based on the

specification received from the purchaser, for an agreed upon price.

Istisna’a revenue is the total price agreed between the seller and purchaser including the Group’s

profit margin. The Group recognises Istisna’a revenue and profit margin based on percentage of

completion method by taking in account the difference between total revenue (cash price to

purchaser) and Group’s estimated cost. The Group’s recognises anticipated losses on Istisna’a

contract as soon as they are anticipated.

[FAS No. 10 Istisna’a and Parallel Istisna’a provides an alternative accounting treatment for

Istisna’a contracts as the completed contract method. The completed contract method should be

applied when both the percentage of completion and expected cost to complete the Istisna’a

contract cannot be estimated with reasonable accuracy at the end of the reporting period.]

Wakala Wakala contracts represent agency agreements between two parties. One party, the provider of

funds (Muwakkil) appoints the other party as an agent (Wakeel) with respect to the investment of



909

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Other financial assets and liabilities

(i) Recognition and initial measurement

The Group initially recognises due from banks, financing assets, customer current accounts,

due to banks, and financing liabilities on the date at which they are originated. All other

financial assets and liabilities are initially recognised on the [trade date / settlement date] at

which the Group becomes a party to the contractual provisions of the instrument.

A financial asset or financial liability is measured initially at fair value plus, for an item not at

fair value through income statement, transaction costs that are directly attributable to its

acquisition or issue.

(ii) De-recognition of financial assets and financial liabilities

The Group de-recognises a financial asset when the contractual rights to the cash flows

from the financial asset expire, or when it transfers the financial asset in a transaction in

which substantially all the risks and rewards of ownership of the financial asset are

transferred or in which the Group neither transfers nor retains substantially all the risks and

rewards of ownership and it does not retain control of the financial asset. Any interest in

transferred financial assets that qualify for de-recognition that is created or retained by the

Group is recognised as a separate asset or liability in the consolidated statement of financial

position. On de-recognition of a financial asset, the difference between the carrying amount

of the asset (or the carrying amount allocated to the portion of the asset transferred), and

consideration received (including any new asset obtained less any new liability assumed) is

recognised in consolidated income statement.

The Group de-recognises a financial asset when the contractual rights to the cash flows

from the financial asset expire, or when it transfers the financial asset in a transaction in

which substantially all the risks and rewards of ownership of the financial asset are

transferred or in which the Group neither transfers nor retains substantially all the risks and

rewards of ownership and it does not retain control of the financial asset.

Any interest in transferred financial assets that qualify for de-recognition that is created or

retained by the Group is recognised as a separate asset or liability in the consolidated

statement of financial position. On de-recognition of a financial asset, the difference

between the carrying amount of the asset (or the carrying amount allocated to the portion of

the asset transferred), and consideration received (including any new asset obtained less

any new liability assumed) is recognised in consolidated income statement. The Group enters into transactions whereby it transfers assets recognised on its

consolidated statement of financial position, but retains either all or substantially all of the

risks and rewards of the transferred assets or a portion of them. If all or substantially all risks

and rewards are retained, then the transferred assets are not derecognised.



910

Reference 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Other financial assets and liabilities (continued)

(ii) De-recognition of financial assets and financial liabilities (continued)

In transactions in which the Group neither retains nor transfers substantially all the risks and

rewards of ownership of a financial asset and it retains control over the asset, the Group

continues to recognise the asset to the extent of its continuing involvement, determined by the

extent to which it is exposed to changes in the value of the transferred asset. In certain transactions the Group retains the obligation to service the transferred financial asset

for a fee. The transferred asset is de-recognised if it meets the de-recognition criteria. An asset

or liability is recognised for the servicing contract, depending on whether the servicing fee is

more than adequate (asset) or is less than adequate (liability) for performing the servicing. The Group de-recognises a financial liability when its contractual obligations are discharged or

cancelled or expire.

(iii) Offsetting Financial assets and liabilities are offset only when there is a legal or religious enforceable right

to set off the recognised amounts and the Group intends to either settle on a net basis, or to

realise the asset and settle the liability simultaneously.

(f) Impairment of financial assets

The Group assesses at each consolidated statement of financial position date whether there is

objective evidence that an asset is impaired. Objective evidence that financial assets (including

equity-type investments) are impaired can include default or delinquency by a counterparty /

investee, restructuring of financing facility or advance by the Group on terms that the Group

would not otherwise consider, indications that a counterparty or issuer will enter bankruptcy, the

disappearance of an active market for a security, or other observable data relating to a group of

assets such as adverse changes in the payment status of counterparty or issuers in the group,

or economic conditions that correlate with defaults in the group. In addition, for an investment in

equity-type instruments, a significant or prolonged decline in its fair value below its cost is

objective evidence of impairment.

QCB – P 336

Equity-type investments classified as fair value through equity

In the case of equity-type investments classified as fair value through equity and measured at

fair value, a significant (where market value has declined by a minimum of 20%) or prolonged

(where market value has declined for 9 months at least) decline in the fair value of an

investment below its cost is considered in determining whether the investments are impaired. If

any such evidence exists for equity-type investments classified as fair value through equity, the

cumulative loss previously recognised in the consolidated statement of changes in equity is

removed from equity and recognised in the consolidated income statement. Impairment losses

recognised in the consolidated income statement on equity-type investments are subsequently

reversed through equity.



911

Reference

3.


(f) Impairment of financial assets (continued)

Financial assets carried at amortised cost (including investment in debt-type instruments classified as amortised cost)

For financial assets carried at amortised cost, impairment is measured as the difference

between the carrying amount of the financial assets and the present value of estimated cash

flows discounted at the assets’ original effective profit rate. Losses are recognised in

consolidated income statement and reflected in an allowance account. When a subsequent

event causes the amount of impairment loss to decrease, the impairment loss is reversed

through the consolidated income statement, to the extent of previously recognised impairment

losses. The Group considers evidence of impairment for financial assets carried at amortised

cost at both a specific asset and collective level. All individually significant financial assets are

assessed for specific impairment. All individually significant financial assets found not to be

specifically impaired are then collectively assessed for any impairment that has been incurred

but not yet identified. Financial assets that are not individually significant are collectively

assessed for impairment by grouping assets together with similar risk characteristics. In assessing collective impairment the Group uses (please mention the collective impairment

method e.g. flow rate method, statistical modelling of historical trends of probability of default,

delinquency method etc.) (g) Cash and cash equivalents IAS 7.46

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with

central banks and highly liquid financial assets with maturities of three months or less from the

acquisition date that are subject to an insignificant risk of changes in their fair value, and are

used by the Group in the management of its short-term commitments. Cash and cash equivalents are carried at amortised cost in the consolidated statement of

financial position. (h) Investment property QCB – P339

Properties held for rental, or for capital appreciation purposes, or both, are classified as

investment property. For rental: Investment property is carried at cost less accumulated depreciation and impairment

allowances (if any). Cost includes expenditure that is directly attributable to the acquisition of the

investment property. For capital appreciation: Investment property is measured at fair value with any change therein

recognised in equity as fair value reserve. [QCB instructions, reference no. (Part VII-Chapter 8, First, 2/2/1 (B), for Islamic banks also

require investments in real estate made with the intention of selling, to be measured at fair value

and revaluation should be recognised in fair value reserve in equity.]



912

Reference

3.


(i) Risk Management Instruments IFRS 7.21

Risk management instruments and hedge accounting [where applicable and approved by the Sharia’a Board]

Risk managementinstruments are measured at fair value on the consolidated statement of

financial position. The Group designates certain instruments as hedging instruments in qualifying hedging

relationships. On initial designation of the hedge, the Group formally documents the relationship

between the risk management instrument(s) and hedged item(s), including the risk management

objective and strategy in undertaking the hedge, together with the method that will be used to

assess the effectiveness of the hedging relationship. The Group makes an assessment, both at

the inception of the hedge relationship as well as on an ongoing basis, as to whether the

hedging instrument(s) is (are) expected to be highly effective in offsetting the changes in the fair

value or cash flows of the respective hedged item(s) during the period for which the hedge is

designated, and whether the actual results of each hedge are within a range of 80-125 percent. The Group makes an assessment for a cash flow hedge of a forecast transaction, as to whether

the forecast transaction is highly probable to occur and presents an exposure to variations in

cash flows that could ultimately affect consolidated income statement. These hedging relationships are discussed below.

Fair value hedges [where applicable]

When a risk management instrument is designated as the hedging instrument in a hedge of the

change in fair value of a recognised asset or liability or a firm commitment that could affect

consolidated income statement, changes in the fair value of the derivative are recognised

immediately in consolidated income statement together with changes in the fair value of the

hedged item that are attributable to the hedged risk. If the hedging derivative expires or is sold, terminated, or exercised, or the hedge no longer

meets the criteria for fair value hedge accounting, or the hedge designation is revoked, then

hedge accounting is discontinued prospectively. Any adjustment up to that point to a hedged

item, for which the effective profit method is used, is amortised to consolidated income

statement as part of the recalculated effective profit rate of the item over its remaining life. Cash flow hedges [where applicable]

When a risk management instrument is designated as the hedging instrument in a hedge of the

variability in cash flows attributable to a particular risk associated with a recognised asset or

liability or a highly probable forecast transaction that could affect consolidated income

statement, the effective portion of changes in the fair value of the risk management instrument is

recognised in equity in the hedging reserve. The amount recognised in equity is reclassified to

consolidated income statement as a reclassification adjustment in the same period as the

hedged cash flows affect consolidated income statement, and in the same line item in the

consolidated statement of changes in equity.



913

Reference

3.


(i) Risk management instruments (continued) Cash flow hedges [where applicable]

Any ineffective portion of changes in the fair value of the risk management instrument is

recognised immediately in consolidated income statement. If the risk management instrument

expires or is sold, terminated, or exercised, or the hedge no longer meets the criteria for cash

flow hedge accounting, or the hedge designation is revoked, then hedge accounting is

discontinued prospectively. In a discontinued hedge of a forecast transaction the cumulative

amount recognised in equity from the period when the hedge was effective is reclassified from

equity to consolidated income statement as a reclassification adjustment when the forecast

transaction occurs and affects consolidated income statement. If the forecast transaction is no

longer expected to occur, then the balance in equity is reclassified immediately to consolidated

income statement as a reclassification adjustment.

Net investment hedges [where applicable] When a risk management instrument or a non-derivative financial liability is designated as the

hedging instrument in a hedge of a net investment in a foreign operation, the effective portion of

changes in the fair value of the hedging instrument is recognised in equity in the translation

reserve. Any ineffective portion of the changes in the fair value of the risk management

instrument is recognised immediately in consolidated income statement. The amount

recognised in translation reserve is reclassified to consolidated income statement as a

reclassification adjustment on disposal of the foreign operation.

(j) Fixed assets (i) Recognition and measurement IAS

16.73(a)

IAS 16.30 IAS 16.16 IAS 16.45 IAS 16.41, 71

Items of fixed assets are measured at cost less accumulated depreciation and impairment

losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost

of self-constructed assets includes the cost of materials and direct labour, any other costs

directly attributable to bringing the assets to a working condition for their intended use, the

costs of dismantling and removing the assets and restoring the site on which they are located

and capitalised borrowing costs. (Cost may also include transfers from equity of any gain or

loss on qualifying cash flow hedges of foreign currency purchases of fixed assets.)

[Alternatively after recognition of a fixed asset whose fair value can be measured reliably shall

be carried at a revalued amount, being its fair value recognised in equity at the date of the

revaluation less any subsequent accumulated depreciation and subsequent accumulated

impairment losses. Revaluations shall be made with sufficient regularity to ensure that the

carrying amount does not differ materially from that which would be determined using fair value

at the end of the reporting period.]

Purchased software that is integral to the functionality of the related equipment is capitalised as

part of related equipment. [When the Group has sotware that are not integral part of the

Equipment should be treated as intangible assets and accounting policy should be disclosed

accordingly]



914

Reference

3.


(j) Fixed assets (continued) (i) Recognition and measurement (continued)

When parts of an item of fixed asset have different useful lives, they are accounted for as

separate items (major components) of fixed assets.

The gain or loss on disposal of an item of fixed asset is determined by comparing the proceeds

from disposal with the carrying amount of the item of fixed assets, and is recognised in other

income/other expenses in consolidated income statement.

(ii) Subsequent costs

The cost of replacing a component of fixed asset is recognised in the carrying amount of the

item if it is probable that the future economic benefits embodied within the part will flow to the

Group and its cost can be measured reliably. The carrying amount of the replaced part is

derecognised. The costs of the day-to-day servicing of fixed assets are recognised in

consolidated income statement as incurred.

Depreciation is recognised in consolidated income statement on a straight-line basis over the

estimated useful lives of each part of an item of fixed assets since this closely reflects the

expected pattern of consumption of the future economic benefits embodied in the asset and is

based on cost of the asset less its estimated residual value. Leased assets under finance

leases are depreciated over the shorter of the lease term and their useful lives. Land is not

depreciated.

The estimated useful lives for the current and comparative years are as follows:

XXX XX years

XXX XX years

Useful lives and residual values are reassessed at each reporting date and adjusted

prospectively, if appropriate.

(k) Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets.

Subsequent to initial recognition goodwill is measured at cost less accumulated impairment

losses.

Intangible assets other than goodwill are amortised over their useful lives, and carried net of

accumulated amortisation and impairment losses. Useful life of intangible assets are as

follows:

Purchased software XX years



915

Reference

3.


(l) Impairment of non-financial assets IAS 36.9 IAS 36.18, 80

[The carrying amounts of the Group’s non-financial assets, other than deferred tax assets

(where applicable) are reviewed at each reporting date to determine whether there is any

indication of impairment. If any such indication exists, then the asset’s recoverable amount is

estimated. For goodwill and intangible assets that have indefinite useful lives or that are not

yet available for use, the recoverable amount is estimated each year at the same time. An

impairment loss is recognised if the carrying amount of an asset or its Cash Generating Unit

(“CGU") exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value

less costs to sell. In assessing value in use, the estimated future cash flows are discounted to

their present value using a pre-tax discount rate that reflects current market assessments of

the time value of money and the risks specific to the asset or CGU.

For the purpose of impairment testing, assets that cannot be tested individually are grouped

together into the smallest group of assets that generates cash inflows from continuing use that

are largely independent of the cash inflows of other assets or CGU. Subject to an operating

segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill

has been allocated are aggregated so that the level at which impairment testing is performed

reflects the lowest level at which goodwill is monitored for internal reporting purposes.

Goodwill acquired in a business combination is allocated to groups of CGUs that are expected

to benefit from the synergies of the combination.

The Group’s corporate assets do not generate separate cash inflows and are utilised by more

than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis

and tested for impairment as part of the testing of the CGU to which the corporate asset is

allocated.

IAS 36.102 IAS 36.104

Impairment losses are recognised in consolidated income statement. Impairment losses

recognised in respect of CGUs are allocated first to reduce the carrying amount of any

goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the

other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets,

impairment losses recognised in prior periods are assessed at each reporting date for any

indications that the loss has decreased or no longer exists. An impairment loss is reversed if

there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not

exceed the carrying amount that would have been determined, net of depreciation or

amortisation, if no impairment loss had been recognised.]

(m) Customer current accounts

Balances in current accounts are recognised when received by the Bank. The transactions are

measured as the amount received by the Bank at the time of contracting. At the end of the

reporting period, these accounts are measured at amortised cost.



916

Reference

3.


(n) Equity of investment account holders FAS 6.3-8

Equity of investment account holders are funds held by the Group, which it can invest at its

own discretion. The investment account holders authorises the Group to invest the account

holders’ funds in a manner which the Group deems appropriate without laying down any

restrictions as to where, how and for what purpose the funds should be invested.

The Bank charges a management fee (Mudarib fees) to investment account holders. Of the

total income from investment accounts, the income attributable to account holders is allocated

to investment accounts after setting aside provisions, reserves (profit equalisation reserve and

investment risk reserve) and deducting the Group’s share of income as a Mudarib. The

allocation of income is determined by the management of the Group within the allowed profit

sharing limits as per the terms and conditions of the investment accounts.

Investment accounts are carried at their book values and include amounts retained towards

the profit equalisation and investment risk reserves. The profit equalisation reserve is the

amount appropriated by the Group out of the Mudaraba income, before allocating the

Mudarib’s share, in order to maintain a certain level of return to the account holders on the

investments. The investment risk reserve is the amount appropriated by the Group out of the

income of investment account holders, after allocating the Mudarib’s share, in order to cater

against future losses for investment account holders.

(o) Distribution of profit between equity of investment account holders and owners

The Bank complies with the directives of the QCB as follows: Net profit is arrived at after taking into account all income and expenses at the end of

the financial year, and is distributed between investment account holders and owners. The share of profit of investment account holders is calculated on the basis of their daily

deposit balances over the year, after reducing the Bank’s agreed and declared

Mudaraba fee.

In case of any expense or loss, which arises out of negligence on the part of the Bank

due to non-compliance with QCB regulations and instructions, then such expenses or

loss, shall not be borne by the investment account holders. Such matter is subject to the

QCB decision.

In case the results of the Group at the year end are net losses, then QCB, being the

authority responsible for determining the Bank’s accountability for these losses, shall

decide how these shall be treated without violation to the Islamic Shari’a rules.

Due to pooling of investment funds with the Group’s funds for the purpose of

investment, no priority has been given to either party in the appropriation of profit.



917

Reference 3.


(p) Restricted investment accounts FAS 6.9-14 and FAS 1.65

Restricted investment accounts represents assets acquired by funds provided by holders of

restricted investment accounts and their equivalent and managed by the Group as an

investment manager based on either a Mudaraba contract or (Wakala) agency contract. The

restricted investment accounts are exclusively restricted for investment in specified projects as

directed by the investments account holders. Assets that are held in such capacity are not

included as assets of the Group in the consolidated financial statements.

(q) Financing liabilities [Sukuk financing]

[Sukuk financing represents common shares in the ownership of assets or benefits or services

which bears fixed semi-annual profit and mature after __ years. Profits are recognised

periodically till maturity. Sukuks are recognised at amoritised cost. Sukuks are disclosed as a

separate line in the consolidated financial statements as “Sukuk financing”.] [Accounting policy statement for Sukuk may vary depending on the structure of the Sukuk and

characteristics attached to Sukuk.]

IAS 37.14 (r) Provisions

Provision is recognised if, as a result of a past event, the Group has a present legal or

constructive obligation that can be estimated reliably, and it is probable that an outflow of

economic benefits will be required to settle the obligation. Provisions are determined by

discounting the expected future cash flows at a pre-tax rate that reflects current market

assessments of the time value of money and, where appropriate, the risks specific to the

liability. IAS 37.72(a) (i) Restructuring

A provision for restructuring is recognised when the Group has approved a detailed and formal

restructuring plan, and the restructuring either has commenced or has been announced

publicly. Future operating losses are not provided for. (ii) Onerous contracts IAS 37.66

A provision for onerous contracts is recognised when the expected benefits to be derived by

the Group from a contract are lower than the unavoidable cost of meeting its obligations under

the contract. The provision is measured at the present value of the lower of the expected cost

of terminating the contract and the expected net cost of continuing with the contract. Before a

provision is established, the Group recognises any impairment loss on the assets associated

with that contract.

(s) Employee benefits IAS 19.44

Defined contribution plans The Group provides for its contribution to the State administered retirement fund for Qatari

employees in accordance with the retirement law, and the resulting charge is included within

the personnel cost under general and administration expenses in the consolidated income

statement. The Group has no further payment obligations once the contributions have been

paid. The contributions are recognised when they are due. [Defined benefits scheme accounting to be disclosed as applicable].



918

Reference 3.


(s) Employee benefits (continued)

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are

expensed as the related service is provided. A liability is recognised for the amount expected to

be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or

constructive obligation to pay this amount as a result of past service provided by the employee

and the obligation can be estimated reliably. IFRS 7.21 (t) Share capital and reserves (i) Share issue costs

Incremental costs directly attributable to the issue of an equity instrument are deducted from

the initial measurement of the equity instrument. (ii) Dividends on ordinary shares

Dividends on ordinary shares are recognised in equity in the period in which they are approved

by the Bank’s owners. [Dividends that are declared after the reporting date should be disclosed

as subsequent events.]

(u) Revenue recognition

Murabaha Profit from Murabaha transactions is recognised when the income is both contractually

determinable and quantifiable at the commencement of the transaction. Such income is

recognised on a time-apportioned basis over the period of the transaction. Where the income

from a contract is not contractually determinable or quantifiable, it is recognised when the

realisation is reasonably certain or when actually realised. Income related to non-performing

accounts is excluded from the consolidated income statement. Mudaraba Income on Mudaraba financing is recognised when the right to receive payment is established

or on distribution by the Mudarib, whereas losses are charged to the consolidated income

statement on declaration by the Mudarib.

Musharaka Income on Musharaka financing is recognised when the right to receive payments is

established or on distribution. Ijara Ijara income is recognised on time-apportioned basis over the lease period. Income related to

non-performing accounts is excluded from the consolidated income statement. Istisna’a Revenue and the associated profit margin are recognised in the Group’s consolidated income

statement according to the percentage of completion method or completed contract method. Wakala Income from Wakala placements is recognised on a time apportioned basis so as to yield a

constant periodic rate of return based on the balance outstanding.



919

Reference 3.


(u) Revenue recognition (continued)

Income from investment banking services Income from investment banking services (presented in fee and commission income),

including placement, advisory, marketing and performance fees, is recognised as per

contractual terms when the service is provided and income is earned. This is usually when

the Group has performed all significant acts in relation to a transaction and it is highly

probable that the economic benefits from the transaction will flow to the Group. Significant

acts in relation to a transaction are determined based on the terms agreed in the contracts

for each transaction. The assessment of whether economic benefits from a transaction will

flow to the Group is based on the extent of binding firm commitments received from other

parties. Fees and commission income Fees and commission income that are integral to the effective profit rate on a financial asset

carried at amortised cost are included in the measurement of the effective profit rate of the

financial asset. Other fees and commission income, including account servicing fees, sales

commission, management, arrangement and syndication fees, are recognised as the related

services are performed. Dividend income Dividend income is recognised when the right to receive the dividend is established.

(v) Tax expense [where applicable] IAS 12.58 IAS 12.46

IAS 12.22(c),

39

Tax expense comprises current and deferred tax. Current tax and deferred tax are

recognised in consolidated income statement except to the extent that it relates to items

recognised directly in equity. Current tax is the expected tax payable or receivable on the

taxable income or loss for the year, using tax rates enacted or substantively enacted at the

reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax (where applicable) is recognised in respect of temporary differences between

the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for taxation purposes. Deferred tax is not recognised for:

temporary differences on the initial recognition of assets or liabilities in a transaction that

is not a business combination and that affects neither accounting nor taxable

consolidated income statement;

temporary differences related to investments in subsidiaries to the extent that it is

probable that they will not reverse in the foreseeable future; and

temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary

differences when they reverse, based on the laws that have been enacted or substantively

enacted by the reporting date.



920

Reference 3.


(v) Tax expense [where applicable] (continued) IAS 12.71, 74

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset

current tax liabilities against current tax assets, and they relate to taxes levied by the same

tax authority on the same taxable entity, or on different tax entities, but they intend to settle

current tax liabilities and assets on a net basis or their tax assets and liabilities will be

realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible

temporary differences to the extent that it is probable that future taxable profits will be

available against which they can be utilised. Deferred tax assets are reviewed at each

reporting date and are reduced to the extent that it is no longer probable that the related tax

benefit will be realised.

IAS 33.10 (w) Earnings per share

[The Bank presents basic and diluted earnings per share (“EPS”) data for its ordinary

shares. Basic EPS is calculated by dividing the profit or loss attributable to owners of the

Bank by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is determined by adjusting the profit or loss attributable to owners and the

weighted average number of ordinary shares outstanding for the effects of all dilutive

potential ordinary shares.] (x) Segment reporting IFRS 8.5

[An operating segment is a component of the Group that engages in business activities from

which it may earn revenues and incur expenses, including revenues and expenses that

relate to transactions with any of the Group’s other components, whose operating results

are reviewed regularly by the Group Management Committee (being the chief operating

decision maker) to make decisions about resources allocated to each segment and assess

its performance, and for which discrete financial information is available.]

(y) Fiduciary activities

The Group acts as fund manager and in other fiduciary capacities that result in the holding

or placing of assets on behalf of individuals, corporate and other institutions. These assets

and income arising thereon are excluded from these consolidated financial statements, as

they are not assets of the Group.

(z) Repossessed collateral

Repossessed collaterals against settlement of customers’ debts are stated within the

consolidated statement of financial position under "Other assets" at their acquisition value

net of allowance for impairment. [According to QCB instructions, the Group should dispose of any land and properties

acquired against settlement of debts within a period not exceeding three years from the date

of acquisition although this period can be extended after obtaining approval from QCB.]



921

Reference 3.


(aa) Earnings prohibited by Shari’a

The Bank is committed to avoid recognising any income generated from non-Islamic

sources. Accordingly, all non-Islamic income is credited to a charity account where the Bank

uses these funds for charitable purposes. (bb) Comparatives

Except when a standard or an interpretation permits or requires otherwise, all amounts are

reported or disclosed with comparative information. (cc) Parent bank financial information

Statement of financial position and income statement of the Parent bank as disclosed in

Note 45 are prepared following the same accounting policies as mentioned above except for

investment in subsidiaries, associates and joint ventures which are carried at cost. IAS 8.30, 31 (dd) New standards and interpretations

[The following should be disclosed: Standards and interpretations that were adopted by the Group for the first time this year,

if any;

New standards and interpretations issued but not yet effective as at and for the year ended 31 December 2012 and their likely impact on the consolidated financial statements of the Group; and

Standards and interpretations that were early adopted by the Group, if any.]



922

IFRS 7.31

4.

FINANCIAL RISK MANAGEMENT

(a) Introduction and overviewIFRS 7.31, 32 IFRS 7.33

The Group’s business involves taking on risks in a targeted manner and managing them

professionally. The core functions of the Group’s risk management are to identify all key risks

for the Group, measure these risks, manage the risk positions and determine capital

allocations. The Group regularly reviews its risk management policies and systems to reflect

changes in markets, products and best market practice.

The Group’s aim is to achieve an appropriate balance between risk and return and minimise

potential adverse effects on the Group’s financial performance. The Group defines risk as the

possibility of losses or profits foregone, which may be caused by internal or external factors.

[Please provide description of the risk management framework applied by the board of directors

and management.]

The risks arising from financial instruments to which the Group is exposed are financial risks,

which include credit risk, liquidity risk, market risks and operational risk.

IFRS 7.33 (b) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial

instrument fails to meet its contractual obligations.

[The following disclosure needs to be made:

-the exposure to credit risk and how it arises.

-the Group’s objectives, policies and processes for managing the risk and the methods used to

measure the risk; and

-any changes from prior period.]

(i) Credit risk measurement

Financing assets (including. bank balances, due from banks, financing commitments and guarantees) [The Group should disclose models used for estimation of credit exposure]

Investment in debt-type securities [The Group should disclose models used for estimation of credit exposure]

Over-the-counter (OTC) risk management instrument s [The Group should disclose models used for estimation of credit exposure]

(ii) Risk limit control and mitigation policies [The Group should disclose processes used to mitigate credit risk]

Collateral [The Group should disclose description of collaterals used to mitigate credit risk]

Financing limits (for risk management instrument and financing books) [The Group should disclose limits on financings used to mitigate credit risk]

Master netting arrangements [The Group should disclose master netting arrangements used to mitigate credit risk]



923

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (b) Credit risk (continued) IFRS 7.33 (iii) Maximum exposure to credit risk before collateral held or other credit enhancements IFRS 7.36

2012 2011

Credit risk exposures relating to financial assets recorded on the consolidated statement of financial position are as follows:

Balances with central banks XXXX XXXX

Due from banks XXXX XXXX

Financing assets XXXX XXXX

Investment securities XXXX XXXX

Other assets XXXX XXXX

XXXX XXXX

Other credit risk exposures are as follows:

Acceptances XXXX XXXX

Guarantees XXXX XXXX

Letter of credit XXXX XXXX

Unutilised credit facilities XXXX XXXX

XXXX XXXX

The above tables represents a worse-case scenario of credit risk exposure to the Group,

without taking account of any collateral held or other credit enhancements attached. For assets

recorded on the consolidated statement of financial position, the exposures set out above are

based on net carrying amounts as reported on the consolidated statement of financial position.

(iv) Concentration of risks of financial assets with credit risk exposure IFRS 7.34(c) Geographical sectors

[The following table breaks down the Group’s credit exposure at their carrying amounts (without

taking into account any collateral held or other credit support), as categorised by geographical

region. For this table, (as an illustration in these illustrative consolidated financial statements),

the Group has allocated exposures to regions based on the country of domicile of its

counterparties.]

2012

Qatar

Other

GCC

Other

Middle

East Others Total

Assets recorded on the consolidated

statement of financial position:

Balances with central banks XXXX XXXX XXXX XXXX XXXX

Due from banks XXXX XXXX XXXX XXXX XXXX

Financing assets XXXX XXXX XXXX XXXX XXXX

Investment securities XXXX XXXX XXXX XXXX XXXX

Other assets XXXX XXXX XXXX XXXX XXXX




924

Reference 4.

FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Credit risk (continued) IFRS 7.34(c) (iv) Concentration of risks of financial assets with credit risk exposure (continued) Geographical sectors (continued)

2011

Assets recorded on the consolidated

statement of financial position: Qatar

Other

GCC

Other

Middle

East Others Total

Balances with central banks XXXX XXXX XXXX XXXX XXXX

Due from banks XXXX XXXX XXXX XXXX XXXX

Financing assets XXXX XXXX XXXX XXXX XXXX

Investment securities XXXX XXXX XXXX XXXX XXXX

Other assets XXXX XXXX XXXX XXXX XXXX


2012

Qatar

Other

GCC

Other

Middle

East Others Total

Acceptances XXXX XXXX XXXX XXXX XXXX

Guarantees XXXX XXXX XXXX XXXX XXXX

Letter of credit XXXX XXXX XXXX XXXX XXXX

Unutilised credit facilities XXXX XXXX XXXX XXXX XXXX


2011

Qatar

Other

GCC

Other

Middle

East Others Total

Acceptances XXXX XXXX XXXX XXXX XXXX

Guarantees XXXX XXXX XXXX XXXX XXXX

Letter of credit XXXX XXXX XXXX XXXX XXXX

Unutilised credit facilities XXXX XXXX XXXX XXXX XXXX




925

Reference IFRS 7.31 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.32 (b) Credit risk (continued) (iv) Concentration of risks of financial assets with credit risk exposure (continued)IFRS 7.34(c) Industry sectors

[The following table, as an illustration, breaks down the Group’s credit exposure at carrying

amounts before taking into account collateral held or other credit enhancements, as categorised

by the industry sectors of the Group’s counterparties.]

Gross

exposure

2012

Gross

exposure

2011

Funded and unfunded

Government XXXX XXXX

Government agencies XXXX XXXX

Industry XXXX XXXX

Commercial XXXX XXXX

Services XXXX XXXX

Contracting XXXX XXXX

Real estate XXXX XXXX

Personal XXXX XXXX

Others XXXX XXXX

Contingent liabilities XXXX XXXX

XXXX XXXX

Credit risk exposure The tables below presents an analysis of financial assets by rating agency designation, based

on Standard & Poor’s ratings (or their equivalent):

2012 2011

Equivalent grades

AAA to AA- XXXX XXXX

A+ to A- XXXX XXXX

BBB+ to BBB- XXXX XXXX

BB+ to B- XXXX XXXX

Below B- XXXX XXXX

Unrated XXXX XXXX

XXXX XXXX



926

Reference

IFRS 7.31

IFRS 7.33

IFRS 7.36(c)

IFRS 7.34(a)

IFRS 7.37(b)

IFRS 7.34(a)

IFRS 7.36(c)

4. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) (v) Credit quality

Financing assets

Due from banks

Investment in debt-

type securities

2012 2011 2012 2011 2012 2011

Neither past due nor impaired (low risk):

[Investment grade XXXX XXXX XXXX XXXX XXXX XXXX

Standard monitoring XXXX XXXX XXXX XXXX XXXX XXXX

Special monitoring] * XXXX XXXX XXXX XXXX XXXX XXXX

Carrying amount XXXX XXXX XXXX XXXX XXXX XXXX

Past due but not impaired (special mentioned):

[Investment grade XXXX XXXX XXXX XXXX XXXX XXXX

Standard monitoring XXXX XXXX XXXX XXXX XXXX XXXX

Special monitoring] * XXXX XXXX XXXX XXXX XXXX XXXX

Carrying amount XXXX XXXX XXXX XXXX XXXX XXXX

Impaired

Substandard (overdue > 3 months) XXXX XXXX XXXX XXXX XXXX XXXX

Doubtful (overdue > 6 months) XXXX XXXX XXXX XXXX XXXX XXXX

Loss (overdue > 9 months) XXXX XXXX XXXX XXXX XXXX XXXX

XXXX XXXX XXXX XXXX XXXX XXXX

Less: impairment allowance-specific (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Less: impairment allowance-collective (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

Carrying amount – net XXXX XXXX XXXX XXXX XXXX XXXX

Investment securities (debt)

At amoritised cost - - - - XXXX XXXX

Less: impairment allowance - - - - (XXXX) (XXXX)

Carrying amount – net - - - - XXXX XXXX

Total carrying amount XXXX XXXX XXXX XXXX XXXX XXXX

*[The Bank should disclose its grading in accordance with its internal risk grading system / QCB regulations

under these broader categories.]



927

Reference

IFRS 7.36(c)

4. (b) (v)

FINANCIAL RISK MANAGEMENT (CONTINUED) Credit risk (continued) Credit quality (continued) Impaired financing assets and investment in debt-type securities Individually impaired financing assets and investment in debt-type securities (other than those

carried at fair value through income statement) for which the Group determines that there is

objective evidence of impairment and it does not expect to collect all principal and profit due

according to the contractual terms of the financing / investment security agreement(s).

Investment in debt-type securities carried at fair value through income statement are not

assessed for impairment but are subject to the same internal grading system.

IFRS 7.34(a) Financing assets past due but not impaired

Past due but not impaired financing assets are those for which contractual profit or principal

payments are past due, but the Group believes that impairment is not appropriate on the basis of

the level of security/collateral available and/or the stage of collection of amounts owed to the

Group.

2012 2011

Upto 30 days XXXX XXXX

30 to 60 days XXXX XXXX

60 – 90 days XXXX XXXX

Gross XXXX XXXX



928

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED) IFRS 7.36(d)

(b) (v)

Credit risk (continued) Credit quality (continued)

Renegotiated financing assets

Restructuring activities include extended payment arrangements, approved external management

plans, modification and deferral of payments. Restructuring policies and practices are based on

indicators or criteria that, in the judgement of local management, indicate that payment will most

likely continue. These policies are kept under continuous review. In the majority of cases,

restructuring results in the asset continuing to be impaired:

2012 2011

Continuing to be impaired after restructuring XXXX XXXX

Non–impaired after restructuring – would otherwise have been impaired XXXX XXXX

Non–impaired after restructuring – would otherwise not have been impaired XXXX XXXX

XXXX XXXX

(vi) Collateral

The determination of eligible collateral and the value of collateral are based on QCB

regulations and are assessed by reference to market price or indexes of similar assets.

The Group has collateral in the form of blocked deposit, pledge of shares or legal mortgage

against the past dues financing assets.

The aggregate collateral is QAR __ million (2011: QAR __ million) for past due up to 30 days,

QAR __ million (2011: QAR __ million) for past due from 31 to 60 days, QAR __ million (2010:

QAR __ million) for past due from 61 and 90 days, and QAR __ million (2010: QAR __ million)

for past due from 91 and above days. IFRS 7.38 (vii) Repossessed collateral

During the year , the Group obtained assets by taking possession of collateral held as security as

follows:

2012 2011

Real estate XXXX XXXX

Financial instruments XXXX XXXX

XXXX XXXX

Repossessed properties are sold as soon as practicable, with the proceeds used to reduce the

outstanding indebtedness. Repossessed property is classified in the consolidated statement of

financial position within other assets. The Group generally does not use the non-cash collateral

for its own operations.

(viii) Write-off policy

The Group writes off a financing asset or an investment in debt-type security balance, and any

related allowances for impairment losses, when Group determines that the financing asset or

security is uncollectible and after QCB approval is obtained.

This determination is made after considering information such as the occurrence of significant

changes in the borrower’s / issuer’s financial position such that the borrower / issuer can no

longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the

entire exposure. For smaller balance standardised financing assets, write-off decisions generally

are based on a product-specific past due status. The amount written off during the year was QAR

____ thousands (2011: QAR _______ thousands.).



929

Reference

4.

FINANCIAL RISK MANAGEMENT (CONTINUED)

IFRS 7.31 (c) Liquidity risk

IFRS 7.39

Liquidity risk is the risk that the Group is unable to meet its obligations when they fall due as a

result of e.g. customer deposits being withdrawn, cash requirements from contractual

commitments, or other cash outflows, such as debt maturities or margin calls for risk

management instrument s etc. Such outflows would deplete available cash resources for client

financing, trading activities and investments. In extreme circumstances, lack of liquidity could

result in reductions in the consolidated statement of financial position and sales of assets, or

potentially an inability to fulfil financing commitments. The risk that the Group will be unable to do

so is inherent in all banking operations and can be affected by a range of institution-specific and

market-wide events including, but not limited to, credit events, merger and acquisition activity,

systemic shocks and natural disasters. IFRS 7.39(b) (i) Management of liquidity risk [The Group should disclose the a description of how liquidity risk is managed.] (ii) Exposure to liquidity riskIFRS 7.34(a), 39(c)

The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to

deposits from customers. For this purpose net liquid assets are considered as including cash and

cash equivalents and investment grade debt securities for which there is an active and liquid

market less any deposits from banks, debt securities issued, other borrowings and commitments

maturing within the next month. A similar, but not identical, calculation is used to measure the

Group’s compliance with the liquidity limit established by QCB.

Details of the reported Group ratio of net liquid assets to deposits from customers at the reporting

date and during the year were as follows:

2012 2011

At 31 December XXXX XXXX

Average for the year XXXX XXXX

Maximum for the year XXXX XXXX

Minimum for the year XXXX XXXX



930

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (c) Liquidity risk (continued) (iii) Maturity analysis

Maturity analysis of Group’s assets are prepared on the basis of their expected maturity. Whereas maturity analysis of Group’s liabilities are prepared on the basis of their contractual maturity.

Carrying

amount

Less

than 1

month

1-3

months

3

months

– 1

year

1-5

years

More

than 5

years

2012

Balances with central banks XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Due from banks XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing assets XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Investment securities XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Other assets XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total financial assets XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Due to banks XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing liabilities XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Other liabilities XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total financial liabilities XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Equiy of investment account holders XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Difference XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)



931

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (c) Liquidity risk (continued)IFRS 7.39 (iii) Maturity analysis (continued)

Carrying

amount

Less

than 1

month

1-3

months

3

months

– 1 year

1-5

years

More

than 5

years

2011

Balances with central banks XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Due from banks XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing assets XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Investment securities XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Other assets XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total financial assets XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Due to banks XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing liabilities XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Other liabilities XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total financial liabilites XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Equiy of investment account

holders XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Difference XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)



932

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (c) Liquidity risk (continued)IFRS 7.39 (iv) Maturity analysis (Financial liabilities and risk management instrument s) IFRS 7.39(a)

IFRS

7.B11C(c)

7.B11D(e)

IFRS

7.39(b),

B11B

Carrying

amount

Gross

undisc-

ounted

cash

flows

Less

than 1

month

1-3

months

3

months

– 1

year

1-5

years

More

than 5

years

2012

Non-derivative financial liabilities

Due to banks XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing liabilities XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Other liabilities XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total liabilities XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Equity of investment account

holders XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Risk management

instruments

Risk Management: XXXX

Outflow (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Inflow XXXX XXXX XXXX XXXX XXXX XXXX

XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) IFRS 7.39(a)

IFRS

7.B11C(c)

7.B11D(e)

IFRS

7.39(b),

B11B

IFRS 7.39

(a), (c).

Carrying

amount

Gross

undisc-

ounted

cash

flows

Less

than 1

month

1-3

months

3

months

– 1 year

1-5

years

More

than 5

years

2011

Non-derivative financial liabilities

Due to banks XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing liabilities XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Other liabilities XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Total liabilities XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Equity of investment account

holders XXXX XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Risk management instrument f

Risk Management XXXX

Outflow (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Inflow XXXX XXXX XXXX XXXX XXXX XXXX

XXXX (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

[The Bank will need to disclose any significant differences between the expected cash flows

and the gross undiscounted cash flows.]



933

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (d) Market risks IFRS7.31,32

[The Group takes on exposure to market risks, which is the risk that the fair value or future cash

flows of a financial instrument will fluctuate because of changes in market prices. Market risks

arise from open positions in profit rate, currency and equity products, all of which are exposed to

general and specific market movements and changes in the level of volatility of market rates or

prices such as profit rates, credit spreads, foreign exchange rates and equity prices. The Group

separates exposures to market risk into either trading or non-trading portfolios. The market risks arising from trading and non-trading activities are concentrated in Group

Treasury and monitored by two teams separately. Regular reports are submitted to the Board of

Directors and heads of each business unit. Trading portfolios include those positions arising from market-making transactions where the

Group acts as principal with clients or with the market. Non-trading portfolios primarily arise from the profit rate management of the entity’s retail and

corporate banking assets and liabilities. Non-trading portfolios also consist of foreign exchange

and equity risks arising from the Group’s debt-type and equity-type investments.] (i) Management of market risks

[Overall authority for market risk is vested in ALCO. Group Market Risk is responsible for the

development of detailed risk management policies (subject to review and approval by ALCO) and

for the day-to-day review of their implementation. – Explain detailed management of market

risks.] (ii) Exposure to market risks – trading portfolios [if applicable]IFRS 7.41(a)

[The principal tool used to measure and control market risk exposure within the Group’s trading

portfolios is Value at Risk (VaR). The VaR of a trading portfolio is the estimated loss that will

arise on the portfolio over a specified period of time (holding period) from an adverse market

movement with a specified probability (confidence level). The VaR model used by the Group is

based upon a 99 percent confidence level and assumes a 10-day holding period. The VaR model

used is based mainly on historical simulation. Taking account of market data from the previous

two years, and observed relationships between different markets and prices, the model

generates a wide range of plausible future scenarios for market price movements.]



934

IFRS 7.31 4. FINANCIAL RISK MANAGEMENT (CONTINUED) (d) Market risks (continued) (ii) Exposure to market risks – trading portfolios [if applicable] (continued)

Although VaR is an important tool for measuring market risk, the assumptions on which the

model is based do give rise to some limitations, including the following:

A 10-day holding period assumes that it is possible to hedge or dispose of positions within

that period. This may not be the case for certain highly illiquid assets or in situations in

which there is severe general market illiquidity.

A 99 percent confidence level does not reflect losses that may occur beyond this level. Even

within the model used there is a one percent probability that losses could exceed the VaR.

VaR is calculated on an end-of-day basis and does not reflect exposures that may arise on

positions during the trading day.

The use of historical data as a basis for determining the possible range of future outcomes

may not always cover all possible scenarios, especially those of an exceptional nature.

The VaR measure is dependent upon the Group’s position and the volatility of market prices.

The VaR of an unchanged position reduces if market price volatility declines and vice versa.

The Group uses VaR limits for total market risk and specific foreign exchange, profit rate, equity,

credit spread and other price risks. The overall structure of VaR limits is subject to review and

approval by ALCO. VaR limits are allocated to trading portfolios. VaR is measured at least daily

and more regularly for more actively traded portfolios. Daily reports of utilisation of VaR limits are

submitted to Group Market Risk and regular summaries are submitted to ALCO. IFRS 7.41(b)

A summary of the VaR position of the Group’s trading portfolios at 31 December and during the

year is as follows:

At 31

December Average Maximum Minimum

2012 Foreign currency risk XXXX XXXX XXXX XXXX

Profit rate risk XXXX XXXX XXXX XXXX

Credit spread risk XXXX XXXX XXXX XXXX

Equity price risk XXXX XXXX XXXX XXXX

Covariance XXXX XXXX XXXX XXXX

Overall XXXX XXXX XXXX XXXX

2011 Foreign currency risk XXXX XXXX XXXX XXXX

Profit rate risk XXXX XXXX XXXX XXXX

Credit spread risk XXXX XXXX XXXX XXXX

Equity price risk XXXX XXXX XXXX XXXX

Covariance XXXX XXXX XXXX XXXX

Overall XXXX XXXX XXXX XXXX



935

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (d) Market risks (continued) (ii) Exposure to market risks – trading portfolios (continued)

The limitations of the VaR methodology are recognised by supplementing VaR limits with other

position and sensitivity limit structures, including limits to address potential concentration risks

within each trading portfolio. In addition, the Group uses a wide range of stress tests to model

the financial impact of a variety of exceptional market scenarios, such as periods of prolonged

market illiquidity, on individual trading portfolios and the Group’s overall position.

(iii) Exposure to profit rate risk – non-trading portfolios IFRS 7.34(a)

The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in

the future cash flows or fair values of financial instruments because of a change in market profit

rates. Profit rate risk is managed principally through monitoring profit rate gaps and by having pre-

approved limits for repricing bands. ALCO is the monitoring body for compliance with these limits

and is assisted by Group central Treasury in its day-to-day monitoring activities.

A summary of the Group’s profit rate gap position on non-trading portfolios is as follows: Repricing in:

Carrying

amount

Less

than 3

months

3-12

months

1-5

years

More

than 5

years

Non-profit

sensitive

Effective

profit rate

2012

Cash and balances with central

banks XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Due from banks XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Financing assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Investment securities XXXX XXXX XXXX XXXX XXXX XXXX XXXX

XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Due to banks (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing liabilities (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

(XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Equity of investment account holders (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) - (XXXX)

Consolidated statement of financial position items XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Off consolidated statement of financial position items - XXXX XXXX XXXX XXXX XXXX XXXX

Profit rate sensitivity gap (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) -

Cumulative profit rate sensitivity gap (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)



936

IFRS 7.31 4. FINANCIAL RISK MANAGEMENT (CONTINUED) (d) Market risks (continued) (iii) Exposure to profit rate risk – non-trading portfolios (continued) IFRS 7.34(a)

Repricing in:

Carrying

amount

Less

than 3

months

3-12

months

1-5

years

More

than 5

years

Non-

profit

sensitive

Effective

profit rate

2011

Cash and balances with

central banks XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Due from banks XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Financing assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Investment securities XXXX XXXX XXXX XXXX XXXX XXXX XXXX

XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Due to banks (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Financing liabilities (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

(XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Equity of investment account holders (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) - (XXXX)

Consolidated statement of financial position items XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Off consolidated statement of financial position items - XXXX XXXX XXXX XXXX XXXX XXXX

Profit rate sensitivity gap (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) -

Cumulative profit rate sensitivity gap (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Sensitivity analysis

The management of profit rate risk against profit rate gap limits is supplemented by monitoring the

sensitivity of the Group’s financial assets and liabilities to various standard and Non - standard

profit rate scenarios. Standard scenarios that are considered on a monthly basis include a 100

basis point (bp) parallel fall or rise in all yield curves worldwide and a 50 bp rise or fall in the

greater than 12-month portion of all yield curves. An analysis of the Group’s sensitivity to an

increase or decrease in market profit rates, assuming no asymmetrical movement in yield curves

and a constant financial position, is as follows:

Sensitivity of net profit

100 bp

parallel

increase

100 bp

parallel

decrease

2012

At 31 December (XXXX) XXXX

Average for the year (XXXX) XXXX

2011

At 31 December (XXXX) XXXX

Average for the year (XXXX) XXXX



937

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (d) Market risks (continued)IFRS 7.40(a) (iii) Exposure to profit rate risk – non-trading portfolios [if applicable] (continued)

Profit rate movements affect reported equity in the following ways:

retained earnings arising from increases or decreases in net profit and the fair value changes

reported in consolidated income statement; and

hedging reserves arising from increases or decreases in fair values of hedging instruments

designated in qualifying cash flow hedge relationships;

Overall non-trading profit rate risk positions are managed by Group Central Treasury, which uses

financial investments, advances to banks, deposits from banks and risk management instrument s

to manage the overall position arising from the Group’s non-trading activities. The use of risk

management instrument s to manage profit rate risk. (iv) Exposure to other market risks – non-trading portfolios

Foreign currency transactions The result of structural foreign exchange positions on the Group’s net investments in foreign

subsidiaries and branches, together with any related net investment hedges, is recognised in

equity. The Group’s policy is only to hedge such exposures when not doing so would have a

significant impact on the regulatory capital ratios of the Group and its subsidiaries. The result of

this policy is that hedging generally only becomes necessary when the ratio of structural

exposures in a particular currency to risk-weighted assets denominated in that currency diverges

significantly from the capital ratio of the entity being considered. In addition to monitoring VaR in

respect of foreign currency, the Group monitors any concentration risk in relation to any individual

currency in regard to the translation of foreign currency transactions and monetary assets and

liabilities into the respective functional currency of Group entities, and with regard to the

translation of foreign operations into the presentation currency of the Group (after taking account

of the impact of any qualifying net investment hedges).



938

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (d) Market risks (continued) (iv) Exposure to other market risks – non-trading portfolios (continued) IFRS 7.34(c)

Foreign currency transactions (continued)

Functional currency of Group entities

2012 2011

Net foreign currency exposure:

Pounds Sterling XXXX XXXX

USD XXXX XXXX

Euro XXXX XXXX

Other currencies XXXX XXXX

Foreign operations Net investments

2012 2011

Functional currency of foreign operation:

Pounds Sterling XXXX XXXX

USD XXXX XXXX

Euro XXXX XXXX

Increase /

(decrease) in profit or loss

Increase / (decrease) in equity

5% increase / (decrease) in currency exchange rate 2012 2011 2012 2011 Pound Sterling XXXX XXXX XXXX XXXXUSD XXXX XXXX XXXX XXXXEuro XXXX XXXX XXXX XXXXOther XXXX XXXX XXXX XXXX

Equity price risk

Equity price risk is the risk that the fair value of equities decreases as a result of changes in the

level of equity indices and individual stocks. The non-trading equity price risk exposure arises from

equity securities classified as fair value through income statement and fair value through equity.

The Group is also exposed to equity price risk and the sensitivity analysis thereof is as follows:

2012 2011

5% increase / (decrease) in [QE 30 index]

Increase / (decrease) in profit and loss XXXX XXXX

Increase / (decrease) in equity XXXX XXXX



939

The above analysis has been prepared on the assumption that all other variables such as profit

rate, foreign exchange rate, etc are held constant and is based on historical correlation of the

equity securities to the relevant index. Actual movement may be different from the one stated

above. Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (e) Operational risks

[Operational risk is the risk of direct or indirect loss arising from a wide variety of causes

associated with the Group’s involvement with financial instruments, including processes,

personnel, technology and infrastructure, and from external factors other than credit, market and

liquidity risks such as those arising from legal and regulatory requirements and generally accepted

standards of corporate behaviour.

The Group’s objective is to manage operational risk so as to balance the avoidance of financial

losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control

procedures that restrict initiative and creativity.

The primary responsibility for the development and implementation of controls to address

operational risk is assigned to senior management within each business unit. This responsibility is

supported by the development of overall Group standards for the management of operational risk

in the following areas: requirements for appropriate segregation of duties, including the independent authorisation

of transactions;

requirements for the reconciliation and monitoring of transactions;

compliance with regulatory and other legal requirements;

documentation of controls and procedures;

requirements for the periodic assessment of operational risks faced, and the adequacy of

controls and procedures to address the risks identified;

requirements for the reporting of operational losses and proposed remedial action;

development of contingency plans;

training and professional development;

ethical and business standards; and

risk mitigation, including insurance where this is effective.]



940

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (f) Capital management IAS 1.134 IAS 1.135(a) Regulatory capital IAS 1.135(a)(iii) IAS 1.135(d) IAS 1.135(b),(c)

The Group’s policy is to maintain a strong capital base so as to ensure investor, creditor and

market confidence and to sustain future development of the business. The impact of the level

of capital on owners’ return is also recognised and the Group recognises the need to

maintain a balance between the higher returns that might be possible with greater gearing and

the advantages and security afforded by a sound capital position. The Group and its individually regulated operations have complied with all externally imposed

capital requirements throughout the period.

The capital adequacy ratio of the Group is calculated in accordance with the Basel Committee

guidelines as adopted by the QCB.

The Group’s regulatory capital position under Basel II and QCB regulations at 31 December

was as follows:

2012 2011Tier 1 capital XXXX XXXXTier 2 capital XXXX XXXXTotal regulatory capital XXXX XXXX

[Tier 1 capital includes share capital, legal reserve, retained earnings and other reserves.]

[Tier 2 capital includes risk reserve (up to 1.25% of the risk weighted assets), fair value

reserves (45% if positive and 100 % if negative) and subordinated debt.]



941

Reference 4. FINANCIAL RISK MANAGEMENT (CONTINUED)IFRS 7.31 (f) Capital management (continued) Regulatory capital (continued) Risk weighted assets and carrying amounts

2012

Basel II

Risk

weighted

amount

2011

Basel II

Risk

weighted

amount

2012

Carrying

amount

2011

Carrying

amount

Balances with central banks XXXX XXXX XXXX XXXX Placements with banks and other financial institutions XXXX XXXX XXXX XXXX

Financing assets XXXX XXXX XXXX XXXX

Investment securities XXXX XXXX XXXX XXXX

Other assets XXXX XXXX XXXX XXXX Off balance sheet assets XXXX XXXX - -

Total risk weighted assets for credit risk XXXX XXXX XXXX XXXX

Risk weighted assets for market risk XXXX XXXX - XXXX Risk weighted assets for operational risk XXXX XXXX - XXXX

XXXX XXXX XXXX XXXX

2012 2011

Risk weighted assets XXXX XXXX

Regulatory capital XXXX XXXX

Risk weighted assets as a percentage of regulatory capital (capital ratio) XX% XX%

The minimum ratio limit determined by QCB is 10% and the current Basel II capital adequacy

requirement is 8%.



942

Reference

5.

USE OF ESTIMATES AND JUDGMENTS

(a) Key sources of estimation uncertainty The Group makes estimates and assumptions that affect the reported amounts of assets and

liabilities. Estimates and judgements are continually evaluated and are based on historical

experience and other factors, including expectations of future events that are believed to be

reasonable under the circumstances.

(i) Allowances for credit losses

Assets accounted for at amortised cost are evaluated for impairment on a basis described in

significant accounting policies.

The specific counterparty component of the total allowances for impairment applies to financial

assets evaluated individually for impairment and is based upon management’s best estimate of

the present value of the cash flows that are expected to be received. In estimating these cash

flows, management makes judgements about a counterparty’s financial situation and the net

realisable value of any underlying collateral. Each impaired asset is assessed on its merits, and

the workout strategy and estimate of cash flows considered recoverable are independently

approved by the Credit Risk function. Minimum impairment on specific counter parties are

determined based on the QCB regulations.

Collectively assessed impairment allowances cover credit losses inherent in portfolios of

financing and investment securities measured at amortised cost with similar credit risk

characteristics when there is objective evidence to suggest that they contain impaired financial

assets, but the individual impaired items cannot yet be identified. In assessing the need for

collective allowances, management considers factors such as credit quality, portfolio size,

concentrations and economic factors. In order to estimate the required allowance, assumptions

are made to define the way inherent losses are modelled and to determine the required input

parameters, based on historical experience and current economic conditions. The accuracy of

the allowances depends on the estimates of future cash flows for specific counterparty

allowances and the model assumptions and parameters used in determining collective

allowances.



943

Reference

5.

USE OF ESTIMATES AND JUDGMENTS (CONTINUED)

(a) Key sources of estimation uncertainty (continued) (ii) Determining fair values

The determination of fair value for financial assets and liabilities for which there is no

observable market price requires the use of valuation techniques as described in significant

accounting policies. For financial instruments that trade infrequently and have little price

transparency, fair value is less objective, and requires varying degrees of judgement depending

on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks

affecting the specific instrument. IAS 1.122 (b) Critical accounting judgements in applying the Group’s accounting policies (i) Valuation of financial instruments

The Group’s accounting policy on fair value measurements is discussed in the significant

accounting policies section.

The Group measures fair values using the following fair value hierarchy that reflects the

significance of the inputs used in making the measurements.

Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or

indirectly (i.e. derived from prices). This category includes instruments valued using: quoted

market prices in active markets for similar instruments; quoted prices for identical or similar

instruments in markets that are considered less than active; or other valuation techniques

where all significant inputs are directly or indirectly observable from market data.

Level 3: Valuation techniques using significant unobservable inputs. This category includes

all instruments where the valuation technique includes inputs not based on observable data

and the unobservable inputs have a significant effect on the instrument’s valuation. This

category includes instruments that are valued based on quoted prices for similar

instruments where significant unobservable adjustments or assumptions are required to

reflect differences between the instruments.

Fair values of financial assets and financial liabilities that are traded in active markets are

based on quoted market prices or dealer price quotations. For all other financial instruments the

Group determines fair values using valuation techniques.

Valuation techniques include net present value and discounted cash flow models, comparison

to similar instruments for which market observable prices exist, Black-Scholes and polynomial

option pricing models and other valuation models. Assumptions and inputs used in valuation

techniques include risk-free and benchmark profit rates, credit spreads and other premia used

in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity

and equity index prices and expected price volatilities and correlations. The objective of

valuation techniques is to arrive at a fair value determination that reflects the price of the

financial instrument at the reporting date, that would have been determined by market

participants acting at arm’s length.



944

Reference

5.


IAS 1.122 (b) Critical accounting judgements in applying the Group’s accounting policies (continued) (ii) Financial asset and liability classification

The table below analyses financial instruments measured at fair value at the end of the

reporting period, by the level in the fair value hierarchy into which the fair value measurement

is categorised: Level 1 Level 2 Level 3 Total

In millions 2012 Risk management instruments XXXX XXXX - XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Risk management instruments XXXX XXXX - XXXX XXXX XXXX - XXXX

2011 Derivative assets held for risk management XXXX XXXX - XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Risk management instruments XXXX XXXX - XXXX XXXX XXXX - XXXX

During the current year, due to changes in market conditions for certain investment securities,

quoted prices in active markets were no longer available for certain securities. However, there

was sufficient information available to measure fair values of those securities based on

observable market inputs. Hence, those securities, with a carrying amount of QAR ___ million,

were transferred from Level 1 to Level 2 of the fair value hierarchy. The Group’s accounting policies provide scope for assets and liabilities to be designated at

inception into different accounting categories in certain circumstances:

in classifying financial assets or liabilities as trading, the Group has determined that it meets

the description of trading assets and liabilities set out in accounting policies.

in designating financial assets or liabilities at fair value through income statement, the

Group has determined that it has met one of the criteria for this designation set out in

accounting policies.

Details of the Group’s classification of financial assets and liabilities are given in note 7.



945

Reference

5.


IAS 1.122 (b) Critical accounting judgements in applying the Group’s accounting policies (continued) (iii) Qualifying hedge relationships In designating financial instruments in qualifying hedge relationships, the Group has determined

that it expects the hedges to be highly effective over the period of the hedging relationship.

In accounting for risk management instrument s as cash flow hedges, the Group has

determined that the hedged cash flow exposure relates to highly probable future cash flows. (iv) Impairment of investments in equity and debt securities

Investments in equity and debt securities are evaluated for impairment on the basis described

in the significant accounting policies note. (v) Useful lives of fixed assets

The Group’s management determines the estimated useful life of fixed assets for calculating

depreciation. This estimate is determined after considering the expected usage of the asset,

physical wear and tear, technical or commercial obsolescence.

(vi) Useful life of intangible assets

The Group’s management determines the estimated useful life of its intangible asssets for

calculating amortisation. This estimate is determined after considering the expected economic

benefits to be received from the use of intangible assets.



946

6. OPERATING SEGMENTS

The Group has [report number] reportable segments, as described below, which are the Group’s strategic

divisions. The strategic divisions offer different products and services, and are managed separately based on the

Group’s management and internal reporting structure. For each of the strategic divisions, the Group Management

Committee reviews internal management reports on at least a [monthly / quarterly / half yearly / annually basis].

The following summary describes the operations in each of the Group’s reportable segments. [Please refer to IFRS

8 ‘Operating Segment’ to determine the reporting segments.]

EXAMPLES

Corporate Banking Includes financings, deposits and other transactions and balances with

corporate customers

Retail Banking Includes financings, deposits and other transactions and balances with

retail customers

Group central treasury Undertakes the Group’s funding and centralised risk management

activities through borrowings, issues of debt securities, use of risk

management instrument s for risk management purposes and investing

in liquid assets such as short-term placements and corporate and

government debt securities.

Asset Management Operates the Group’s funds management activities

Investment Includes the Group’s trading and corporate finance activities

Information regarding the results, assets and liabilities of each reportable segment is included below. Performance

is measured based on segment profit before tax, as included in the internal management reports that are reviewed

by the Group Management Committee. Segment profit is used to measure performance as management believes

that such information is the most relevant in evaluating the results of certain segments relative to other entities that

operate within these industries.



947

6. OPERATING SEGMENTS (CONTINUED)

(i) Information about operating segments 2012 Corporate

bankingRetail

bankingGroup central

treasury

Asset management

Investment Others Total

External revenue: Total income from financing and investing activities - XXXX XXXX - XXXX XXXX XXXX Net fee and commission income XXXX XXXX XXXX XXXX - - XXXX Foreign exchange gain / (loss) XXXX - - - XXXX XXXX XXXX Other income - - XXXX - XXXX XXXX XXXX Share of results of associates and joint ventures - - - - XXXX - XXXX Inter segment revenue - XXXX - - - (XXXX) - Total segment revenue XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Other material non-cash items: Net impairment loss on investment securities - XXXX XXXX - - - XXXX Net impairment loss on financing assets - - - - XXXX - XXXX Reportable segment profit before tax XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Reportable segment assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Reportable segment liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXX



948

6. OPERATING SEGMENTS (CONTINUED)

(i) Information about operating segments (continued) 2011 Corporate

bankingRetail

bankingGroup central

treasury

Asset management

Investment Others Total

External revenue: Total income from financing and investing activities - XXXX XXXX - XXXX XXXX XXXX Net fee and commission income XXXX XXXX XXXX XXXX - - XXXX Foreign exchange gain / (loss) XXXX - - - XXXX XXXX XXXX Other income - - XXXX - XXXX XXXX XXXX Share of results of associates and joint ventures - - - - XXXX - XXXX Inter segment revenue - XXXX - - - (XXXX) - Total segment revenue XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Other material non-cash items: Net impairment loss on investment securities - XXXX XXXX - - - XXXX Net impairment loss on financing assets - - - - XXXX - XXXX Reportable segment profit before tax XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Reportable segment assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Reportable segment liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXX



949

6. OPERATING SEGMENTS (CONTINUED) (ii) Reconciliation of reportable segment revenues, profit or (loss), assets and liabilities

2012 2011 Revenues Total revenue for reportable segments XXXX XXXXUnallocated amounts XXXX XXXXElimination of inter-segment revenue (XXXX) (XXXX)Consolidated revenue XXXX XXXX Profit or (loss) Total profit or (loss) for reportable segments XXXX XXXXUnallocated amounts XXXX XXXXConsolidated profit / (loss) before tax XXXX XXXX

Assets Total assets for reportable segments XXXX XXXXOther unallocated amounts XXXX XXXXConsolidated total assets XXXX XXXX Liabilities Total liabilities for reportable segments XXXX XXXXOther unallocated amounts XXXX XXXXConsolidated total liabilities XXXX XXXX



950

6. OPERATING SEGMENTS (CONTINUED) (iii) Geographical areas In presenting information on the bais of geographical areas, revenue is based on the geographical location of customers and assets are based on the geographical location of the assets.

QatarOther GCC

Middle East other than GCC Europe

North America

Rest of the

World Total 2012 External revenues XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Non-current assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX

2011 External revenues XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Non-current assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX



951

Reference 7. FAIR VALUE AND CLASSICIATION OF FINANCIAL INSTRUMENTSIFRS

7.6,8,25

The table below sets out the carrying amounts and fair values of the Group’s financial assets and financial liabilities:

*Fair value through income

statement

Fair value through

equity Amortised

cost

Total carrying amount

Fair value

2012 Cash and balances with central banks - - XXXX XXXX XXXXDue from banks - - XXXX XXXX XXXXFinancing assets - - XXXX XXXX XXXXInvestment securities:

- Measured at fair value XXXX XXXX - XXXX XXXX- Measured at amortised cost - - XXXX XXXX XXXX

Risk management instrument s XXXX - - XXXX XXXX XXXX XXXX XXXX XXXX XXXX Due to banks - - XXXX XXXX XXXXCustomer current accounts - - XXXX XXXX XXXXFinancing liabilities - - XXXX XXXX XXXXRisk management instruments XXXX - - XXXX XXXX XXXX - XXXX XXXX XXXX

*This category include all financial instruments mandatorily classified as ‘fair value through income statement’,’ held for trading’ and ‘designated as fair value through income statement’.



952

Reference 7. FAIR VALUE AND CLASSICIATION OF FINANCIAL INSTRUMENTS (CONTINUED) IFRS 7.6,8,25 The table below sets out the carrying amounts and fair values of the Group’s financial assets and financial liabilities:

*Fair value through income

statement

Fair value through

equity Amortised

cost

Total carrying amount

Fair value

2011 Cash and balances with central banks - - XXXX XXXX XXXXDue from banks - - XXXX XXXX XXXXFinancing assets - - XXXX XXXX XXXXInvestment securities:

- Measured at fair value XXXX XXXX - XXXX XXXX- Measured at amortised cost - - XXXX XXXX XXXX

Risk management instruments XXXX - - XXXX XXXX XXXX XXXX XXXX XXXX XXXX Due to banks - - XXXX XXXX XXXXCustomer current accounts - - XXXX XXXX XXXXFinancing liabilities - - XXXX XXXX XXXXRisk management instruments XXXX - - XXXX XXXX XXXX - XXXX XXXX XXXX

*This category include all financial instruments mandatorily classified as ‘fair value through income statement’,’ held for trading’ and ‘designated as fair value through income statement’.



953

8. BUSINESS COMBINATION(S) Subsidiaries acquired

Principal activity Date of

acquisition

Proportion of voting equity

interests acquired

(%)

Consideration transferred

QAR’0002012 Entity 1 Banking XX 20XX XX XXXXEntity 2 Asset Management XX 20XX XX XXXX XXXX [The reporting entity should provide here the details of each acquisition].

Consideration transferred 2012 2011 Cash XXXX XXXXFair value of other non cash consideration XXXX XXXXContingent consideration arrangement XXXX XXXXTotal XXXX XXXX Assets acquired and liabilities recognised at acquisition Entity 1 Entity 2 Current assets Cash and cash equivalents XXXX XXXXTrade and other receivables XXXX XXXX Non-current assets Fixed assets XXXX XXXX Current liabilities Trade and other payables (XXXX) (XXXX)Contingent liabilities (XXXX) (XXXX) Non-current liabilities Deferred tax liabilities (XXXX) (XXXX) XXXX XXXXNon-controlling interests The non-controlling interests (__% ownership interest in Entity 1) recognised at the acquisition date was measured

by reference to the fair value / [book value] of the non-controlling interests and amounted to QAR ____. This fair

value was estimated by applying the income approach.

[Please disclose the key inputs in determining the fair value of the NCI.]

[The Bank is required to disclose appropriate accounting policy for measuring non-controlling interests.]



954

8. BUSINESS COMBINATION(S) (CONTINUED)

Goodwill arising on acquisition Entity 1 Entity 2 Total Fair value of consideration transferred XXXX XXXX XXXXPlus: non-controlling interests (__% in entity 1, __% in entity 2) XXXX XXXX XXXXLess: fair value of identifiable net assets acquired (XXXX) (XXXX) (XXXX)Goodwill arising on acquisition XXXX XXXX XXXX

9. CASH AND BALANCES WITH CENTRAL BANKS

2012 2011

Cash XXXX XXXXCash reserve with QCB* XXXX XXXXOther balances with QCB XXXX XXXXBalances with other central banks XXXX XXXX XXXX XXXX

*The cash reserve with QCB (and part of balances with other central banks) is not available for use in the Group’s

day to day operations.

10. DUE FROM BANKS

2012 2011 Current accounts XXXX XXXXWakala placements with banks XXXX XXXXMudaraba placements XXXX XXXXCommodity Murabaha receivable XXXX XXXXImpairment against due from banks (XXXX) (XXXX)) XXXX XXXX

[The reporting entity should also disclose amount held under reverse repo transactions in due from banks.]

Impairment of bank balances

2012 2011 Balance in January XXXX XXXXForieng currency translation XXXX XXXXProvisions made during the year XXXX XXXXRecoveries during the year (XXXX) (XXXX) XXXX XXXX



955

11. FINANCING ASSETS (a) By type 2012 2011 Murabaha XXXX XXXXMusawama XXXX XXXXIstisna’a* XXXX XXXXIjarah Muntahia Bittamleek XXXX XXXXMudaraba XXXX XXXXDiminishing Musharaka XXXX XXXXOthers XXXX XXXXTotal financing assets XXXX XXXX Less: Deferred profit XXXX XXXX Specific impairment of financing assets to customers** XXXX XXXX Collective impairment of financing assets to customers XXXX XXXXNet financing assets (see note 1 below) XXXX XXXX

*Total carrying amount of Istisn’a contracts under processing is QAR _____ million (2011:QAR ______). **Should only include impairment against financing assets on the balance sheet. Impairment in respect of off-balance sheet items is disclosed under note 21. The total non-performing financing assets at 31 December 2012 amounted to QAR __ million, representing __% of the gross financing assets (2011: __ million, representing __%). Specific impairment of financing assets includes QAR __ million of profit in suspense (2011: QAR __ million.) Note 1 2012 2011

Government and related agencies XXXX XXXXNon-Banking Financial Institutions XXXX XXXXCorporate XXXX XXXXRetail XXXX XXXX XXXX XXXX



956

11. FINANCING ASSETS (continued) (b) Movement in the provision for impairment on financing assets:

2012 2011

Balance at 1 January XXXX XXXX

Foreign currency translation (XXXX) XXXX

Provisions made during the year XXXX XXXX

Recoveries during the year (XXXX) (XXXX)

XXXX XXXX

Written off during the year (XXXX) (XXXX)

Balance at 31 December XXXX XXXX

(c) Movement in the provision for impairment on financing assets- sector wise:

Corporates SMEs Retail Real Estate

MortgagesTotal

Balance at 1 January XXXX XXXX XXXX XXXX XXXXForeign currency translation XXXX XXXX XXXX XXXX XXXXProvision made during the year XXXX XXXX XXXX XXXX XXXXRecoveries during the year (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)Provision related to subsidiaries XXXX XXXX XXXX XXXX XXXXUtilized/ Transfered XXXX XXXX XXXX XXXX XXXXBalance at 31 December 2012 XXXX XXXX XXXX XXXX XXXX

Balance at 1 January XXXX XXXX XXXX XXXX XXXXForeign currency differences XXXX XXXX XXXX XXXX XXXXProvision made during the year XXXX XXXX XXXX XXXX XXXXRecoveries during the year (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)Provision related to subsidiaries XXXX XXXX XXXX XXXX XXXXUtilized/ Transfered XXXX XXXX XXXX XXXX XXXXBalance at 31 December 2011 XXXX XXXX XXXX XXXX XXXX

[As per the requirements of QCB for Ijarah financing, the Group can only enter into Ijarah Muntahia

Bittamleek agreements.]

[During the year, the Bank had written off fully provided bad debts after meeting the conditions stipulated in

the instructions of QCB amounting to QAR ______.]



957

11. FINANCING ASSETS (CONTINUED)

(d) By sector

2012 Murabaha Musawama Istisna’a Ijarah Muntahia

Bittamleek

Mudaraba Diminishing Musharaka

Others Total

Government and related agenices XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Non-banking financial institutions XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Industry XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Commercial XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Services XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Contracting XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Real estate XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Personal XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Others XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Total financing assets XXXX XXXX XXXX XXXX XXXX

XXXX

XXXX XXXX Less: Deferred profit XXXX Provision for impairment on financing assets

XXXX

Net financing assets XXXX

[In accordance with paragraph 25 of FAS 1, the reporting entity should also disclose nature and amount of any assets which are restricted for a particular use or used as collateral for the Islamic bank’s obligations.]



958

11. FINANCING ASSETS (CONTINUED)

(c) By sector (continued)

2011 Murabaha Musawama Istisna’a Ijarah Muntahia Bittamleek

Mudaraba Diminishing Musharaka

Others Total

Government and related agenices XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Non-banking financial institutions XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Industry XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Commercial XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Services XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Contracting XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Real estate XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Personal XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Others XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Total financing assets XXXX XXXX XXXX XXXX XXXX

XXXX

XXXX XXXX Less: Deferred profit XXXX Provision for impairment on financing assets

XXXX

Net financing assets XXXX



959

12. INVESTMENT SECURITIES 2012 2011 Quoted Unquoted Total Quoted Unquoted Total

Investments classified as fair value through income statement

- Investments classified as held for trading XXXX - XXXX XXXX - XXXX - Designated as fair value through income Statement:

equity-type investments XXXX XXXX XXXX XXXX XXXX XXXX

debt-type investments* - Fixed rate XXXX XXXX XXXX XXXX XXXX XXXX- Floating rate XXXX XXXX XXXX XXXX XXXX XXXX


Debt-type investments classified at amortised cost*

- Fixed rate XXXX XXXX XXXX XXXX XXXX XXXX- Floating rate XXXX XXXX XXXX XXXX XXXX XXXX

Less: provision for impairment (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) XXXX XXXX XXXX XXXX XXXX XXXX Equity-type investments classified as fair value through equity

XXXX XXXX XXXX

XXXX XXXX XXXX


*The reporting entity should disclose any investment in the State of Qatar debt securities separately as part of debt-type instruments. [In accordance with paragraph 46 of FAS 26, the reporting should disclose fair value of investment carried at

amortised cost.]

[In accordance with paragraph 34 of FAS 25, the reporting entity should disclose any restrictions on investments,

their profits and sales.]

[In accordance with paragraph 35 of FAS 25, the reporting entity should disclose reasons for not being able to

determine the reliable measure for fair value for investment carried at cost along with the market for such

investments, and information on how the entity will dispose-off these investments.]

[In accordance with paragraph 41, 42 and 42 of FAS 25, the reporting entity should disclose the following for

investments carried at fair value:

Para 41 - Fair value hierarchy by category of investment presenting fair values used for investments which are

quoted in an active market, fair values measured for investments by reference to the directly or indirectly observable

inputs, and fair values measured by using inputs which are not directly based on observable market data.



960

12. INVESTMENT SECURITIES (CONTINUED)

Para 42 - Disclosure should be made of the amount of unrealised gain/ losses included in the income statement and

changes in equity during the year for each level fair value hierarchy discussed above.

Para 43 – Disclosure should be made for transfers between categories of fair value hierarchy mentioned in Para 41.]

[The reporting entity should also disclose amount of securities pledged against repurchase agreements.}

The cumulative change in fair value of equity-type investments designated as fair value through equity, during the

year is as follows: 2012 2011 Positive

fair valueNegative fair value

Total Positive fair value

Negative fair value

Total

Balance at 1 January XXXX (XXXX) XXXX XXXX (XXXX) XXXXNet change in fair value XXXX (XXXX) XXXX XXXX (XXXX) XXXXTransferred to consolidated income statement

(XXXX) XXXX XXXX

(XXXX) XXXX XXXX

Balance at 31 December XXXX (XXXX) XXXX XXXX (XXXX) XXXX

The movement in impairment of debt-type securities carried at amortised cost and equity-type securities (*) carried at

fair value through equity: 2012 2011Balance at 1 January XXXX XXXXCharge during the year XXXX XXXXReversal made during the year (XXXX) (XXXX)Amount written-off during the year (XXXX) (XXXX)Balance at 31 December XXXX XXXX

*In the case of equity-type investments classified as fair value through equity and measured at fair value, a

significant (where market value has declined by a minimum of 20%) or prolonged (where market value has declined

for 9 months at least) decline in the fair value of an investment below its cost is considered in determining whether

the investments are impaired. Please see page no (910), note 3(f) ‘Impairment of financial assets’.

13. INVESTMENT IN ASSOCIATES AND JOINT VENTURES

2012 2011Balance at 1 January XXXX XXXXForeign currency translation XXXX XXXXInvestments acquired during the year XXXX XXXXShare of results XXXX XXXXCash dividend (XXXX) (XXXX)Associates / joint ventures sold or transferred (XXXX) (XXXX)Other movements XXXX XXXXBalance at 31 December XXXX XXXX

Associates/ Company’s Ownership % Name of the Company Joint venture Country Activities 2012 2011

ABC Company XXXX XXXX XXXX XXXX XXXXXYZ Company XXXX XXXX XXXX XXXX XXXX



961

13. INVESTMENT IN ASSOCIATES AND JOINT VENTURES (CONTINUED)

The financial position, revenue and results of associates and joint ventures based on audited financial statements, as

at and for the year ended 31 December 2012 are as follows:

31 December 2012 ABC XYZ Total assets XXXX XXXX

Total liabilities XXXX XXXX

Total revenue XXXX XXXX

Net profit/loss

Share of profit / (loss) XXXX XXXX

31 December 2011 A B Total assets XXXX XXXX

Total liabilities XXXX XXXX

Total revenue XXXX XXXX

Net profit/loss

Share of profit / (loss) XXXX XXXX

[Associate / joint venture A is listed on ____, having a fair value of QAR ___ (2011: QAR ____).]

[The reporting entity should present here detailed disclosures for its investment in associates and joint ventures.

Disclosures may include presenting investments by type, movement in goodwill during the year, disclosure relating to

percentage of ownership of the reporting entity and disclosure of financial position of associates.]

IAS 31.54 (a)-(c) IAS 31.55 (a)-(b)

[The Group shall disclose the following in respect of joint ventures: any contingencies that the Group has incurred in relation to its investments in joint ventures,

and its share in each of the contingencies that have been incurred jointly with other venturers;

the Group’s share of the contingencies of joint ventures for which it is contingently liable; those contingencies that arise because the venturer is contingently liable for the liabilities of

the other venturers of a joint venture; any capital commitments of the Group in relation to its interests in joint ventures ans its

share in the capital commitments thst have been incurred jointly with other venturers; and the Group’s share of the capital commitments of the joint ventures themselves.]

14. INVESTMENT PROPERTY 2012 2011 Held for: Capital

appreciation Rental Total Capital

appreciationRental Total

Balance at 1 January XXXX XXXX XXXX XXXX XXXX XXXXAddition(s) XXXX XXXX XXXX XXXX XXXX XXXXDisposal(s) XXXX XXXX XXXX XXXX XXXX XXXXChanges in fair value XXXX XXXX XXXX XXXX XXXX XXXXImpairment (XXXX) (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)Balance at 31 December XXXX XXXX XXXX XXXX XXXX XXXX [The above table assumes that investment property is fair valued. If the reporting entity follows cost model, than a

movement schedule in line fixed asset note should be presented along with fair value of investment property in

comparison to its costs.]



962

15. FIXED ASSETS Land and IT Fixtures Work Buildings* Equipment* and fittings In progress Total Cost Balance at 1 January 2011 XXXX XXXX XXXX XXXX XXXXAcquisitions / transfers XXXX XXXX XXXX XXXX XXXXDisposals (XXX) (XXX) (XXX) - (XXX)Foreign currency translation (XXXX) (XXXX) (XXXX) - (XXXX)

Balance at 31 December 2011 XXXX XXXX XXXX

XXXX XXXX Balance at 1 January 2012 XXXX XXXX XXXX XXXX XXXXAcquisitions / transfers XXXX XXXX XXXX XXXX XXXXDisposals (XXXX) (XXXX) (XXXX) - (XXXX)Foreign currency translation (XXXX) (XXXX) (XXXX) - (XXXX)


XXXX XXXX Accumulated depreciation and impairment losses

Balance at 1 January 2011 XXXX XXXX XXXX - XXXXDepreciation charged during the year XXXX XXXX XXXX - XXXXImpairment during the year XXXX XXXX XXXX - XXXXDisposals (XXX) (XXX) (XXX) - (XXX)Foreign currency translation (XXXX) (XXXX) (XXXX) - (XXXX)


- XXXX - Balance at 1 January 2011 XXXX XXXX XXXX - XXXXDepreciation charged during the year XXXX XXXX XXXX - XXXXImpairment during the year XXXX XXXX XXXX - XXXXDisposals (XXXX) (XXXX) (XXXX) - (XXXX)Foreign currency translation (XXXX) (XXXX) (XXXX) - (XXXX)


- XXXX Carrying amounts Balance at 1 January 2011 XXXX XXXX XXXX XXXX XXXXBalance at 31 December 2011 XXXX XXXX XXXX XXXX XXXXBalance at 31 December 2012 XXXX XXXX XXXX XXXX XXXX

[The Group is required to disclose the impairment of fixed asset in the schedule, if any]



963

16. INTANGIBLE ASSETS

Purchased Goodwill software Total

Balance at 1 January 2011 XXXX XXXX XXXX Acquisitions XXXX XXXX XXXX Amortisation for the year XXXX XXXX XXXX


Balance at 1 January 2012 XXXX XXXX XXXX Acquisitions XXXX XXXX XXXX Amortisation for the year XXXX XXXX XXXX


Goodwill computation: Details on goodwill arising on acquisition are disclosed in note 38 Business combinations.



964

17. OTHER ASSETS

2012 2011 Accrued profit XXXX XXXXPrepayments and advances XXXX XXXXRepossessed collateral (i) XXXX XXXXPositive fair value of risk management instrument s XXXX XXXXSundry debtors XXXX XXXXDeferred tax asset XXXX XXXXClearing suspense accounts XXXX XXXXOthers XXXX XXXX XXXX XXXX

(i) This represents the value of the properties acquired in settlement of debts which are stated at their acquisition

value net of provision amounting to QR XXXX (2011: XXXX). The estimated market values of these properties

as at 31 December 2012 are not materially different from the carrying values.

18. DUE TO BANKS Note 2012 2011 Current accounts XXXX XXXXCommodity Murabaha payable XXXX XXXXShort term loans from banks* XXXX XXXXWakala payable 18.1 XXXX XXXX XXXX XXXX 18.1 Wakala payable includes various facilities with maturities ranging from [__ month – __ years] and carries a

profit rate [__% – __%] for fixed rate Wakalas and repo rate plus [__ % – __%] per annum for variable rate

Wakalas.

[*Includes amount held under repurchase agreements amounting to QR XXX (2011: XXXX)]

19. CUSTOMER CURRENT ACCOUNTS

2012 2011Current accounts by sector:

- Government XXXX XXXX- Non-Banking Financial Institutions XXXX XXXX- Corporate XXXX XXXX- Individuals XXXX XXXX

XXXX XXXX



965

20. FINANCING LIABILITIES [SUKUK FINANCING]

[The reporting entity should disclose the features of Sukuk financing. The following are some of the common features

of Sukuk Financing arrangements:

a) Amount of financing, net of issuance cost;

b) Disclosing that Sukuks are Shari’a complaint and approved by the Board of Directors of the Company;

c) Maturity of Sukuks;

d) Name of stock exchange in which the Sukuks are listed;

e) Details of arrangement relating to transfer of assets to the Sukuk Issuance Company [“the Issuer”], and/or

details relating to asset base of the Sukuk.;

f) Name of the Issuer;

g) Sukuk repurchase price at maturity; and

h) Profit percentage on Sukuks including method of profit and principal repayments.]

[The reporting entity should also present ‘Sukuk holders share of profit’ in the consolidated income statement after

the net profit for the year; if as per the Sukuk Financing Agreement, Sukuk holders are eligible towards share of

profit.]

21. OTHER LIABILITIES Note 2012 2011

Unearned commission income XXXX XXXXTax payable XXXX XXXXNegative fair value of risk management instrument s XXXX XXXXCash margins XXXX XXXXDividend payable XXXX XXXXUnclaimed balances XXXX XXXXDeferred tax liability XXXX XXXXClearing suspense accounts XXXX XXXXOther provisions 21.1 XXXX XXXXEmployees' end of service benefits 21.2 XXXX XXXXOthers XXXX XXXX XXXX XXXX

21.1 Movement in other provisions: (i

) Other provisions

Contingencie

s provision

Legal

provision

Other

provision

Total

2012

Total

2011

Balance at 1 January XXXX XXXX XXXX XXXX XXXX

Foreign currency translation (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Provisions made during the year XXXX XXXX XXXX XXXX XXXX


Provisions recovered during the year (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Provisions paid and written off during the year (XXXX) (XXXX) (XXXX) (XXXX) (XXXX)

Balance at 31 December XXXX XXXX XXXX XXXX XXXX



966

21. OTHER LIABILITIES (CONTINUED)

21.2 Movement in employees’ end of service benefits is as follows: 2012 2011

Employees' end of

service benefits

Balance at 1 January XXXX XXXXCharge for the year XXXX XXXXPayments made during the year XXXX XXXXBalance at 31 December XXXX XXXX



967

22. EQUITY OF INVESTMENT ACCOUNT HOLDERS 2012 2011

Investment account holders balance before share of profit XXXX XXXXAdd: Distributed profits of investment account holders’ profit for the year (a) XXXX XXXXTotal investment account holders balance after share of profit (b) XXXX XXXX

By type: 2012 2011

Saving accounts XXXX XXXXTerm accounts XXXX XXXXCall accounts XXXX XXXXTotal (b) XXXX XXXX

By sector: Government XXXX XXXXBanks XXXX XXXXNon-banking financial institution XXXX XXXXRetail XXXX XXXXCorporate XXXX XXXXTotal (b) XXXX XXXX

2012 2011

Total investment account holders balance after share of profit (b) XXXX XXXXProfit equalisation reserve XXXX XXXXInvestment risk reserve XXXX XXXXShare in fair value reserve XXXX XXXXShare in other reserve (*) XXXX XXXXTotal investment account holders balance XXXX XXXX

(*) share of undistributed net profit from investments in associates and joint ventures after deducting the cash

dividends received as per regulations of QCB

[In accordance with paragraph 45 of FAS 1, the reporting entity should also disclose rights, conditions and

obligations of each type of investment accounts or its equivalent.]

[In accordance with paragraph 2/1/1 of FAS 5, the reporting entity should disclose the basis applied in allocation of

profit between owners’ equity and investment account holders.]

[The reporting entity should disclose here the basis of calculation of profit payable to investment account holders and

maturity wise profit distribution rates.] 2012 2011Share of investment account holders’ profit for the year (a) XXXX XXXXLess: transferred to profit equalisation reserve (XXXX) (XXXX)Less: Mudarib share (XXXX) (XXXX)Less: transferred to risk reserve (XXXX) (XXXX)Add: Profit equalisation reserves utilised, net (i) - -Add: Investment risk reserve utilised, net (ii) - -Owners’ contribution (if any) XXXX XXXXTotal profit distributed to investment account holders for the year XXXX XXXX



968

22. EQUITY OF INVESTMENT ACCOUNT HOLDERS (CONTINUED) (i) Profit equalisation reserves 2012 2011

Balance at 1 January XXXX XXXX

Amount apportioned from share in investment account holders profit XXXX XXXX

Amount utilised during the year - -Balance at 31 December (**) XXXX XXXX

(**) distributed as follows:

2012 2011

Investment account holders share XXXX XXXX

Equity share XXXX XXXX

XXXX XXXX

(i) Investment risk reserve 2012 2011

Balance at 1 January XXXX XXXXAmount apportioned from share in investment account holders profit XXXX XXXXAmount utilised during the year (**) (**)Balance at 31 December XXXX XXXX

[The profit equalisation reserve and investment risk reserve will revert to investment account holders as per terms and conditions of the Mudaraba contract.] [If investment account holder’s funds are commingled with the Group’s funds for investment, no priority is granted to any party for the purpose of investments and distribution of profits.] [The Group shall disclose any deductions made from its share in the mudaraba income and/or any expense borne by the Group on behalf of URIA.]

23. OWNERS’ EQUITY (a) Share capital Ordinary shares In millions of shares 2012 2011 On issue at -1 January XXXX XXXXNew shares issued XXXX XXXXOn issue at 31 December XXXX XXXX At 31 December 2012 the authorised share capital comprised ___ million ordinary shares (2011: ___ million), having a par value of QAR ____ each share. Out of these ____ million ordinary shares (2011: ____ million) are issued and fully paid. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Bank.



969

23. OWNERS’ EQUITY (continued)

(b) Legal reserve In accordance with QCB Law no. 13 of 2012, 10% of net profit attributable to the owners of the Bank for the year is

required to be transferred to the reserve until the legal reserve equals 100% of the paid up share capital. This

reserve is not available for distribution except in circumstances specified in Qatar Commercial Companies Law No. 5

of 2002 and after QCB approval. During the year ended 31 December 2012 the appropriation made to legal reserve

amounts to QAR __ million (2011: QAR __ million).

The legal reserve includes share premium received on issuance of new shares in accordance with Qatar Commercial

Companies Law No.5 of 2002.

(c) Risk reserve In accordance with QCB regulations, a risk reserve should be created to cover contingencies on both the public and

private sector financing assets, with a minimum requirement of 2.5% of the total private sector exposure granted by

the Group inside and outside Qatar after the exclusion of the specific provisions and profit in suspense. The finance

provided to / or secured by the Ministry of Finance – Qatar or finance against cash guarantees is excluded from the

gross direct finance. Based on profit for the year, the total amount of the transfer made to the risk reserve was QAR

[______] million (2011: QAR [______] million).

[QCB instructions, reference no. (Part VII-Chapter 1, First, 4/3/4 (A, B and C), for Islamic banks require setting aside

the risk reserves according to the methodology provided in paragraphs (4/3/1) and (4/3/2) of the same reference.]

(d) Fair value reserves

Fair value reserves

Cash

flow

hedging

reserves

Investments

carried as

fair value

through

equity

Revaluation

of

investment

property

Total2012 Cash flow hedging reserves:

Effective portion of changes in fair value XXXX - - XXXXNet amount transferred to consolidated income statement (XXXX) - - (XXXX)

Investments carried as fair value through equity:

Movement in fair value through fair value reserve - XXXX - XXXXNet amount transferred to consolidated income statement - (XXXX) (XXXX) -

Revaluation of investment property: Movement in investment propety fair value - - XXXX XXXXNet amount transferred of consolidated income statement - - (XXXX) (XXXX)

XXXX XXXX XXXX XXXX



970

23. OWNERS’ EQUITY (continued)

(d) Fair value reserves (continued)

Fair value reserves

Cash

flow

hedging

reserves

Investments

carried as fair

value through

equity

Revaluation

of

investment

property Total2011 Cash flow hedging reserves:

Effective portion of changes in fair value XXXX - - XXXXNet amount transferred to consolidated income statement (XXXX) - - (XXXX)

Investments carried as fair value through equity:

Movement in fair value through fair value reserve - XXXX - XXXXNet amount transferred to consolidated income statement - (XXXX) (XXXX) -

Revaluation of investment property: Movement in investment propety fair value - - XXXX XXXXNet amount transferred of consolidated income statement - - (XXXX) (XXXX)

XXXX XXXX XXXX XXXX

[The reporting entity should disclose here segregation of fair value reserve between owners’ and investment account

holders.] (e) Foreign currency translation reserve The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the

financial statements of foreign operations as well as from the translation of liabilities and gains and losses on risk

management instrument s that hedge the Group’s net investment in foreign operations. (f) Other reserves

2012 2011

Group’s share in undistributed profit from investments in associates and joint ventures after deducting the received dividends

XXXX XXXX

Group’s share of profit equalization reserve XXXX XXXX

Other reserves XXXX XXXX XXXX XXXX

(g) Proposed dividend The Board of Directors has proposed a cash dividend of ___% of paid up share capital amounting to QAR __ million

– QAR ___ per share (2011 – ___% of paid up capital amounting to QAR ___ million – QAR ___ per share) which is

subject to approval at the Annual General Meeting of the owners of the Bank.



971

24. NON-CONTROLLING INTERESTS This represents the Group’s non-controlling interests in [Name of subsidiary] amounting to [Percentage].

25. NET INCOME FROM FINANCING ACTIVITIES

2012 2011

Murabaha and Musawama XXXX XXXXMudaraba XXXX XXXXMusharaka XXXX XXXXIjarah XXXX XXXXIstisna’a XXXX XXXXOthers XXXX XXXX XXXX XXXX

26. NET INCOME FROM INVESTING ACTIVITIES

2012 2011

Income from inter-bank placements with Islamic banks XXXX XXXXIncome from investment in debt-type instruments XXXX XXXXNet gain or loss on sale of equity-type investments XXXX XXXXNet gain or loss on sale of debt-type investments XXXX XXXXFair value gain / (loss) on investment securities carried as fair value through income statement

XXXX (XXXX)

Dividend income XXXX XXXX XXXX XXXX

27. NET FEE AND COMMISSION INCOME

2012 2011

Management fee income XXXX XXXXCommission income XXXX XXXXAdvisory fee income XXXX XXXXPlacement fee income XXXX XXXXArrangement fee XXXX XXXXStructuring fee XXXX XXXXMarketing fee income XXXX XXXXPerformance fee income XXXX XXXX XXXX XXXXCommission expense XXXX XXXXNet fee and commission income XXXX XXXX

28. FOREIGN EXCHANGE GAIN / (LOSS)

2012 2011

Dealing in foreign currencies XXXX XXXXRevaluation of assets and liabilities XXXX XXXX XXXX XXXX



972

29. STAFF COSTS

2012 2011

Basic salaries XXXX XXXXStaff pension fund costs XXXX XXXXStaff indemnity costs XXXX XXXXTraining XXXX XXXXOther XXXX XXXX XXXX XXXX

30. OTHER EXPENSES

2012 2011

Rent XXXX XXXXRepairs and maintenance XXXX XXXXInsurance costs XXXX XXXXCommunication and utilities XXXX XXXXBoard of Directors’ remuneration XXXX XXXXService expenses XXXX XXXXAdvertising and marketing expenses XXXX XXXXSubscription fees XXXX XXXXLegal and professional fees XXXX XXXXIT expenses XXXX XXXXOther expenses XXXX XXXX XXXX XXXX

31. TAX EXPENSE

2012 2011

Current tax expense Current year XXXX XXXXAdjustments for prior years XXXX XXXX Deferred tax expense Origination and reversal of temporary differences XXXX XXXXReduction in tax rate XXXX XXXXRecognition of previously unrecognised tax losses XXXX XXXX XXXX XXXXTotal tax expense XXXX XXXX

IAS 12.81 [The Group is also required to show a numerical reconciliation between tax expense (income)

and the product of accounting profit multiplied by the applicable tax rate(s),disclosing also the basis on which the applicable tax rate(s) is (are) computed or numerical reconciliation between the average effective tax rate and the applicable tax rate, disclosing also the basis on which the applicable tax rate is computed.]



973

32. CONTINGENT LIABILITIES AND COMMITMENTS

Reference 32. Contingent liabilities and commitments 2012 2011 a) Contingent liabilities Unused facilities-cancellable XXXX XXXX Unused facilities- non cancellable XXXX XXXX Acceptances XXXX XXXX Guarantees XXXX XXXX Letters of credit XXXX XXXX Others XXXX XXXX XXXX XXXX

b) Commitments Profit rate swaps XXXX XXXX Other risk management instrument s XXXX XXXX Total XXXX XXXX

Unused facilities

Commitments to extend credit represent contractual commitments to make financings and revolving credits. The majority of these expire in the next year. Since commitments may expire without being drawn upon, the total contractual amounts do not necessarily represent future cash requirements.

Acceptances, Guarantees and Letters of credit

Acceptances, guarantees and letters of credit commit the group to make payments on behalf of customers in the event of a specific event. Guarantees and standby letters of credit carry the same credit risk as financings. [Please explain other commitments and contingencies.]

Lease commitments Non-cancellable operating lease rentals are payable as follows: 2012 2011 Less than one year XXXX XXXX Between one and five years XXXX XXXX More than five years XXXX XXXX XXXX XXXX [The Group leases a number of branches and office premises under operating leases. The

leases typically run for a period of up to __ years, with an option to renew the lease after that period. Lease payments are increased every three to five years to reflect market rentals.]



974

33. CONCENTRATION OF ASSETS, LIABILITIES AND EQUITY OF INVESTMENT ACCOUNT HOLDERS [IN

ACCORDANCE WITH PARAGRAPH 16 OF FAS 1]

Geographical sector Following is the concentration of assets, liabilities and equity of investment account holders into geographical sectors regions:

2012 Qatar Other GCC Europe North

America Others Total

Cash and balances with central banks XXXX XXXX XXXX XXXX XXXX XXXXDue from banks XXXX XXXX XXXX XXXX XXXX XXXXFinancing assets XXXX XXXX XXXX XXXX XXXX XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXXInvestment property XXXX XXXX XXXX XXXX XXXX XXXXIntangible assets XXXX XXXX XXXX XXXX XXXX XXXXFixed assets XXXX XXXX XXXX XXXX XXXX XXXXOther assets XXXX XXXX XXXX XXXX XXXX XXXXTotal assets XXXX XXXX XXXX XXXX XXXX XXXX

Liabilities and equity of investment account holders

Liabilities

Placements from financial institutions XXXX XXXX XXXX XXXX XXXX XXXXCustomer current accounts XXXX XXXX XXXX XXXX XXXX XXXXFinancing liabilities XXXX XXXX XXXX XXXX XXXX XXXXOther liabilities XXXX XXXX XXXX XXXX XXXX XXXXTotal liabilities XXXX XXXX XXXX XXXX XXXX XXXX Equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX Total liabilities and equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX



975

33. CONCENTRATION OF ASSETS, LIABILITIES AND EQUITY OF INVESTMENT ACCOUNT HOLDERS

(CONTINUED)

Geographical sector (continued) Following is the concentration of assets, liabilities and equity of investment account holders into geographical sectors regions:

2011 Qatar Other GCC Europe North

America Others Total

Cash and balances with central banks XXXX XXXX XXXX XXXX XXXX XXXXDue from banks XXXX XXXX XXXX XXXX XXXX XXXXFinancing assets XXXX XXXX XXXX XXXX XXXX XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXXInvestment property XXXX XXXX XXXX XXXX XXXX XXXXIntangible assets XXXX XXXX XXXX XXXX XXXX XXXXFixed assets XXXX XXXX XXXX XXXX XXXX XXXXOther assets XXXX XXXX XXXX XXXX XXXX XXXXTotal assets XXXX XXXX XXXX XXXX XXXX XXXX


Liabilities

Placements from financial institutions XXXX XXXX XXXX XXXX XXXX XXXXCustomer current accounts XXXX XXXX XXXX XXXX XXXX XXXXFinancing liabilities XXXX XXXX XXXX XXXX XXXX XXXXOther liabilities XXXX XXXX XXXX XXXX XXXX XXXXTotal liabilities XXXX XXXX XXXX XXXX XXXX XXXX Equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX Total liabilities and equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX



976


Industrial sector Following is the concentration of assets, liabilities and equity of investment account holders into industrial sectors regions:

2012 Real

estate Construction,

engeering and

maufacturing

Oil and gas

Financial services

Individuals Others Total

Cash and balances with central banks XXXX XXXX XXXX XXXX XXXX XXXX XXXXDue from banks XXXX XXXX XXXX XXXX XXXX XXXX XXXXFinancing assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXX XXXXInvestment property XXXX XXXX XXXX XXXX XXXX XXXX XXXXIntangible assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXFixed assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXOther assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXTotal assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX


Liabilities

Placements from financial institutions XXXX XXXX XXXX XXXX XXXX XXXX XXXXCustomer current accounts XXXX XXXX XXXX XXXX XXXX XXXX XXXXFinancing liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXXOther liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXXTotal liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXX Equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX XXXX Total liabilities and equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX XXXX



977


(CONTINUED)

Industrial sector (continued) Following is the concentration of assets, liabilities and equity of investment account holders into industrial sectors regions:

2011 Real

estate Construction, engeering and maufacturing

Oil and gas

Financial services

Individuals Others Total

Cash and balances with central banks XXXX XXXX XXXX XXXX XXXX XXXX XXXXDue from banks XXXX XXXX XXXX XXXX XXXX XXXX XXXXFinancing assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXX XXXXInvestment property XXXX XXXX XXXX XXXX XXXX XXXX XXXXIntangible assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXFixed assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXOther assets XXXX XXXX XXXX XXXX XXXX XXXX XXXXTotal assets XXXX XXXX XXXX XXXX XXXX XXXX XXXX


Liabilities

Placements from financial institutions XXXX XXXX XXXX XXXX XXXX XXXX XXXXCustomer current accounts XXXX XXXX XXXX XXXX XXXX XXXX XXXXFinancing liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXXOther liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXXTotal liabilities XXXX XXXX XXXX XXXX XXXX XXXX XXXX Equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX XXXX Total liabilities and equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX XXXX



978

35. MATURITY PROFILE

2012 Up to 3

months 3 to 6

months 6 months - 1

year 1 to 3 years

Over 3 years

Total

Cash and balances with central banks XXXX XXXX XXXX XXXX XXXX XXXXDue from banks XXXX XXXX XXXX XXXX XXXX XXXXFinancing assets XXXX XXXX XXXX XXXX XXXX XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXXInvestment property XXXX XXXX XXXX XXXX XXXX XXXXIntangible assets XXXX XXXX XXXX XXXX XXXX XXXXFixed assets XXXX XXXX XXXX XXXX XXXX XXXXOther assets XXXX XXXX XXXX XXXX XXXX XXXXTotal financial assets XXXX XXXX XXXX XXXX XXXX XXXX


Liabilities

Placements from financial institutions XXXX XXXX XXXX XXXX XXXX XXXXCustomer current accounts XXXX XXXX XXXX XXXX XXXX XXXXFinancing liabilities XXXX XXXX XXXX XXXX XXXX XXXXOther liabilities XXXX XXXX XXXX XXXX XXXX XXXXTotal liabilities XXXX XXXX XXXX XXXX XXXX XXXX Equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX Total liabilities and equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX Maturity gap XXXX XXXX XXXX XXXX XXXX XXXX



979

35. MATURITY PROFILE (CONTINUED)

2011 Up to 3

months 3 to 6 months 6 months - 1

year 1 to 3 years

Over 3 years

Total

Cash and balances with central banks XXXX XXXX XXXX XXXX XXXX XXXXDue from banks XXXX XXXX XXXX XXXX XXXX XXXXFinancing assets XXXX XXXX XXXX XXXX XXXX XXXXInvestment securities XXXX XXXX XXXX XXXX XXXX XXXXInvestment property XXXX XXXX XXXX XXXX XXXX XXXXIntangible assets XXXX XXXX XXXX XXXX XXXX XXXXFixed assets XXXX XXXX XXXX XXXX XXXX XXXXOther assets XXXX XXXX XXXX XXXX XXXX XXXXTotal financial assets XXXX XXXX XXXX XXXX XXXX XXXX


Liabilities

Placements from financial institutions XXXX XXXX XXXX XXXX XXXX XXXXCustomer current accounts XXXX XXXX XXXX XXXX XXXX XXXXFinancing liabilities XXXX XXXX XXXX XXXX XXXX XXXXOther liabilities XXXX XXXX XXXX XXXX XXXX XXXXTotal liabilities XXXX XXXX XXXX XXXX XXXX XXXX Equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX Total liabilities and equity of investment account holders XXXX XXXX XXXX XXXX XXXX XXXX Maturity gap XXXX XXXX XXXX XXXX XXXX XXXX



980

36. BASIC AND DILUTED EARNINGS PER SHARE

[This disclosure is mandatory for listed Banks]

Earnings per share are calculated by dividing the net profit for the year attributable to the owners of the Bank by the

weighted average number of ordinary shares in issue during the year.

2012 2011

Profit for the year attributable to the owners of the Bank XXXX XXXX

Weighted average number of outstanding shares XXXX XXXX

Earning per share (QAR) XX.XX XX.XX

The weighted average number of shares have been calculated as follows:

2012 2011

Weighted average number of shares at 1 January XXXX XXXX

[Effect of bonus share issue] XXXX XXXX

Weighted average number of shares at 31 December XXXX XXXX

[In the event if any potentially dilutive shares outstanding at any time, the dilutive earnings per shares needs to be disclosed separately in the financial statements.]

[The Group will be required to adjust the EPS in case of right issues etc. (please refer IAS 33 for more guidance)] 37. CASH AND CASH EQUIVALENTS

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following balances with

maturities of less than three months: 2012 2011Cash and balances with central banks (excluding restricted QCB and other central banks reserve account) XXXX

XXXX

Due from banks XXXX XXXX XXXX XXXX



981

38. RELATED PARTIES

Parties are considered to be related if one party has the ability to control the other party or exercise significant

influence over the other party in making financial and operating decisions. Related parties include the significant

owners’ and entities over which the Group and the owners’ exercise significant influence, directors and executive

management of the Group. [The Group is required to disclose the names of its related parties, nature of related party relationships as well as

nature of the transactions with them and outstanding balances.] The related party transactions and balances included in these consolidated financial statements are as follows: 2012 2011

Subsidiary and associated companies

Board of directors

Others

Subsidiary and associated companies

Board of directors

Others

Assets: xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx Liabilities: xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx Off balance sheet items:

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx Consolidated income statement items:

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

IAS 24.17

Transactions with key management personnel

Key management personnel and their immediate relatives have transacted with the Group during the year as follows:

2012 2011

IAS 24.17(a),

(b)

Mortgage and other secured financings XXXX XXXX Credit card XXXX XXXX Other financings XXXX XXXX XXXX XXXX

IAS 24.17(b) [The reporting entity should provide details of profit rates charged against the market rates,

secured financings granted etc.] IAS 24.17

(c),(d)

[The reporting entity should provide details of any impairment loss recognised.]



982

Reference

38.

RELATED PARTIES (CONTINUED)

IAS 24.16 Key management personnel compensation for the year comprised:

2012 2011

Short-term employee benefits XXXX XXXX Long-service leave XXXX XXXX Post-employment benefits XXXX XXXX Share-based payment transactions XXXX XXXX XXXX XXXX

IAS 24 .25

[If a Government has control, joint control or significant influence over the Group. The Group is

required to disclose the the name of the government and the nature of its relationship with the

Group (ie control, joint control or significant influence) and information in sufficient detail to enable

users to understand the effect of related party transactions on consolidated financial statements

i.e.

(i) the nature and amount of each individually significant transaction; and

(ii) for other transactions that are collectively, but not individually, significant, a qualitative or

quantitative indication of their extent.]



983

Reference

IFRS 7.22(b)

39. RISK MANAGEMENT INSTRUMENTS Notional / expected amount by term to maturity Positive Negative Notional within 3 - 12 1-5 More than fair value fair value amount 3 months months years 5 years

At 31 December 2012: Risk management instruments held as cash flow hedges: Profit rate swaps XXXX XXXX XXXX XXXX XXXX XXXX XXXX Forward foreign exchange contracts XXXX XXXX XXXX XXXX XXXX XXXX XXXX Total XXXX XXXX XXXX XXXX XXXX XXXX XXXX

At 31 December 2011: Risk management instruments held as cash flow hedges: Profit rate swaps XXXX XXXX XXXX XXXX XXXX XXXX XXXX Forward foreign exchange contracts XXXX XXXX XXXX XXXX XXXX XXXX XXXX Total XXXX XXXX XXXX XXXX XXXX XXXX XXXX

IFRS 7.22(a) [COMMENTRY ON RISK MANAGEMENT INSTRUMENTS]



984

40. ZAKAH

Zakah is directly borne by the owners. The Group does not collect or pay Zakah on behalf of its owners in

accordance with the [Articles of Association].

41. SHARI’A SUPERVISORY BOARD1

The Shari’a supervisory Board of the Group consists of ___ scholars who are specialised in Shari’a principles and

they ensure the Group’s compliance with general Islamic principles and work in accordance with the issued Fatwas

and guiding rules. The Board’s review includes examining the evidence related to documents and procedures

adopted by the Group in order to ensure that its activities are according to the principles of Islamic Shari’a.

42. SOCIAL RESPONSIBILITY

The Group discharges its social responsibilities through donations to charitable causes and organisations when

profits are reported.

43. SUBSEQUENT EVENTS

[Based on paragraph 24 of FAS 1, the reporting should disclose details of any event subsequent to the date of the

statement of financial position which might have a significant effect on the Group’s financial position or results of its

operations, including those events which may cause significant change in the banks activities or size, or which may

restrict management’s ability to take action.]

44. COMPARATIVE FIGURES

The comparative figures presented for 2011 have been reclassified where necessary to preserve consistency with

the 2012 figures. However, such reclassifications did not have any effect on the consolidated net profit / (loss), or

the total consolidated equity for the comparative year.

1 Refer to articles no. (106, 107 and 108) of QCB Law no. (13) of 2012.



985

45. STATEMENT OF FINANCIAL POSITION OF THE PARENT BANK

Reference As at 31 December 2012 2011

ASSETS FAS 1.30-38 Cash and balances with central banks XXXX XXXX Due from banks XXXX XXXX Financing assets XXXX XXXX Investment securities XXXX XXXX Investment in subsidiaries, associates and joint ventures XXXX XXXX Investment property XXXX XXXX Fixed assets XXXX XXXX Intangible assets XXXX XXXX Other assets XXXX XXXX TOTAL ASSETS XXXX XXXX

FAS 1.41-45 LIABILITIES Due to banks XXXX XXXX Customer current accounts XXXX XXXX Financing liabilities XXXX XXXX Other liabilities XXXX XXXX TOTAL LIABILITIES XXXX XXXX

FAS 1.41-45 EQUITY OF INVESTMENT ACCOUNT HOLDERS XXXX XXXX FAS 1.41-45 OWNERS' EQUITY Share capital XXXX XXXX Legal reserve XXXX XXXX Risk reserve XXXX XXXX Fair value reserves XXXX XXXX Foreign currency translation reserve XXXX XXXX Other reserves XXXX XXXX Retained earnings XXXX XXXX TOTAL OWNERS’ EQUITY XXXX XXXX TOTAL LIABILITIES, EQUITY OF INVESTMENT ACCOUNT

HOLDERS AND OWNERS’ EQUITY XXXX XXXX



986

46. INCOME STATEMENT OF THE PARENT BANK

Reference For the year ended 31 December 2012 2011

FAS 1.46 - 52 Income from financing activities XXXX XXXX

Income from investing activities XXXX XXXX Total income from financing and investing activities XXXX XXXX

Fee and commission income XXXX XXXX Fee and commission expense XXXX XXXX Net fee and commission income XXXX XXXX

Foreign exchange gain / (loss) XXXX XXXX Other income XXXX XXXX Total income XXXX XXXX

Staff costs (XXXX) (XXXX) Depreciation and amortisation (XXXX) (XXXX) Other expenses (XXXX) (XXXX) Total expenses (XXXX) (XXXX)

Net impairment loss on investment securities (XXXX) (XXXX) Net impairment loss on financing assets (XXXX) (XXXX) Profit / (loss) for the year before return to investment

account holders

XXXX XXXX Return to investment account holders before the Bank’s

share as Mudarib

XXXX XXXX Bank’s share as Mudarib (XXXX) (XXXX) Less: net return to investment account holders (XXXX) (XXXX) Profit / (loss) for the year before tax XXXX XXXX Tax expense (XXXX) (XXXX) Profit / (loss) for the year XXXX XXXX

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