United Arab Bank P.J.S.C
.
Review report and condensed interim financial statements
For the six months period ended 30 June 2023United Arab Bank P.J.S.C.
Review report and condensed interim financial statements
For the six months period ended 30 June 2023
Pages
Independent auditor’s review report to the shareholders and directors 2
Interim statement of financial position 3
Interim statement of income 4
Interim statement of comprehensive income 5
Interim statement of cash flows 6
Interim statement of changes in equity 7
Notes to the condensed interim financial statements 8 - 26ERNST & YOUNG Tel: +971 6 574 1491
(SHARJAH BRANCH) Fax: +971 4 332 4004
P.O. Box 1350 dubai@ae.ey.com
City Gate Tower, 14th Floor, Office 1402 ey.com
Al-Ittihad Street
Emirate of Sharjah
United Arab Emirates PL No. 2845
REPORT ON REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS TO
THE BOARD OF DIRECTORS OF UNITED ARAB BANK P.J.S.C
Introduction
We have reviewed the accompanying condensed interim financial statements of United Arab Bank
P.J.S.C. (the “Bank”), which comprise the interim statement of financial position as at 30 June
2023 and the related interim income statement and comprehensive income statement for three-
month and six-month periods then ended and the interim statement of changes in equity and cash
flows for the six-month periods then ended and explanatory notes. Management is responsible for
the preparation and presentation of these condensed consolidated interim financial statements in
accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting
(“IAS 34”). Our responsibility is to express a conclusion on these condensed interim financial
statements based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements
2410, “Review of Interim Financial Information Performed by the Independent Auditor of the
Entity”. A review of interim financial information consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying condensed interim financial statements are not prepared, in all material respects,
in accordance with IAS 34.
For Ernst & Young
Signed by:
Anthony O’Sullivan
Partner
Registration No: 687
24 July 2023
Sharjah, United Arab Emirates
A member firm of Ernst & Young Global LimitedUnited Arab Bank P.J.S.C,
INTERIM STATEMENT OF FINANCIAL POSITION
For the six months period ended 30 June 2023 (Unaudited)
Unaudited A udited
30 June 31 December
2023 2022
AED'000 AED'000
Note
Assets
Cash and balances with UAE Central Bank 5 1,660,466 1.207.589
Due from banks 6 104,973 302.772
Loans and advances and Islamic financing receivables 7 7,585,348 7.604.300
Investments and Islamic instruments 8 4,175,663 3.887.476
Property, equipment and capital work-in-progress 298,133 295.696
Other assets 623,665 782.589
TOTAL ASSETS 14,448,248 14.080.422
Liabilities and shareholders' equity
Liabilities
Due to banks 9 3,257,399 3.272.443
Customer deposits and Islamic customer deposits 10 8,410,131 8.568.587
Other liabilities 652,832 740.056
TOTAL LIABILITIES 12,320,362 12.581.086
Shareholders' equity
Share capital 4 2,062,550 2.062.550
Treasury shares (865) -
Tier 1 instrument 548,283 -
Special reserve 22,491 22.491
Statutory reserve 51,415 51.415
General reserve 9,311 9.311
Cumulative changes in fair value (181,666) (153,621)
Accumulated losses (383,633) (492.810)
TOTAL SHAREHOLDERS’ EQUITY 2,127,886 1.499.336
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 14,448,248 14.080.422
This condensed interim financial information was approved by the Board of Directors on 24 July 2023 and signed on
its behalf by:
The notes on pages 8 to 26 form an integral part of the condensed interim financial information. The independent auditors'
report on review of the Bank's condensed interim financial information is set out on page 2.United Arab Bank P.J.S.C.
INTERIM STATEMENT OF INCOME
For the six months period ended 30 June 2023 (Unaudited)
Three month period Six month period
ended 30 June ended 30 June
(Unaudited) (Unaudited)
──────────── ────────────
2023 2022 2023 2022
Notes AED’000 AED’000 AED’000 AED’000
Interest income 209,395 114,350 400,187 214,940
Income from Islamic financing products 15,734 12,776 33,406 25,735
────── ────── ────── ──────
Total interest income and income from
Islamic financing products 225,129 127,126 433,593 240,675
Interest expense (108,896) (42,947) (207,537) (81,156)
Distribution todepositors–Islamic products (16,014) (10,135) (33,850) (18,597)
────── ────── ────── ──────
Total interest expense and distribution to
depositors (124,910) (53,082) (241,387) (99,753)
Net interest income and income from
Islamic products net of distribution to
depositors 100,219 74,044 192,206 140,922
Net fees and commission income 15,435 14,941 30,235 27,435
Foreign exchange income 6,480 4,615 13,910 9,231
Otheroperating income 27,740 32,264 36,230 65,128
────── ────── ────── ──────
Total operating income 149,874 125,864 272,581 242,716
────── ────── ────── ──────
Employee benefit expenses (44,761) (33,087) (87,166) (66,994)
Other operatingexpenses (18,618) (18,683) (35,839) (37,910)
Depreciation (5,328) (5,789) (11,250) (11,136)
────── ────── ────── ──────
Total operating expenses (68,707) (57,559) (134,255) (116,040)
────── ────── ────── ──────
Profit beforeimpairment loss 81,167 68,305 138,326 126,676
Net impairment loss 11 (15,395) (15,419) (17,802) (43,402)
────── ────── ────── ──────
Net profit for the period 65,772 52,886 120,524 83,274
═══════ ═══════ ═══════ ═══════
Earnings per share
(basic and diluted in AED) 4 0.03 0.03 0.06 0.04
═══════ ═══════ ═══════ ═══════
The notes on pages 8 to 26 form an integral part of the condensed interim financial information. The independent auditors’
report on review of the Bank’s condensed interim financial information is set out on page 2. 4United Arab Bank P.J.S.C.
INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the six months period ended 30 June 2023 (Unaudited)
Three month period ended Six month period ended
30 June (Unaudited) 30 June (Unaudited)
────────────── ─────────────
2023 2022 2023 2022
AED’000 AED’000 AED’000 AED’000
Netprofitforthe period 65,772 52,886 120,524 83,274
Other comprehensive income / (loss)
Fair value through other comprehensive income
(FVOCI):
Net change in fair value during the period 8,336 (184,968) (26,887) (318,052)
Change inallowance for expected credit losses - (12) - 5,984
Reclassified to the income statement (13,260) 33,107 (1,158) 118,496
────── ────── ────── ──────
Other comprehensivelossfor the period (4,924) (151,873) (28,045) (193,572)
────── ────── ────── ──────
Total comprehensive income/(loss) for the period 60,848 (98,987) 92,479 (110,298)
═══════ ═══════ ═══════ ═══════
The notes on pages 8 to 26 form an integral part of the condensed interim financial information. The independent auditors’
report on review of the Bank’s condensed interim financial information is set out on page 2. 5United Arab Bank P.J.S.C.
INTERIM STATEMENT OF CASH FLOWS
For the six months period ended 30 June 2023 (Unaudited)
Six months period
ended 30 June (unaudited)
──────────────────
2023 2022
AED’000 AED’000
Operating activities
Netprofitfor the period 120,524 83,274
Adjustments for:
Depreciation 11,250 11,137
Gain on sale of assets acquired in settlement of debt (3,585) (13,356)
Impairment on assets acquired in settlement of debt 11 3,500 -
Netcreditimpairment losses 11 14,302 43,402
Amortisation of premium paid on investments 2,633 5,475
Net fair value gain on disposal of investments and
Islamic instruments 32 100
Unrealised loss on investments - 46
──────── ────────
Operating cash flows before movements in working capital 148,656 130,078
──────── ────────
Changes in operating assets and liabilities:
Loans and advances and Islamic financing receivables 7 (4,116) (199,814)
Balances with the UAE Central Bank maturing afterthree months (171,503) (9,855)
Cash margin held by counterparty banks against
borrowings and derivative transactions (7,887) 89,297
Other assets 90,977 (208,363)
Due to banks maturing afterthree months (261,954) (1,412,803)
Customer deposits and Islamic customer deposits 10 (158,456) 110,492
Other liabilities (66,454) 184,533
──────── ────────
Net cash generatedused in operating activities (430,737) (1,316,435)
────────── ──────────
Investing activities
Purchase of property, equipment and capital work-in-progress (12,405) (8,438)
Purchase of investments (414,871) (416,802)
Proceeds from redemption / sale of investments 132,608 201,774
Proceeds from sale of assets acquired in settlement of debt 6,700 70,000
────────── ──────────
Net cashused in investing activities (287,968) (153,466)
────────── ──────────
Financing activities
Proceeds from Tier 1instrument 550,875 -
Tier 1 instrument issuance cost (2,592) -
Net purchase of treasury shares (865) -
────────── ──────────
Net cash from financing activities 547,418 -
────────── ──────────
Net decrease in cash and cash equivalents (171,287) (1,469,901)
Cash and cash equivalents at 1 January (1,275) 1,680,891
────────── ──────────
Cash and cash equivalents at 30 June (172,562) 210,990
════════ ════════
Cash and cash equivalents comprise the following statement of financial position amounts with original maturities of
three months or less:
Cash and balances with UAE Central Bank 1,231,299 1,042,238
Due from banks 97,086 402,332
Due to banks (1,500,947) (1,233,580)
──────── ────────
(172,562) 210,990
════════ ════════
The notes on pages 8 to 26 form an integral part of the condensed interim financial information. The independent auditors’
report on review of the Bank’s condensed interim financial information is set out on page 2. 6United Arab Bank P.J.S.C.
INTERIM STATEMENT OF CHANGES IN EQUITY
For the six months period ended 30 June 2023(Unaudited)
Cumulative
Share Tier 1 Special Statutory General Treasury changes in Accumulated
capital instrument reserve reserve reserve shares fair value Losses Total
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
At 1 January 2023 2,062,550 - 22,491 51,415 9,311 - (153,621) (492,810) 1,499,336
Profit for the period - - - - - - - 120,524 120,524
Other comprehensive loss
for the period - - - - - - (28,045) - (28,045)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ───────
Total comprehensive
income/(loss) for the period - - - - - - (28,045) 120,524 92,479
Tier 1 instrument - 550,875 - - - - - - 550,875
Tier 1 instrument issuance
cost - (2,592) - - - - - - (2,592)
Coupon payable to Tier 1
instrument holders - - - - - - - (11,347) (11,347)
Treasury shares acquired - - - - - (865) - - (865)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ───────
At 30 June 2023
(unaudited) 2,062,550 548,283 22,491 51,415 9,311 (865) (181,666) (383,633) 2,127,886
══════ ══════ ══════ ══════ ══════ ══════ ══════ ══════ ══════
At 1 January 2022 (audited) 2,062,550 - 7,019 35,943 9,311 - 7,656 (610,587) 1,511,892
Profit for the period - - - - - - - 83,274 83,274
Other comprehensive loss
for the period - - - - - - (193,572) - (193,572)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ───────
Total comprehensive income /
(loss) for the period - - - - - - (193,572) 83,274 (110,298)
─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── ───────
At 30 June 2022(unaudited) 2,062,550 - 7,019 35,943 9,311 - (185,916) (527,313) 1,401,594
══════ ══════ ══════ ══════ ══════ ══════ ══════ ══════ ══════
The notes on pages 8 to 26 form an integral part of the condensed interim financial information.
The independent auditors’ report on review of the Bank’s condensed interim financial information is set out on page 2. 7United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
1 LEGAL STATUS AND ACTIVITIES
United Arab Bank P.J.S.C. (the “Bank”) was incorporated in 1975 as a Private Joint Stock Company in the Emirate of
Sharjah. The legal form of the Bank was converted to a public company with limited liability in 1982 by a decree of
His Highness the Ruler of Sharjah and has been registered as a Public Joint Stock Company under the UAE
Commercial Companies Law No. (8) of 1984 (as amended). The Bank’s registered office is located in the Emirate of
Sharjah, United Arab Emirates. The address of the registered office is PO Box 25022, Sharjah, United Arab Emirates.
The Bank carries out the business of commercial banking through its offices and branches in the United Arab Emirates.
The Bank also carries out Islamic banking operations through Islamic banking windows at selected branches.
The condensed interim financial statements of the Bank have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), interpretations
issued by International Financial Reporting Interpretations Committee (“IFRIC”) and applicable requirements of laws
of the United Arab Emirates.
2 CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
2.1 Changes in accounting policies
The accounting policies adopted in the preparation of the condensed interim financial information are consistent with
those followed in the preparation of the Bank’s annual financial information for the year ended 31 December 2022.
The Bank has not early adopted any new standards, interpretations or amendments that have been issued but are not
yet effective in these condensed interim financial statements. Other amendments and interpretations apply for the first
time in 2023, but do not have an impact on the Bank’s condensed interim financial statements.
Standards, amendments and interpretations that are effective for the Bank’s accounting period beginning on
1 January 2023
The following amendments to existing standards have been applied by the Bank in preparation of these condensed
interim financial statements. The adoption of these new standards does not have significant impact on the condensed
interim financial statements
Description Effective from
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) 1 January 2023
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts 1 January 2023
Definition of Accounting Estimate (Amendments to IAS 8) 1 January 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 1 January 2023
2)
Deferred Tax related to Assets and Liabilities arising from a Single Transaction 1 January 2023
(Amendments to IAS 12)
Standard Issued but not yet Effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance
of the Bank’s condensed interim financial statements are disclosed below. The Bank intends to adopt these new and
amended standards and interpretations, if applicable, when they become effective.
Description Effective from
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred
(Amendments to IFRS 10 and IAS 28) indefinitely
There are no other applicable new standards and amendments to published standards or IFRS IC interpretations that
have been issued but are not effective for the first time for the Bank’s financial year beginning on 1 January 2023 that
would be expected to have a material impact on the Bank’s condensed interim financial statements.
8United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
2 CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS (continued)
2.2 Key accounting estimates and judgments
The preparation of the condensed interim financial information requires management to make estimates and
assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and
expenses. Such estimates are necessarily based on assumptions about several factors involving varying degrees of
judgment and uncertainty, and actual results may therefore differ resulting in future changes in these estimates. In
preparing this condensed interim financial information, significant judgments made by management in applying the
Bank’s accounting policies and the key sources of estimation and uncertainty were the same as those that applied to
the audited financial statements as at and for the year ended 31 December 2022.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Basis of preparation
The condensed interim financial information of the Bank has been prepared in accordance with the International
Financial Reporting Standards (“IFRS”), International Accounting Standard (“IAS”) 34: Interim Financial Reporting
as issued by International Accounting Standard Board (“IASB”).
The condensed interim financial information does not include all the information and disclosures required in the annual
financial statements prepared in accordance with IFRS and should be read in conjunction with the Bank’s audited
financial statements as at and for the year ended 31 December 2022. In addition, results for the six months period
ended 30 June 2023 are not necessarily indicative of the results that may be expected for the full financial year ending
31 December 2023.
In preparing this condensed interim financial information, significant judgments made by the management in applying
the Bank’s accounting policies and the key sources of estimation were the same as those that were applied to the
financial statements as at and for the year ended 31 December 2022 as explained in Note 2.2.
Implementation of UAE Corporation Tax law and application of IAS 12 Income Taxes
On 9 December 2022, the UAE Ministry of Finance released Federal Decree-Law No. 47 of 2022 on the Taxation of
Corporations and Businesses (Corporate Tax Law or the Law) to enact a Federal corporate tax (CT) regime in the
UAE. The CT regime will become effective for accounting periods beginning on or after 1 June 2023.
UAE businesses will be subject to a 9% CT rate. A rate of 0% will apply to taxable income not exceeding AED
375,000 in same tax period. In addition, there are several other decisions that are to be finalised by the Cabinet in
order for entities to determine their tax status and the taxable income. Given that the final tax guidelines are yet to
be issued by the cabinet the Bank shall accordingly assess the possible impact on its financial statements from IAS
12 – Income Taxes perspective.
3.2 Significant accounting policies
The accounting policies applied by the Bank in the preparation of the condensed interim financial statements are
consistent with those applied by the Bank in the annual audited financial statements for the year ended 31 December
2022, except for changes in accounting policies explained in Note 2.1.
9United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
4 EARNINGS PER SHARE
Basic earnings per share is based on the profit attributable to ordinary shareholders and divided by weighted average
number of ordinary shares outstanding calculated as follows:
Unaudited six months period
ended30 June
───────────────────────
2023 2022
AED’000 AED’000
Net profit for the period 120,524 83,274
══════════ ══════════
Weighted average number of ordinary shares:
Weighted average number of shares of AED 1 each outstanding for the
period 2,062,550,649 2,062,550,649
══════════ ══════════
Basic earnings per share AED 0.06 AED 0.04
The figures for diluted earnings per share are the same as basic earnings per share as the Bank has not issued any
instruments which would have an impact on earnings per share if or when exercised.
5 CASH AND BALANCES WITH UAE CENTRAL BANK
Unaudited Audited
30 June 31 December
2023 2022
AED’000 AED’000
Cash on hand 38,201 44,809
Balances with UAECentral Bank:
-Statutory and other deposits with UAE Central Bank* 922,265 312,780
-Overnight deposit facilityand Certificate of Deposits 700,000 850,000
─────── ───────
1,660,466 1,207,589
═══════ ═══════
* includes statutory reserve requirement of AED 429,167 thousand (31 December 2022: AED 257,665 thousand)
6 DUE FROM BANKS
Unaudited Audited
30 June 31 December
2023 2022
AED’000 AED’000
Demand deposits 105,131 302,837
Less: Expected Credit Loss (158) (65)
─────── ───────
104,973 302,772
═══════ ═══════
Due from other banks include AED 87,676 thousand (31 December 2022: AED 292,803thousand) placed with foreign
banks outside the UAE. AED 7,887 thousand (31 December 2022: AED nil thousand) is held as margin for derivative
transactions.
10United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
7 LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES
Unaudited Audited
30 June 31 December
2023 2022
AED’000 AED’000
The composition of the loans and advances portfolio is asfollows:
Overdrafts 1,010,594 1,134,946
Term loans (medium and short term)* 6,498,799 6,480,812
Loans against trust receipts 482,644 440,195
Bills discounted 122,418 124,604
Other cash advances 24,856 27,302
Bills drawn under letters ofcredit 55,671 31,776
──────── ────────
Gross amount of loans and advances and Islamic financing receivables 8,194,982 8,239,635
Less: Provision for impairment on loans and advances and Islamic
financing receivables (609,634) (635,335)
──────── ────────
Net loans and advances and Islamic financing receivables 7,585,348 7,604,300
════════ ════════
* Includes retail loans of AED 1,212,734 thousand (31 December 2022: AED 1,341,125 thousand)
Islamic financing gross receivables amount to AED 347,083 thousand (31 December 2022: AED 426,824 thousand)
recognized through the Bank’s Shari’a – compliant Islamic window.
At 30 June 2023, the gross amount of loans and advances and Islamic financing receivables, individually determined
to be impaired, before deducting any individually assessed impairment allowance amounted to AED 551,714 thousand
(31 December 2022: AED 673,806 thousand).
11United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
7 LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES (continued)
Grading of gross balances of loans and advances and Islamic financing receivables along with stages
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
High 10,086 - - 10,086
Standard 7,144,971 236,739 - 7,381,710
Watchlist - 251,473 - 251,473
Default - - 551,713 551,713
──────── ──────── ──────── ────────
Total gross carrying amount 7,155,057 488,212 551,713 8,194,982
Expected credit loss (110,530) (198,734) (300,370) (609,634)
──────── ──────── ──────── ────────
As at 30 June 2023 (unaudited) 7,044,527 289,478 251,343 7,585,348
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
High 20,296 - - 20,296
Standard 6,909,077 423,000 - 7,332,077
Watchlist - 213,456 - 213,456
Default - - 673,806 673,806
─────── ─────── ─────── ───────
Total gross carrying amount 6,929,373 636,456 673,806 8,239,635
Expected credit loss (93,109) (245,401) (296,825) (635,335)
─────── ─────── ─────── ────────
As at 31 December2022(audited) 6,836,264 391,055 376,981 7,604,300
═══════ ═══════ ═══════ ═══════
12United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
7 LOANS AND ADVANCES AND ISLAMIC FINANCING RECEIVABLES (continued)
Movement in the gross balances of loans and advances and Islamic financing receivables
Stage 1 Stage 2 Stage 3 Total
Gross carrying amount AED’000 AED’000 AED’000 AED’000
As at 31 December2022 6,929,373 636,456 673,806 8,239,635
Net of new assets originated and assets repaid 228,319 (131,301) (76,922) 20,096
Write-offs - - (64,749) (64,749)
Transferredto/(from)Stage 1 (13,005) 4,476 8,529 -
Transferredto/(from)Stage 2 10,370 (26,911) 16,541 -
Transferredto/(from)Stage 3 - 5,492 (5,492) -
──────── ──────── ──────── ────────
As at 30 June2023 7,155,057 488,212 551,713 8,194,982
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
Gross carrying amount AED’000 AED’000 AED’000 AED’000
As at 31 December 2021 7,262,783 616,877 1,034,082 8,913,742
Net of new assets originated and assets repaid (211,969) (166,841) (97,975) (476,785)
Write-offs - - (197,322) (197,322)
Transferredto/(from)Stage 1 (193,044) 157,404 35,640 -
Transferredto/(from)Stage 2 40,063 (158,079) 118,016 -
Transferredto/(from)Stage 3 31,540 187,095 (218,635) -
──────── ──────── ──────── ────────
As at 31December 2022 6,929,373 636,456 673,806 8,239,635
════════ ════════ ════════ ════════
Movement in provision for impairment of loans and advances:
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at 31 December2022 93,109 245,401 296,825 635,335
Charge to income statement 27,688 (3,858) 15,218 39,048
Write-offs - - (64,749) (64,749)
Transferredfrom12 month ECL (10,279) 8,314 1,965 -
Transferred from lifetime ECL not credit - (52,272) 52,272 -
impaired
Transferredfromlifetime ECL credit-impaired 12 1,149 (1,161) -
Transferred from lifetime ECL credit-impaired
on commitments and contingent liabilities - - - -
──────── ──────── ──────── ────────
As at 30 June 2023 (unaudited) 110,530 198,734 300,370 609,634
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at31December 2021 85,065 175,051 440,276 700,392
Transferred to 12 month ECL 28,617 2,404 101,194 132,215
Write-offs - - (197,322) (197,322)
Transferred from 12 month ECL (21,056) 21,056 - -
Transferred from lifetime ECL not credit impaired 440 (440) - -
Transferred from lifetime ECL credit impaired 43 47,330 (47,373) -
Transferred from lifetime ECL credit impaired - - 50 50
oncommitments and contingent liabilities
─────── ──────── ─────── ───────
As at 31December 2022(audited) 93,109 245,401 296,825 635,335
════════ ════════ ════════ ════════
13United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
8 INVESTMENTS AND ISLAMIC INSTRUMENTS
Unaudited Audited
30 June 2023 31 December 2022
─────────────────────── ───────────────────────
Quoted Unquoted Total Quoted Unquoted Total
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
FVOCI
Local 1,956,797 - 1,956,797 1,908,114 - 1,908,114
Overseas 1,457,982 - 1,457,982 1,151,576 - 1,151,576
Amortised cost
Local 191,759 - 191,759 581,361 - 581,361
Overseas 570,715 - 570,715 248,013 - 248,013
──────── ─────── ──────── ──────── ──────── ────────
Total debt securities 4,177,253 - 4,177,253 3,889,064 - 3,889,064
════════ ═══════ ════════ ════════ ════════ ════════
Equity:
FVOCI
Local - 466 466 - 466 466
Overseas 110 76 186 112 76 188
──────── ─────── ──────── ──────── ──────── ────────
Total equities 110 542 652 112 542 654
════════ ═══════ ════════ ════════ ════════ ════════
Total investments 4,177,363 542 4,177,905 3,889,176 542 3,889,718
════════ ═══════ ════════ ════════ ════════ ════════
Expectedcredit loss (2,242) (2,242)
──────── ────────
Net investments 4,175,663 3,887,476
════════ ════════
The Bank holds a stage 1 ECL allowance on its investment securities classified under FVOCI amounting to
AED 29,260 thousand as at 30 June 2023 (31 December 2022: AED 29,260 thousand).
Included in the above are investment securities amounting to AED 733,351 thousand (31 December 2022:
AED 1,144,033 thousand) secured under repurchase agreement with the lenders. The Banks holds an ECL allowance
of AED 3,574 thousand (31 December 2022: AED 1,931 thousand) on these investment securities secured under
repurchase agreements.
14United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
8 INVESTMENTS AND ISLAMIC INSTRUMENTS (continued)
Grading of gross balances of investment securities (FVOCI and Amortised Cost) along with stages:
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
High 1,234,919 - - 1,234,919
Standard 2,942,986 - - 2,942,986
──────── ──────── ──────── ────────
Total gross carrying amount 4,177,905 - - 4,177,905
Expected credit loss (31,502) - - (31,502)
──────── ──────── ──────── ────────
As at 30 June 2023 (unaudited) 4,146,403 - - 4,146,403
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
High 1,940,590 - - 1,940,590
Standard 1,948,474 - - 1,948,474
─────── ─────── ─────── ───────
Total gross carrying amount 3,889,064 - - 3,889,064
Expected credit loss (31,502) - - (31,502)
─────── ─────── ─────── ───────
As at 31 December2022(audited) 3,857,562 - - 3,857,562
════════ ════════ ════════ ════════
Movement in the provision for impairment of investment securities (FVOCI and Amortised Cost):
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at 31 December2022 31,502 - - 31,502
Net charge to income statement - - - -
──────── ──────── ──────── ────────
As at 30 June 2023 (unaudited) 31,502 - - 31,502
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at 31 December 2021 25,502 - - 25,502
Net(release)to income statement 6,000 - - 6,000
──────── ──────── ──────── ────────
As at 31 December2022(audited) 31,502 - - 31,502
════════ ════════ ════════ ════════
9 DUE TO BANKS
Unaudited Audited
30 June 31 December
2023 2022
AED’000 AED’000
Demand deposits 99,224 56,794
Term deposits 3,158,175 3,215,649
─────── ───────
3,257,399 3,272,443
═══════ ═══════
Term deposits include borrowings through repurchase agreements of AED 608,617 thousand (31 December 2022:
AED 1,038,860 thousand).
15United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
10 CUSTOMER DEPOSITS AND ISLAMIC CUSTOMER DEPOSITS
Unaudited Audited
30 June 31 December
2023 2022
AED’000 AED’000
Term deposits 5,142,214 5,493,952
Current accounts 3,128,121 2,915,492
Call and savings accounts 139,796 159,143
─────── ───────
8,410,131 8,568,587
═══════ ═══════
Customer’s deposits include Islamic customer deposits amounting to AED 911,125 thousand (31 December 2022:
AED 1,755,365 thousand) undertaken through the Bank’s Shari’a – compliant Islamic window.
11 NET IMPAIRMENT LOSS
Provision for losses recognized in the condensed statement of income is as follows:
Six months period ended
30 June (Unaudited)
─────────────────
2023 2022
AED’000 AED’000
Net impairment of financial assetson:
Loans and advances and Islamic financing receivables 39,546 57,506
Contingent liabilities (4,951) 5,655
Due from banks 70 (68)
Investments and Islamic instruments - 6,000
Recovery on bad debts written-off (20,363) (25,691)
Impairment of non-financial assets 3,500 -
─────── ───────
Net impairment loss 17,802 43,402
═══════ ═══════
12 COMMITMENTS AND CONTINGENT LIABILITIES
Contingent liabilities represent credit related commitments under letters of credit and guarantees that are designed to
meet the requirements of the Bank’s customers towards third parties. Commitments represent credit facilities that are
undrawn as on the date of the interim statement of financial position. The Bank has the following gross credit related
commitments:
Unaudited Audited
30 June 31December
2023 2022
AED’000 AED’000
Contingent liabilities
Letters of credit 201,058 295,245
Guarantees 1,964,919 2,072,693
─────── ───────
2,165,977 2,367,938
═══════ ═══════
Commitments
Undrawn loan commitments 2,145,603 2,295,621
═══════ ═══════
The undrawn loan commitments of the Bank are all revocable and are not considered for ECL computation.
16United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
12 COMMITMENTS AND CONTINGENT LIABILITIES (continued)
Grading of gross balances of contingent liabilities along with stages
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
High 4,307 - - 4,307
Standard 1,803,337 178,743 - 1,982,080
Watchlist - 45,310 - 45,310
Default - - 134,280 134,280
──────── ──────── ──────── ────────
Total gross carrying amount 1,807,644 224,053 134,280 2,165,977
Expected credit loss (4,214) (19,561) (59,192) (82,967)
──────── ──────── ──────── ────────
As at 30 June 2023 (unaudited) 1,803,430 204,492 75,088 2,083,010
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
High 4,307 - - 4,307
Standard 1,983,609 175,290 - 2,158,899
Watchlist - 67,437 - 67,437
Default - - 137,295 137,295
─────── ─────── ─────── ───────
Total gross carrying amount 1,987,916 242,727 137,295 2,367,938
Expected credit loss (6,416) (26,113) (55,389) (87,918)
──────── ──────── ──────── ────────
As at 31 December2022(audited) 1,981,500 216,614 81,906 2,280,020
════════ ════════ ════════ ════════
Movement in the gross balance of contingent liabilities
Stage 1 Stage 2 Stage 3 Total
Gross carrying amount AED’000 AED’000 AED’000 AED’000
As at 31 December2022 1,987,916 242,727 137,295 2,367,938
Changes due to financial assets recognized in the
opening balance that have:
Transferredto/(from)Stage 1 (5,629) 5,629 - -
Transferredto/(from)Stage 2 - - - -
Transferredto/(from)Stage 3 - - - -
Originated / (expired) during the year (174,643) (24,303) (3,015) (201,961)
──────── ──────── ──────── ────────
As at 30 June2023 1,807,644 224,053 134,280 2,165,977
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
Gross carrying amount AED’000 AED’000 AED’000 AED’000
Asat 31 December 2021 2,091,644 364,178 208,212 2,664,034
Changes due to financial assets recognized in the
opening balance that have:
Transferredto/(from)Stage 1 (94,547) 94,547 - -
Transferredto/(from)Stage 2 174,929 (180,986) 6,057 -
Transferredto/(from)Stage 3 - 3,698 (3,698) -
Originated / (expired) during the year (184,110) (38,710) (73,276) (296,096)
─────── ─────── ─────── ───────
As at 31 December2022 1,987,916 242,727 137,295 2,367,938
════════ ════════ ════════ ════════
17United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
12 COMMITMENTS AND CONTINGENT LIABILITIES (continued)
Movement in the provision for impairment of commitments and contingent liabilities
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at 31 December2022 6,416 26,113 55,389 87,918
Changes due to provisions recognized in the
opening balance that have:
Transferredto/(from) Stage 1 (22) 22 - -
Transferredto/(from) Stage 2 - - - -
Transferredto/(from) Stage 3 - - - -
Charge to income statement (2,180) (6,574) 3,803 (4,951)
──────── ──────── ──────── ────────
As at 30 June 2023 (unaudited) 4,214 19,561 59,192 82,967
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at31 December2021 8,990 44,510 47,032 100,532
Changes due to provisions recognized in the
opening balance that have:
Transferredto/(from)Stage 1 (4,153) 4,153 - -
Transferredto/(from)Stage2 1,605 (1,605) - -
Transferredto/(from)Stage3 - 859 (859) -
Charge to income statement (26) (21,804) 9,216 (12,614)
─────── ─────── ─────── ───────
As at 31 December2022(audited) 6,416 26,113 55,389 87,918
════════ ════════ ════════ ════════
13 DIVIDENDS
At the virtual Annual General Meeting of the shareholders held on 16 March 2023, no cash or scrip dividend was
proposed or subsequently approved for the year ended 31 December 2022 (31 December 2021: Nil).
14 SEGMENTAL INFORMATION
For the purposes of reporting to the chief operating decision makers, the Bank is organised into two segments:
Wholesale banking - principally handling loans and other credit facilities and deposit and current
accounts for corporate and institutional customers. This segment also includes
Financial Markets which is principally involved in providing money market,
trading and treasury services, as well as the management of the Bank’s funding
operations
Retail banking - principally handling individual customers’ deposits, and providing consumer type
loans, overdrafts, credit card facilities and funds transfer facilities as well as
Islamic banking services
The interest from Treasury is credited and charged to respective business segments in order to reflect the allocation
of funding costs and to match funding at transfer pricing rates.
18United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
14 SEGMENTAL INFORMATION (Continued)
Segmental information for the six months period ended 30 June 2023 is as follows:
Wholesale Retail
banking banking Total
AED’000 AED’000 AED’000
Net interest income and income 162,037 30,169 192,206
from Islamic products net of
distribution to depositors
Other operating income 72,085 8,290 80,375
Operating expenses (106,451) (27,804) (134,255)
Net impairment losses (16,799) (1,003) (17,802)
──────── ──────── ────────
Profitfor the period 110,872 9,652 120,524
════════ ════════ ════════
Capitalexpenditure
- Property and equipment 11,433 973 12,406
════════ ════════ ════════
At 30 June 2023
Segment assets 13,315,264 1,132,984 14,448,248
════════ ═══════ ═══════
Segment liabilities 10,480,142 1,840,220 12,320,362
════════ ═══════ ═══════
Segmental information for the six months period ended 30 June 2022 was as follows:
Wholesale Retail
banking banking Total
AED’000 AED’000 AED’000
Net interest income and income
from Islamic products net of
distribution to depositors 100,689 40,233 140,922
Other operating income 91,327 10,467 101,794
Operating expenses (87,307) (28,733) (116,040)
Net impairment losses (43,741) 339 (43,402)
──────── ──────── ────────
Profit for the period 60,968 22,306 83,274
════════ ════════ ════════
Capital expenditure
- Property and equipment 8,731 930 9,661
════════ ════════ ════════
At 30 June 2022
Segment assets 13,328,775 1,419,621 14,748,396
════════ ═══════ ═══════
Segment liabilities 11,396,834 1,949,968 13,346,802
════════ ═══════ ═══════
The Bank operates in only one geographic area, the Middle East. Accordingly, no further geographical analysis of
operating income, net profit and net assets is given.
19United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
15 RELATED PARTY TRANSACTIONS
The Bank carries out transactions in the ordinary course of business with related parties, defined as shareholders who
have a significant equity interest in the Bank, directors of the Bank, key management personnel of the Bank and
companies over which such shareholders and directors exercise control or significant influence either directly or
indirectly.
The significant balances outstanding are as follows:
Unaudited Audited
30 June 31 December
2023 2022
AED’000 AED’000
Shareholders:
Due frombanks 77 118
═══════ ═══════
Due to banks 3,685 2,659
═══════ ═══════
Commitments and contingencies 5,000 4,570
═══════ ═══════
Tier 1 instrument 550,875 -
═══════ ═══════
Coupon payableonTier 1 instrument 11,347 -
═══════ ═══════
Directors:
Loans and advances 15,509 15,809
═══════ ═══════
Customer deposits 9,343 16,122
═══════ ═══════
Commitments and contingencies 45 45
═══════ ═══════
Other related entities of shareholders and directors:
Loans andadvances 60,035 159,397
═══════ ═══════
Due from banks 11 10
═══════ ═══════
Due to other banks 925 1,786
═══════ ═══════
Customer deposits 154,722 191,005
═══════ ═══════
Commitments and contingencies 50,958 85,320
═══════ ═══════
Keymanagement personnel of the Bank:
Loans and advances 4,152 809
═══════ ═══════
Customers’ deposits 4,896 4,861
═══════ ═══════
Shareholders, directors, their related entities and key management
personnel:
Accrued interest income 247 834
═══════ ═══════
Accrued interest expense 513 735
═══════ ═══════
20United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
15 RELATED PARTY TRANSACTIONS (continued)
The income, expenses, purchase and sale of investments in respect of related parties during the period included in the
interim statement of income are as follows:
Unaudited six months
period ended30 June
2023 2022
AED’000 AED’000
Shareholders, directors and their related entities
Interest income 4,038 4,931
═══════ ═══════
Interest expense 222 757
═══════ ═══════
Professional fees 127 1,596
═══════ ═══════
Unaudited six months
period ended 30 June
2023 2022
AED’000 AED’000
Number of key management personnel 13 10
═══════ ═══════
AED’000 AED’000
Salaries and other short term benefits 11,442 7,971
Employees’ end of service benefits 210 718
─────── ───────
Total compensation to key management personnel 11,652 8,689
═══════ ═══════
Interest income 28 16
═══════ ═══════
Interest expense 25 3
═══════ ═══════
Unaudited six months
period ended 30 June
2023 2022
AED’000 AED’000
Expected credit loss–(releasefrom)/chargeto income statement (2,448) 497
═══════ ═══════
Terms and conditions of transactions with related parties
The above mentioned outstanding balances and transactions arose from the ordinary course of business and have been
conducted on an arm’s length basis. The interest charged to and by related parties is at normal commercial rates.
Outstanding balances at year end are unsecured.
The Bank has leased office space in various premises owned by a related party. The property leases and associated
expenses for the six months period ended 30 June 2023 amounted to AED 772 thousand (30 June 2022: AED 941
thousand). The property rentals are negotiated each year at market rates.
21United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
15 RELATED PARTY TRANSACTIONS (continued)
Movement in the gross balances of all related party loans and advances
Stage 1 Stage 2 Stage 3 Total
Gross carrying amount AED’000 AED’000 AED’000 AED’000
As at 31 December 2022 119,032 56,983 - 176,015
Net of new assets originated and assets repaid (63,371) (37,100) - (100,471)
──────── ──────── ──────── ────────
As at 30 June 2023 55,661 19,883 - 75,544
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
Gross carrying amount AED’000 AED’000 AED’000 AED’000
As at 31 December 2021 123,811 61,355 - 185,166
Net of new assets originated and assets repaid (4,779) (4,372) - (9,151)
─────── ─────── ────── ───────
As at 31 December 2022 119,032 56,983 - 176,015
═══════ ═══════ ══════ ═══════
Movement in provision for impairment of related party loans and advances
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at 31 December2022 951 2,317 - 3,268
Charge to income statement (538) (1,910) - (2,448)
──────── ──────── ──────── ────────
As at 30 June 2023 413 407 - 820
════════ ════════ ════════ ════════
Stage 1 Stage 2 Stage 3 Total
AED’000 AED’000 AED’000 AED’000
Balance as at 31 December 2021 1,795 3,600 - 5,395
Release to income statement (844) (1,283) - (2,127)
──────── ──────── ──────── ────────
As at 31 December 2022 951 2,317 - 3,268
════════ ════════ ════════ ════════
22United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
16 FAIR VALUES OF FINANCIAL INSTRUMENTS
The Bank uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2 - other techniques for which all inputs have a significant effect on the recorded fair value that are
observable, either directly or indirectly; and
Level 3 - techniques that use inputs which have a significant effect on the recorded fair value that are not
based on observable market data.
Financial instruments recorded at fair value
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:
Level 1 Level 2 Level 3 Total
30 June 2023 AED’000 AED’000 AED’000 AED’000
Investments 3,414,889 - 542 3,415,431
Derivative assets - 81,010 - 81,010
─────── ─────── ─────── ───────
3,414,889 81,010 542 3,496,441
═══════ ═══════ ═══════ ═══════
Derivative liabilities - 7,128 - 7,128
═══════ ═══════ ═══════ ═══════
31 December2022
Investments 3,059,802 - 542 3,060,344
Derivative assets - 84,786 - 84,786
─────── ─────── ─────── ───────
3,059,802 84,786 542 3,145,130
═══════ ═══════ ═══════ ═══════
Derivative liabilities - 10,066 - 10,066
═══════ ═══════ ═══════ ═══════
23United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
16 FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)
Financial instruments not recorded at fair value
The fair values of financial instruments not recorded at fair value includes cash and balances with the UAE Central
Bank, due from banks, loans and advances, investments held at amortised cost, other assets (excluding derivative
assets), due to banks, customer deposits and other liabilities (excluding derivative liabilities). Derivative assets and
liabilities are categorised as level two based on market observable inputs. The fair value of financial instruments not
recorded at fair value are not materially different to their carrying values.
The fair value of the quoted debt instruments at amortised cost as at 30 June 2023 amounted to AED 646,576 thousand
(31 December 2022: AED 818,438 thousand). The fair value determination of the quoted debt instruments will fall
under level 1 category wherein fair value is determined based on inputs that are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can access at the measurement date.
17 DERIVATIVES
Derivatives held for risk management
The tables below show the fair values of derivative financial instruments held for trading purposes, recorded as assets and
liabilities, together with their notional amounts.
30 June 2023 Notional amounts by term to maturity
Positive Negative Notional Within 3 3-12 1-5 years Over 5
fair value fair value amount months months years
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
Forward contracts 3,132 (2,479) 3,010,853 1,537,448 1,456,763 16,642 -
Interest rate swaps 4,570 (4,570) 867,329 3,329 204,000 660,000 -
────── ────── ────── ────── ─────── ─────── ──────
7,702 (7,049) 3,878,182 1,540,777 1,660,763 676,642 -
══════ ══════ ══════ ══════ ═══════ ═══════ ══════
31 December2022 Notional amounts by term to maturity
Positive Negative Notional Within 3 3-12 1-5 years Over 5
fair value fair value amount months months years
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
Forward contracts 2,757 (3,063) 2,854,673 1,969,009 871,126 14,538 -
Interest rate swaps 7,003 (7,003) 885,988 - 209,988 676,000 -
────── ────── ────── ────── ─────── ─────── ───────
9,760 (10,066) 3,740,661 1,969,009 1,081,114 690,538 -
══════ ══════ ══════ ══════ ═══════ ═══════ ═══════
24United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
17 DERIVATIVES (continued)
Derivatives held for risk management (continued)
As at 30 June 2023, the Bank held the following interest rate swaps as hedging instruments in fair value hedges of
interest rate risk:
Notional amounts by term to maturity
Positive Negative Notional Within 3 3-12 1-5 years Over 5
fair value fair value amount months months years
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
30 June 2023
Hedge of
investments 73,308 (79) 1,693,193 36,725 306,654 1,037,651 312,163
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════
31 December
2022
Hedge of
investments 75,026 - 1,792,660 - 130,956 1,223,903 437,801
═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════
The carrying amount of the hedged items are included in the line item ‘Investments’ on the statement of financial
position with the notional amount totaling to AED 1,805,125 thousand (31 December 2022: AED 2,110,459
thousand). These hedged items comprise of debt instruments which are held as FVOCI.
The Bank has recognised the following gains / (losses) relating to hedge ineffectiveness calculated as follows:
30 June2023 30 June2022
Effectiveness Effectiveness
recognised in recognised in
Change in profit and loss Change in value profit and loss
value
AED’000 AED’000 AED’000 AED’000
On hedging instruments (1,799) 6,801 143,473 22,134
On hedged items 8,600 (121,339)
18 CAPITAL ADEQUACY RATIO
Unaudited Audited
30 June 31 December
2023 2022
Common equity tier 1 ratio 13.70% 13.3%
Tier 1 capital ratio 18.46% 13.3%
Total Capital adequacy ratio 19.63% 14.5%
On 30 March 2023, the Bank has issued a perpetual, non-callable 5.5 years Tier 1 Instrument (“instrument”) of
USD 150 million (AED 551 Million) which qualifies to be included as regulatory Tier 1 capital. The instrument
constitutes direct, unsecured, non-convertible and sub-ordinated obligations of the Bank. Under the terms and
conditions of the issue, the Bank may elect not to pay a coupon and has the option to call back the Instrument at the
contractual reset date subject to Central Bank of UAE approval. This issuance has strengthened the Bank’s capital
adequacy position and accordingly the Bank’s total capital adequacy ratio stands at 19.63% as of 30 June 2023.
25United Arab Bank P.J.S.C.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months period ended 30 June 2023(Unaudited)
18 CAPITAL ADEQUACY RATIO (continued)
The accounting treatment for the Tier 1 Instrument is governed by IAS 32 - Financial Instruments Presentation. As
per IAS 32, the instrument qualifies as an equity instrument and the coupon payment on the instrument is accounted
for as a deduction from retained earnings. The transaction costs incurred for issuing the instrument are accounted for
as a deduction from equity. These are incremental costs directly attributable to the equity transaction that otherwise
would have been avoided.
19 COMPARATIVE FIGURES
Certain comparative figures have been reclassified where appropriate to conform to the presentation and accounting
policies adopted in these financial statements.
26MANAGEMENT DISCUSSION & ANALYSIS
H1’2023
www.uab.aeKey Highlights – H1’2023
UAB Reports Financial Results for H1 2023
UAB reported H1 2023 Net Profit of AED 120.5 Mn as compared to Net Profit of AED 83.3 Mn in H1 2022 (↑ 45%), similarly
Net profit for Q2 2023 has increased by 20% in comparison to Q1 2023
YoY Net Interest Income
YoY Total Income higher by 12%
higher by 36%
from 243m in H1 2022 to 273m in H1 2023
from 141m in H1 2022 to 192m in H1 2023
Improvement in Asset Quality
59% YoY reduction in Provisions
NPL ratio improved from 10.0% in H1 2022 to 6.7%
in H1 2023, Cost of Risk reduced from 1.1% in FY 2022 to -
Provision coverage improved from 77% in H1 2022 0.4% in H1 2023
to 110% in H1 2023
Adequate Liquidity profile
Additional Tier 1 capital instrument
Maintained
of USD 150m (AED 551m) issued in
(ASR 82%, ELAR 18%)
H1’23 and as a result:
(LCR 153%, NSFR 113%)
CAR stands at 19.6%
Tier 1 stands at 18.5%
Loan: Deposit Ratio
CET 1 stands at 13.7%
Managed to 90%
Well above the applicable regulatory requirements
2Management Discussion & Analysis – H1’2023
Financial Performance Summary
United Arab Bank P.J.S.C ("UAB" or “the Bank”) announces its Financial Results for the half year ending 30th June 2023.
Strong performance continues and is evidenced across the period with the Bank reporting a Net Profit of AED 120.5m for
H1 2023 compared to a Net Profit of AED 83.3m in H1 2022 (↑ 45%), similarly Net profit for Q2 2023 has increased by
20% in comparison to Q1 2023. The strong growth in net profit is a result of improved operating performance and lower
expected credit losses as a result of prudent approach to risk management which resulted in lower cost of risk.
UAB’s financial performance was aided by a significant progress within the ‘core’ businesses recording a 12% increase in
Operating Income compared to H1 2022.
The Balance Sheet has been significantly strengthened with a focus on quality assets which resulted in recording 59%
reduction in Provisions compared to the H1 2022. These results provide further evidence that the Bank is well positioned
to set sail on its growth journey.
These positive results provide tangible evidence that the Bank’s low risk and efficient UAE focused business model is
appropriate and our turnaround strategy is delivering positive results.
The Bank’s distribution network comprises of 6 full fledged commercial branches and 18 ATMs providing full banking
services to our customers.
Moody's Rating Fitch Rating
Bank Deposits-Long Term Ba1 Long Term IDR BBB+
Outlook Stable Outlook Stable
Counterparty Risk Rating Baa3
3Financial Performance – H1’2023
AED millions
2023 2022 Variance
Income Statement H1'23 Q2'23 Q1'23 Q4'22 Q3'22 H1'22 Q2’22 Q1’22 QoQ% YTD%
Net Interest Income 192.2 100.2 92.0 97.4 83.2 140.9 74.0 66.9 9% 36%
Non-Interest Income 80.4 49.7 30.7 52.4 25.0 101.8 51.8 50.0 62% -21%
Total Operating Income 272.6 149.9 122.7 149.8 108.2 242.7 125.9 116.9 22% 12%
Operating Expenses (134.3) (68.7) (65.5) (67.9) (67.9) (116.0) (57.6) (58.5) 5% 16%
Profit before Impairment Loss 138.3 81.2 57.2 81.9 40.4 126.7 68.3 58.4 42% 9%
Net Impairment Loss (17.8) (15.4) (2.4) (46.3) (4.6) (43.4) (15.4) (28.0) 540% -59%
Net Profit 120.5 65.8 54.8 35.7 35.8 83.3 52.9 30.4 20% 45%
2023 2022 Variance
Balance Sheet Q2’23 Q1’23 Q4’22 Q3’22 Q2’22 Q1’22 QoQ% YoY%
Loans and Advances 7,585 7,369 7,604 7,788 8,374 7,884 3% -9%
Investment Securities 4,176 3,876 3,887 3,435 3,425 3,808 8% 22%
Other Assets 2,687 3,181 2,589 2,843 2,949 2,328 -16% -9%
Total Assets 14,448 14,426 14,080 14,066 14,748 14,021 0% -2%
Customer Deposits 8,410 8,339 8,569 9,241 10,517 10,120 1% -20%
Due to Banks 3,257 3,233 3,272 2,512 1,911 1,582 1% 70%
Other Liabilities 653 786 740 930 919 818 -17% -29%
Total Liabilities 12,320 12,358 12,581 12,683 13,347 12,520 0% -8%
Shareholders' Equity 2,128 2,068 1,499 1,383 1,402 1,501 3% 52%
Total Liabilities & Shareholders'
Funds 14,448 14,426 14,080 14,066 14,748 14,021 0% -2%Key Ratios – H1’2023
Key Ratios 2023 2022 Variance
Q2 Q1 FY'22 Q4 Q3 Q2 Q1 QoQ% YoY%
Regulatory
Capital Adequacy 19.6% 19.3% 14.5% 14.5% 13.5% 13.2% 14.3% 0.3% 6.5%
Tier 1 18.5% 18.1% 13.3% 13.3% 12.3% 12.0% 13.1% 0.3% 6.5%
CET 1 13.7% 13.3% 13.3% 13.3% 12.3% 12.0% 13.1% 0.4% 1.7%
Advances to Stable Resources 82% 80% 87% 87% 88% 83% 80% 1% -1%
Eligible Liquid Assets 18% 21% 18% 18% 17% 15% 16% -3% 3%
Performance
Cost : Income Ratio (YTD) 49% 53% 50% 50% 52% 48% 50% -4% 1%
NPL's : Gross Loans 6.7% 7.8% 8.2% 8.2% 10.3% 10.0% 11.4% -1.0% -3.2%
Provision Coverage 110% 102% 94% 94% 81% 77% 70% 8% 34%
Provision Coverage(Including Collaterals) 175% 175% 163% 163% 127% 139% 131% 0% 36%
Loans : Deposits Ratio 90% 88% 89% 89% 84% 80% 78% 2% 11%
Return on Average Equity (YTD) 13.4% 12.4% 10.3% 10.3% 11.0% 11.5% 8.2% 1.0% 1.9%
Return on Average Assets (YTD) 1.7% 1.6% 1.1% 1.1% 1.1% 1.1% 0.8% 0.1% 0.6%
Cost of Risk (YTD) 0.4% -0.1% 1.1% 1.1% 0.8% 1.1% 1.4% 0.4% -0.7%
CASA % 39% 35% 36% 36% 31% 31% 30% 4% 8%
5Income Statement Review
Total Income
Total Incomefor H1
H1 2022 H1 2023
2023 was AED 273m,
increased by 12%(YoY)
29%
42%
58%
71%
Net Interest Income Non Interest Income Net Interest Income Non Interest Income
YTD NIMs %
The NIMshave increased
3.10% 3.16% by 57 bps compared to
2022 as the bank benefits
2.59%
2.39% from the higher interest
2.28%
2.19% 2.13% rate environment
FY- 21 Q1-22 Q2-22 Q3-22 FY-22 Q1-23 Q2-23
6Income Statement Review (cont.)
Net Interest Income Provision Charge (AEDm)
(AEDm)
192
(59%)
43
141
18
H1'22 H1'23 H1'22 H1'23
Net Interest Income for H1 2023 was AED 192m, representing an increase of 36% against H1 2022 on account of higher prevailing
marketratesasthebankbenefitsfromthehigherinterestrateenvironment
Net Impairment Lossdropped (59%) vs. H1 2022on a total portfolio basis, as the bank focuses on higher quality assets in addition to
renewed focus on remediation efforts and recoveries.
7Balance Sheet Review
Total Funding
Dec-22 Jun-23
11%
15%
5%
5%
23%
61% 23% 58%
Customer Deposits Due to Banks Other Liabilities Equity Customer Deposits Due to Banks Other Liabilities Equity
Customer Depositshave and will continue to represent the Bank’s key source of funds contributing 58% of total funding
compared to 61% in Dec’22.
CASADeposits continue to grow and are now 39% of total deposits which is higher than Dec’22 that was recorded at 36%
and higher than Mar’23 at 35%, as the Bank continues to deploy various initiatives to efficiently manage the cost of funds.
8Liquidity Metrics and Capital Ratios
LOANS:DEPOSITS RATIO ADVANCES TO STABLE CAPITAL ADEQUACY RATIO
RESOURCES RATIO
CB UAE threshold 19.6%
(100%)
90%
89%
86.9% 14.5%
81.7%
Dec-22 Jun-23 Dec-22 Jun-23 Dec-22 Jun-23
Y
N
D
I
N
G
U
I
D
I
T
P
I
T
A
L
U Q A
F NCOANS-ACO:TROET APOL DRTEFPOOLSIIOT S
L
I ELIGIBLE LIQUID C
RISK WEIGHTED ASSETS
(AEDm) ASSETS RATIO
YoY -56% 39% (AEDm)
36% 1 18.4%
17.6%
11,171 11,514
CB UAE threshold
(10%)
Dec-22 Jun-23 Dec-22 Jun-23
Dec-22 Jun-23
Loan : Deposit Ratio of 90% Satisfactory Liquidity base Overall Capital adequacy of 19.6%
underpins a robust liquidity profile, substantiated by both ASR / ELAR position with a Tier 1 ratio of 18.5% &
whilst CASAcompositionat 39% Ratios managed well above CB Common Equity Tier1 (CET1) ratio of
supports reduction in cost of funds UAE thresholds 13.7%, well above the applicable
regulatory requirements
9Asset Quality
NPL : GROSS LOANS
CCOOVVEERRAAGGEE RRAATTIIOOSS
110120%%
10.0%
7707%%
6.7%
Jun-22 Jun-23 MJuanr--2222 MJuanr--2233
UABcontinueswithitsprudentprovisioningapproach,andtoproactivelymanageproblemloanswhichhasresultedinasignificant
reduction in NPL ratio of 6.7% in Jun 2023 compared to 10.0% in Jun 2022. The Provision Coverage ratio increased to 110% as at
Jun2023comparedto77%inJun2022.TheProvisionCoverageRatio(includingcollaterals)asonJun2023standsat175%.
10

Sentiment: neutral