Alhilal Bank Finanacvial Review

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contents
09
63
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nancial review
Chairmans Statement
Chief Executive Ofcers Message
Business Environment
Financial Highlights
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77
nancial information
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about us
The Bank
The Group
Principles
Values
People
Framework
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about you
The Institutional You
The Individual You
Serving You
Building Around You
Standing By You
Independent Auditors Report

Fatwa And Sharia Report
Financial Statements
Supplementary Information - Pillar 3
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In the name of Allah, the most gracious, the most merciful
The Late His Highness Sheikh Zayed Bin Sultan Al Nahyan

Founder Of The United Arab Emirates
Al Hilal Bank Annual Report 2010
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His Highness Sheikh Khalifa Bin Zayed Bin Sultan Al Nahyan
His Highness Sheikh Mohamed Bin Zayed Bin Sultan Al Nahyan
President of the United Arab Emirates and Ruler of the Emirate of Abu Dhabi
Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces
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Its all about

you
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chairmans statement

On behalf of the Board of Directors, I am pleased to present the Annual

Report of Al Hilal Bank Group for the year ended 31 December 2010.
The year 2010 was a challenging year for the banking sector
Our Wholesale Banking Group continued to play a major role in nancing
internationally and in the UAE. Although the effects of the global crisis
critical projects both Government and non-Government, earning an
have begun to subside, the overall growth of the economy and the
enviable reputation from its peers. It also enhanced its product offerings
banking sector remained subdued.
by introducing trade services and cash management solutions, both of
While the economic and business environment during 2010 has been
which were strongly received by the market.
challenging, the Bank has delivered a robust nancial performance
The Bank has also established the Investment Banking Group, tasked
and in doing so reported its rst annual prot in a mere two and a half
with managing the Banks investments and tailoring investment
years of operation. Revenue growth during 2010 is attributable to strong
solutions for our customers. We are condent that the Group will provide
growth of core businesses. At the same time, the Bank continued to
our customers with a wide range of Sharia compliant investment
realise savings from active management of cost of funds.
solutions tailored to their risk appetite.
Key nancial highlights of 2010:
Following on from an impressive performance in 2010, Al Hilal Bank can,
Total revenues of AED 1.38 billion

Net prot of AED 133.5 million
Return on equity of 7.83%
Total assets at AED 25.7 billion
Total nancing at AED 15.3 billion
Customers deposits at AED 18.1 billion
The Bank has continued to strengthen its core businesses and invest
in technology to build a resilient foundation whilst elevating its value
proposition. The Bank maintained its branch and ATM network expansion
programme to the benet of customers across the UAE bringing the
branch total to 19 and the ATM total to 93. The Bank has further launched
operations in Kazakhstan as the rst Islamic Bank in the country and is
currently operating through branches in Almaty and Astana.
Personal Banking Group enjoyed a radiant year and succeeded in
expanding the Banks customer base. A testimony to the Banks retail
prole was marked by the honour of receiving the Best Islamic Retail
Bank Award for 2010 by the Islamic Business and Finance Awards.
The Bank has delivered a

robust financial performance
and in doing so reported its
first annual profit in a mere
two and a half years
of operation.
insha Allah, look to the future with condence banking on our strong
fundamentals and solid core businesses for what is anticipated to be a
more active year in 2011. Although uncertainties remain about global
economic recovery, the UAE Government is determined to drive forward
the local economy, giving cause for condence over the coming year.
This leaves me, on behalf of the Board of Directors, with the pleasant
task of expressing my thanks to the shareholder for their valued
support; my deep appreciation to all members of the Banks staff
whose wholehearted effort ensures continued success, and my sincere
gratitude to all our customers for their ongoing condence and support.
I also express my immense gratitude to the Abu Dhabi Government and
the Central Bank of the UAE for their continued guidance and assistance.
On behalf of Al Hilal Bank, a leading member of the community, I
reiterate our commitment to the growth and development of the UAE
and particularly to Abu Dhabis 2030 vision under the leadership of His
Highness, the President Sheikh Khalifa bin Zayed Al Nahyan and His
Highness the Crown Prince Sheikh Mohammed bin Zayed Al Nahyan.
Ahmed Ateeq Al Mazrouei
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Al Hilal Bank
started with a
dream to build
a very different
bank. A bank thats
dedicated to making
day-to-day banking
simpler and fresher,
under the principles
of Islamic Sharia.
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chief executive officers

message

Al salam alaykom,
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Robustness, innovation and

an increasingly powerful brand
enabled the Bank to create genuine
partnerships with its customers
and to capture 37% of total UAE
financing growth in 2010.
It is with great pleasure that I present to you the rst annual report of
Economic Conditions
As a result, the Bank advanced to the eleventh rank amongst UAE banks
Way Forward
Al Hilal Bank for what I hope will be a clear outline of the Banks results
Emerging mere months ahead of the 2008 global nancial crisis, the
by assets at year end.
Like most banks, we are conscious that we are not out of the woods yet.
and activities.
Bank commenced operations in the least benign conditions.
This growth was paired with a growth of collective provisions to reach
Restructuring and provisioning are not likely to moderate in the shortterm nor is the recovery of the real estate sector imminent. At the same
time, the regulatory environment is continuously evolving and becoming
Al Hilal Bank started with a dream to build a very different bank.
The infancy years of the Bank coincided with economic shrinkage,
1.11 per cent of credit risk weighted assets while total provisions over
A bank thats dedicated to making day-to-day banking simpler and
increased governmental and corporate restructuring and the collapse of
non performing nancings increased to 328 per cent at the end of 2010.
fresher, whilst staying true to the principles of Islamic Sharia.
the real estate sector.
A bank that truly delivers on the promise that customers come rst.
more rigorous.
A bank where its all about you.
Furthermore, the departure of foreign deposits, speculation over the
I was privileged to be tasked with orchestrating the journey to
resulted in a liquidity shortfall and a tightening of credit.
outlook of the UAE Dirham coupled with disruption of capital markets
realise this dream.
Distinction
The Banks distinctive business model was recognised early. The Bank
received numerous local and regional distinctions and awards joining the
elite ranks of the sector.
Strong Performance
The Distinctions and awards such as Best Customer Experience,
Despite the adversity, the Bank delivered strong performance leaping
Middle East Deal of the Year, Best New Bank and Best Retail Bank
Our stepping stone was the articulation of a strategy to penetrate a
into protability in August of 2009 and reporting an annual net prot
are a testimony to the Banks success in realising its vision of becoming
competitive market leveraging on our Islamic identity, shareholder
in 2010.
a standard setter.
Total income increased to reach AED 1.38 billion, a 107% increase
Social Responsibility
Stepping Stones
strength and a distinctive business model.

Perhaps the most exciting challenge was the crafting of a differentiating
compared to 2009, while depositors share of prots increased to reach
model which exploits gaps in surveyed offerings as well as the
AED 0.52 billion, a 71% increase compared to 2009. Net prot for the
engineering of smart processes coupled with a robust framework.
year amounted to AED 133.5 million while Return on Equity (ROE)
In parallel, we commenced the formulation of the Banks governance
amounted to 7.83 per cent following two and half years of operations.
framework. Board and management level committees were formed,
Robustness, innovation and an increasingly powerful brand enabled
policies were introduced and procedures were enacted to cement the
the Bank to create genuine partnerships with its customers and to
Banks governance framework.
capture 37% of total UAE nancing growth in 2010.
Having instituted the foundations, Al Hilal Bank was launched on

19 June 2008 under the patronage of His Highness Sheikh Mohamed Bin
Our commitment is to contribute towards the social, educational and

recreational development and well being of communities and its people.
history of Al Hilal Bank. We look forward to 2011 and the opportunities

ahead with a great deal of optimism. In the year ahead, the Bank will
set its medium term strategy and prioritise growth avenues to maximise
shareholder value.
Further, in 2011, the Bank will continue to full its obligation towards the
Abu Dhabi Economic Vision 2030 by supporting designated sectors and
contributing to the development of UAE nationals.
Recognition
I would like to recognise the determination and distinction of our
employees during a strenuous founding stage and their ongoing
commitment to deliver at the highest of standards. Thank you, for you
are indeed our most valuable asset.
I would also like to express my gratitude to our Sharia supervisory board
CSR initiatives undertaken include development of an Islamic Banking
for its valuable guidance and to thank our board of directors for their
and Finance curriculum for school students with the objective of
immense support and valuable guidance through this delightful journey.

Mohamed Jamil Berro
All Other Banks
63%
extending well beyond the realm of nancial contribution.
responsible use of money.
Zayed Al Nahyan.
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Our objective is to build a rich heritage and a corporate benchmark,
educating students at an early stage about Islamic banking, saving and
2010 UAE Financing Growth
37%
Social responsibility was ingrained in our culture from the onset.
The year 2011 promises to be yet another challenging year in the brief
Al Hilal Bank
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In a short space of time,
the bank has climbed to the
11th rank by assets amongst
UAE Banks and in doing so
reported an annual profit of
AED 133.5 million for 2010.
Financial
Profitabilty
25.7
bn
17.4
5.6
2008
2009
2010
Financings (AED bn)
15.3
10.3
1.9
2008
2009
2010
Deposits (AED bn)
18.1
11.8
4.4
2008
15
2009
25 7
15 3
18 1
Total Assets in 2010:
Assets (AED bn)
2010
Benchmark ranking: 11th

Total Financings in 2010:
bn

Total Deposits in 2010:
bn
NET Prot (AED ml)

133.5
(74)
2009
2010
EPS (AED)
(0.05)
2010
ROE (per cent)
7.83%
-5.7%
2009
ml
Earnings per Share (EPS) in 2010:
0.07
2009
133 5
0 07
7 83
Total net profit in 2010:
2010
AED
Return on Equity (ROE) in 2010:
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Provisions
Services
Collective cover (per cent)
1.11%
0.48%
2009
2010
Specic cover (per cent)
64%
61%
2009
2010
Total cover (per cent)
328%
214%
2009
17
2010
1 11
64
328
Collective cover in 2010:
Specific cover in 2010:
Total cover in 2010:
Branches
21
14
7
2008
2009
2010
ATMs
Total number of ATMs in 2010:
93
61
33
2008
2009
2010
Human capital
Total human capital in 2010:
785
591
463
2008
21
93
785
Total number of branches in 2010:
2009
2010
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trust
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about us
The Bank
Al Hilal Bank PJSC (the Bank) was incorporated
in Abu Dhabi, United Arab Emirates on
18 June 2007 by virtue of Amiri Decree
number 21 of 2007, with limited liability, and
is registered as a public joint stock company
in accordance with the United Arab Emirates
Federal Law number 8 of 1984 (as amended),
United Arab Emirates Federal Law number 10
of 1980 (as amended) and United Arab Emirates
Federal Law number 6 of 1985 regarding Islamic
banks, financial institutions and investment
companies. The Bank commenced operations
on 19 June 2008.
The Bank is wholly owned by the Abu Dhabi Investment Council, an
investment arm of the Government of Abu Dhabi. The Banks shares are
The Organisation
MANAGEMENT
COMMITTEES
BOD COMMITTEES
Executive Credit
Committee
Wholesale Banking
Legal
Corporate
Governance Committee
Asset and Liability

Committee
Investment Banking
Finance
Human Resources
Committee
Management
Committee
Treasury
Information
Technology
Audit Committee
Investment
Committee
Personal Banking
Risk Management
Executive Operational
Risk Committee
Human Capital
Operations
Board Of Directors
Risk Committee
Sharia Board
Chief Executive
Officer
FUNCTIONS
not listed on a recognised exchange.

The Bank is primarily involved in Islamic personal, wholesale, treasury
and investment banking activities in the UAE and through a wholly
owned subsidiary in Kazakhstan.
Internal Audit
Sharia
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about us
The Group
1. Al Hilal Takaful
In 2008, the Bank incorporated Al Hilal Takaful, an Islamic insurance
company, offering insurance portfolios to manage risks of individuals and
corporates. The product offering includes, inter alia, general, property,
casualty, engineering, marine, motor and medical insurance. Products
can be altered or tailor made to match the requirements of groups of
corporations in terms of benets and/or budget. Al Hilal Takaful operates
in ve locations within UAE, four within Abu Dhabi and one in Dubai.
Commenced operations on 19 June 2008
Vision rationale:
To continually strive to simplify Takaful across the world

2. Al Hilal Auto
Al Hilal Auto is a subsidiary of the Bank that acts as a conduit to facilitate
nancing of motor vehicles. Customers have the choice to purchase the
vehicle with cash, nance through the Bank or another Islamic bank.
Al Hilal Auto distinguishes itself by offering instant nance approval,
vehicle registration, takaful, vehicle customisation and vehicle sourcing.
3. Al Hilal Islamic Bank Kazakhstan

In 2010, the Bank completed its rst international expansion by
Al Hilal Islamic Bank Kazakhstan
Capital of AED 2 billion
Al Hilal Takaful
Commenced operations on
11 November 2008
Capital of
AED 100 million
Al Hilal Auto
16 February 2009
Capital of
AED 150 thousand
Al Hilal Islamic Bank

Kazakhstan
17 March 2010
Capital of
AED 165 million
establishing operations in the Republic of Kazakhstan. The Bank was well

received as this marked the rst Islamic bank in Kazakhstan. The Bank
operates from two branches in Astana and Almaty, and its primary focus
is corporate and personal banking as well as Islamic nance solutions
for small and medium enterprises. The Banks missions in Kazakhstan is
to contribute to the national growth and prosperity of Kazakhstan whilst
raising the positive prole of Islamic banking in the Commonwealth of
the Independent States and creating value for all stakeholders. A further
objective is to facilitate UAE investment in Kazakhstan.
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about us
Principles
Values
Al Hilal Bank Mission
Leading by example to be the right partner

for its stakeholders, the Group is committed
to building a sustainable business over the
long term that is trusted for upholding high
standards of corporate governance and social
responsibility. Like all good things, we also
required a solid foundation to support our
dream, so we created the 4 Ps.
To contribute to the UAEs

national growth and
prosperity, whilst raising
the positive profile of
Islamic banking globally
therefore creating value for
all stakeholders.
Professional
The mark of a true professional is being proactive. Anticipating what you
need, giving you what you want. Providing answers to your questions,
attending quickly and efciently to your requests, solving problems on
the spot. Responding, advising, informing. Actively doing what needs to
be done. Anticipating what you need, giving you what you want. That is
Professional!
Progressive
Improvement is the partner of progress. Cutting edge innovation at your
Principled
convenience. A welcoming environment designed around you. Smart,
Doing good is not only a matter of principle, its good business. Honesty
competent staff ready to service you with a smile. Everything from our
and integrity are part of every interaction we have with you. We believe
procedures and processes to products and people have been put in place
respect can only be earned, and loyalty can never be bought. We
to make banking simpler, easier and faster for you. That is Progressive!
believe in taking responsibility and accountability. We believe in doing

what is right for you. Doing what is right is always the right thing to do.
Partnership
Performance with conscience. That is Principled!
In partnership with you, that is the Bank we want to be, whether you are
a student, parent, professional or just married. We want to be a Bank
that works with you. A Bank that allows you to get on with living your life
the way you want to. A Bank that helps you make things happen, when
you need to. A Bank that values you for being you.
Al Hilal Bank Vision
To consistently set new

standards that re-define
the Islamic banking market
across the world.
Identity
A Bank that helps you make things happen. That is Partnership!
Circle
Square
The circle represents Al Hilal Bank
The customer is at the centre of
and our all-embracing approach to
everything we do. The square not
our customers. Our customers are
only portrays this, it also illustrates
surrounded by nancial support in
the importance of attending to the
every aspect of their life. This is why
individual needs of our customers.
we say Its all about you.
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We are
conscious that our
commitment to
service excellence
can only be
translated through
our people.
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about us
People
Commitment
Learning and development
We are conscious that our commitment to service excellence can only be
Management offsite meetings, employee focus groups and employee
The Bank is committed to the learning and development of its people
translated through our people. We foster a nurturing work environment
satisfaction surveys are conducted regularly to enhance overall
and has adopted a robust framework to facilitate this process. The
which entices our people to deliver the Banks mission and vision.
engagement of employees. An independent survey commissioned by
Bank understands that competent, educated personnel results in work
the Bank in 2009 to benchmark job satisfaction at the Bank compared
satisfaction, career fullment, superior client service and differentiation.
Induction, engagement, development and reward programmes were

installed with the objective of instilling our mission, vision and values
throughout the ranks.
to selected leading banks in the UAE revealed that Al Hilal Bank

employees were the most satised employees compared to other
leading Banks in the UAE.
A highlight of the Banks training programme is the Boot Camp

Programme extended to our people, regardless of their function and
department. The Boot Camp Programme comprises thirteen modules
which includes, amongst other modules, Islamic Banking, Financial
Group Headcount
Accounting, Financial Statement Analysis and Investment Banking

which spans over two years. The outcome of the programme is that
785
28%
our people are educated and enthused about our business, understand
UAE Nationals
591
463
72%
2008
2009
Expatriates
2010
the fundamentals of Islamic Banking and are able to apply themselves

effectively in their function.
The Bank employs various training and development methods
which include:
on-the-job training and coaching
informal training
The Bank is fully committed to Emiratisation which stood rmly at
classroom training (internal and external recognised institutions)
28% at year end. Further, the Bank offers its Emirati staff development
technical training
programme in addition to retention programmemes. The programme
behavioural development training
facilitate focused development in all facets of the Bank.
accredited training and learning (IFQ and bankers academy)

online training
The Bank has partnered with several recognised institutions to deliver
training tailored to the needs of our business functions.
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about us
Framework
Governance
In line with its commitment to serve the
best interests of its shareholder and the
broader stakeholders community, the Bank
is keen on adopting best practices of
Corporate Governance set by the UAE Central
Bank, Basel Committee and all applicable
laws and regulations.
Al Hilal Board of Directors
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Framework (continues)
H.E. Ali Majid Al Mansoori
Board of Directors
Board Member
In 2010, a new Board of Directors was appointed by Abu Dhabi Investment Council, the sole shareholder of the Bank, comprising
of ve non-executive directors of whom three are independent (namely H.E. Jassim Ahmed Al Meraikhi, H.E. Ali Majid Al-Mansoori
Mr. Al Mansoori joined the Board as a member in 2010.

Mr. Al Mansoori has held several positions at Abu Dhabi Investment
and H.E. Mohammed Saif Al Suwaidi).

The mix of expertise in the Board membership provides the Bank with a wide range of diversity and contributes to sound and informed
judgement and decision making. Member independence assessment are carried out on annual basis in accordance with the guidelines set
Authority and is currently the Chief Executive Ofcer of Al Rayan

Investment.
Mr. Al Mansoori is also the chairman of Injaz Mena and Morganti,
out by the UAE Central Bank.
vice chairman of Essdar Capital and is a board member of Abu Dhabi

Holding, PIVOT and other companies. With a strong nancial services
background, Mr. Al Mansoori brings extensive knowledge of North
H.E. Ahmed Ateeq Al Mazrouei

Chairman
Mr. Al Mazrouei joined the Board as Chairman in 2008.
American and European markets.
H.E. Mohammed Saif Al Suwaidi

Board Member
Mr. Al Mazrouei has served as chairman of Abu Dhabi Securities Market

and a board member of several nancial concerns including National
Bank of Abu Dhabi, Arab Banking Corporation, Arab International Bank
and Tunis Emirates Bank.
amongst other concerns and is a board member for Arab Bank for
Investment and Foreign Trade, the Center of Food Security for the
and is currently the head of the Infrastructure Department at Abu Dhabi
Emirate and other entities.
chairmanship experience, Mr. Al Mazrouei brings extensive international

experience and exemplary governance credentials.
H.E. Jassim Ahmed Al Meraikhi

Deputy Chairman
Mr. Al Meraikhi joined the Board as Deputy Chairman in 2010.
Mr. Al Meraikhi has served as a board member of several nancial
concerns including Abu Dhabi Commercial Bank, Abu Dhabi Retirement
Pension and Benets Fund, Oman and Emirates Investment Company,
Abu Dhabi Holding, Delma Brokerage and United Brokerage Company.
Mr. Al Meraikhi is currently a director at Abu Dhabi Investment Authority.
Mr. Al Meraikhi brings extensive nancial services and consumer
markets expertise.
Mr. Al Suwaidi is chairman of Al Ain Farms for Livestock Production
Mr. Al Mazrouei started his career with Abu Dhabi Investment Authority
Investment Council. With a strong nancial services background and
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Mr. Al Suwaidi joined the Board as a member in 2010.
Mr. Al Suwaidi is currently the Director General at Abu Dhabi Fund for
Development. Mr. Al Suwaidi brings extensive nancial services and
consumer markets experience.
H.E. Jamal Sultan Al Hameli

Board Member
Mr. Al Hameli joined the Board as a member in 2010.
Mr. Al Hameli has held several Investment, Organisational and
Development positions at Abu Dhabi Investment Authority.
Mr. Al Hameli and is currently the Director of Human Resources and
a member of the Governance Committee at Abu Dhabi Investment
Council. With a strong nancial services background, Mr. Al Hameli
brings extensive nancial services experience in the UAE.
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Governance
(continues)
Board Committees
Management Committees
Transparency and Disclosure
The Board of Directors (The Board) has established four
the effectiveness of internal controls. The Board Audit Committee
The Board and Chief Executive Ofcer recognise the need to conduct
The Bank has developed a Conict of Interest Policy intending to
committees to overlook the execution of the Banks strategy and
emphasises the independence of the Internal Audit and External Audit
their affairs with integrity and in line with best corporate practices.
promote transparency, fairness and disclosure in issues underlying
business plan and maintains the duty to follow up on the actions,
within the organisation, reviews and recommends internal audit policies
To this extent, the Board has set-up executive level management
a conict of interest or related party transactions. Discussions of or
ndings, and recommendations of these committees and taking
and procedures to the Board for approval, reviews Internal Audit
committees to assist it in meeting its responsibilities.
voting on decisions underlying a signicant conict of interest or related
actions as deemed appropriate.
Reports, and oversees the audit functions. The Board Audit Committee
1. Board Risk Committee

2. Board Audit Committee
also maintains regular interaction with the External Auditor to discuss
Management Committee
and address any issues.
The Management Committee consists of the Chief Executive Ofcer and
3. Human Resources Committee
The Board Audit Committee consists of three non-executive directors, of
4. Corporate Governance Committee
whom two are independent.
The delegated authorities of the various committees are vetted by the

governance committee and are subject to regular review.
Board Members Remuneration

After deliberations with the relevant parties, the Chairman presents the
proposed remuneration of the board members to Abu Dhabi Investment
Council for approval.
Board Risk Committee

The Board Risk Committee at the Bank advises the Board on the Banks
overall current and future risk tolerance and strategy and oversees the
party transaction by a director, are made without the participation and
Human Resources Committee

The Human Resources Committee at the Bank is responsible for
reviewing and approving the Banks Human Resources policies and
procedures and ensuring that the policy is in compliance with the
applicable laws and regulations, in addition to reviewing, amending
and approving the overall compensation systems, packages and
grading structure at the Bank. The Human Resources Committee also
ensures that the Banks training, career development, and succession
programmes are effective in elevating the skill level at the Bank and
securing adequate succession at the top management level.
Group Heads and is chaired by the Chief Executive Ofcer.
Executive Credit Committee
presence of the concerned related party.
Professional conduct rules

The Bank ensures that all its employees abide by the highest standards
of legal and ethical conduct and for such purpose it has established
The Executive Credit Committee consists of seven members and is
mechanisms for monitoring compliance with its Code of Ethics and
chaired by the Chief Executive Ofcer.
all applicable laws and regulations. It has developed procedures for
Investment Committee
The Investment Committee consists of seven members and is chaired by
the Chief Executive Ofcer.
Assets and Liabilities Committee

The Assets and Liabilities Committee consists of eight members and is
chaired by the Chief Executive Ofcer.
Banks implementation of that strategy. The Board Risk Committee
The Human Resources Committee consists of three non-executive
Executive Operational Risk Committee
monitors the concentration and diversication of the Banks asset
directors, of whom two are independent. The Chairman of the
The Executive Operational Risk Committee consists of seventeen
portfolios and is responsible for establishing a Business Continuity Plan
Committee is considered by the Board to be independent.
members and is chaired by the Chief Executive Ofcer.
employees to condentially report any violations they become aware of

and for the Bank to promptly act upon and resolve any such issues.
Fatwa and Sharia supervisory board

The Bank, being an Islamic Bank, has a Sharia Board consisting of four
Sharia Scholars. Further information on the membership and activities
of the board is detailed in the Sharia section.
and a Disaster Recovery Plan.

The Board Risk Committee consists of three non-executive directors, of
whom two are independent.
Board Audit Committee

The Board Audit Committee of the Bank is responsible for ensuring that
the overall control environment of the Bank is functioning correctly
and acting in compliance with the governing laws and regulations,
in addition to overseeing nancial reporting processes and assessing
Corporate Governance Committee

The Corporate Governance Committee at the Bank is responsible for the
development and regular update of corporate governance procedures
and Best Practices within the Bank. It monitors their implementation,
ensures compliance with these guidelines and regulatory requirements
and performs public reporting on corporate governance matters. The
Corporate Governance Committee is also accountable for reporting
material concerns and violations committed during the year to the Board
in addition to proposing developments in the corporate governance
procedures and structures.
The Corporate Governance Committee consists of one independent
director and two independent members.
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Framework
Sharia
The Fatwa and Sharia Supervisory Board
has been put at the helm of the Group to
ensure that all activities are carried out
in strict compliance with Sharia rules
and principles.
Sheikh Dr. Abdussattar Abu Ghuddah
Sheikh Esam M. Ishaq
Fatwa and Sharia Supervisory Chairman
Member
Sheikh Dr. Abdussattar Abu Ghuddah joined the Fatwa and Sharia
Sheikh Esam M. Ishaq joined the Fatwa and Sharia Supervisory
Supervisory Board as Chairman in 2008.
Board in 2008.
Dr. Abu Ghuddah holds PhD in Sharia from Al-Azhar University.
Sheikh Ishaq teaches Fiqh, Aqeeda, and Tafseer courses in Bahrain and
Dr. Abu Ghuddah is a member of several Fatwa and Sharia boards which
holds a BA in Political Science from McGill University.
include UBS, Standard Chartered Bank, Dow Jones, Calyon Bank, Samba
Sheikh Ishaq is a member of several Fatwa and Sharia boards which
Financial Group, Qatar Islamic Bank, Jordan Islamic and Noor Islamic Bank.
include Al Meezan Investment Management Limited, Al Ritaj Investment

Company, Al Baraka Islamic Bank, Bahrain Development Bank,
Sheikh Nizam M.S. Yaquby
Tadhamon Capital B.S.C. and a Member of Accounting and Auditing
Fatwa and Sharia Supervisory Vice Chairman
Organisation for Islamic Financial Institutions, Bahrain.
of Directors of the Bank. The Supervisory Board comprises scholarly
Sheikh Nizam M.S. Yaquby joined the Fatwa and Sharia Supervisory
qualied individuals who have comprehensive knowledge in Islamic
Board in 2008.
Dr. Mohammad Abdul Rahim Sultan Al Olama
The Fatwa and Sharia Supervisory Board is appointed by the Board
jurisprudence, nance, banking and laws and are responsible for

ensuring that the activities, contracts, operations and transactions
Sheikh Yaquby holds a BA from McGill University in economics and
executed by the Bank, are in accordance with Sharia rules and principles
comparative religion and is currently a candidate for PhD in Islamic Law

at the University of Wales.
Sheikh Yaquby is a member of several Fatwa and Sharia boards which
include UBS, Standard Chartered Bank, HSBC, Lloyds, BNP Paribas, Dow
Jones, Abu Dhabi Islamic Bank and Samba Financial Group.
Member
Dr. Mohammad Abdul Rahim Sultan Al Olama joined the Fatwa and
Sharia Supervisory Board in 2010.
Dr. Al Olama holds a Bachelors in Shariah from Islamic University in
Madina Al Munawarrah, a Masters and Doctorate of Jurisprudence from
the University of Umm Al-Qura in Makkah Al Mukarramah. Dr. Olama is
currently an Associate Professor at Emirates University where he teaches
Islamic Studies.
Dr. Al Olama is a member of several Fatwa and Sharia boards which
include Takaful House, Zakat Fund, Mawarid Finance, Tabarak, Noor
Islamic Bank, Al Jazira Capital, Minhaj, Awqaf and Islamic Affairs and a
member of Accounting and Auditing Organisation at Islamic Financial
Institutions, Bahrain.
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Risk Management
The Groups risk management policies
are designed to identify, analyse, evaluate,
quantify, accept these risks, set appropriate
risk limits and controls and to monitor the
risks and adherence to limits using up-todate information systems.
The Board has overall responsibility for establishment and oversight of the
An independent Risk Management Group (the RMG), headed by the
Groups Risk Management Framework. The Board has established a Board
Chief Risk Ofcer (the CRO) reporting to the Board Risk Committee, is
Risk Committee (the BRC), comprising members from the Board. The
responsible for carrying out the Risk oversight responsibility on behalf
Board has further set-up committees from within executive management
of the Board. The Groups risk management policies are designed to
to address and manage respective areas i.e. Executive Credit Committee
identify, analyse, evaluate, quantify, accept these risks, set appropriate
(the ExCO), Assets and Liabilities Management Committee (the ALCO),
risk limits and controls and to monitor the risks and adherence to limits
Executive Operational Risk Committee (the ExORC).
using up-to-date information systems. The Board regularly reviews its

risk management policies and systems to reect changes in markets,
products and emerging best practice. The Compliance function of the
Group is also embedded with the RMG.
Financial Risk Factors

Credit risk
Liquidity risk
Credit risk is the risk of nancial loss to the Group if a customer or
Liquidity risk emanates from nancial risk due to uncertain or volatile
counterparty to a nancial exposure or instrument fails to meet
liquidity movements. Unexpected positive or negative cash ow, fall
its contractual obligations, and arises principally from the Groups
in credit ratings, volatile money supply or other events may cause
receivables from Islamic nance activities, Ijara assets and investments
counterparties to avoid borrowing or trading with the Group. The risk
in Sharia-compliant products and structures.
that the Group may not be able to meet its obligations associated with
The Risk Management Group develops and maintains the Groups credit
its nancial liabilities.
risk grading in order to categorise exposures according to the degree
The Groups approach to managing liquidity risk is to ensure that it
of risk of expected nancial loss that could be incurred and to focus
will always have a sufcient liquidity buffer to meet its liabilities when
management on the attendant risks. The risk grading system reects
due, under both normal and stressed conditions, without incurring
obligors probability of default at varying degrees of risk.
unacceptable losses or exposure to reputational risk.
The RMG assesses all credit exposures in excess of designated limits, prior
The Group maintains a portfolio of short-term liquid assets, largely made
to facilities being committed to customers by the business unit concerned.
up of short-term liquid investment securities and inter-bank facilities,
Renewals and reviews of facilities are subject to annual review process.
to ensure that sufcient liquidity is maintained within the Group as a
The Group further manages credit exposure by obtaining security and
whole. Daily liquidity position is monitored and regular stress testing is
collateral where appropriate and limiting the duration of exposure.
conducted under a variety of scenarios covering the normal and more
The Group establishes an allowance for impairment losses on assets

carried at amortised cost that represents its estimate of expected losses
on its nancial assets. The main components of this allowance are a
specic loss component that relates to individually signicant exposures
The Board has also established a Board Audit Committee, which is
as specic provisions, and a collective loss allowance as general
responsible for monitoring nancial and accounting compliance with
provisions. Any write-off for an impaired facility or investment is approved
IFRS, FAS and CBUAE and Federal and Emirate regulations.
subject to approval of the Board Risk Committee, upon recommendation

from RMG that the facility or investment is uncollectible.
Market risk
Market risk arises from open positions in prot rate, currency and
equity products, all of which are exposed to general and specic market
movements in the level of volatility of market rates or prices such as
prot rates, credit spreads, foreign exchange rates and equity prices.
Overall authority for market risk is vested with the Risk Management
Group. The Risk Management Group is responsible for Market Risk
management policies, subject to review and approval by BRC.
severe market conditions. All liquidity policies and procedures are

subject to review and approval by BRC. Daily reports cover the liquidity
position of both the Group and operating subsidiaries and branches. A
summary report, including any exceptions and remedial action taken, is
submitted regularly to ALCO.
Operational risk
The risk of loss resulting from inadequate or failed internal processes,
people, systems or from external events. The Group has implemented
a strategic Operational Risk Management (ORM) Framework which
inculcates understanding, identication and measuring of the
operational risks in the business and facilitates the improvement in
controls to reduce losses and near misses.
Operational risk is one of the metrics in the risk appetite framework and
is monitored with actions taken if breaches beyond dened thresholds
occur. Operational Risk Management conducts regular Risk Control Self
Assessment (RCSA), monitoring of Key Risk Indicators (KRIs), Heat Maps
and regular updating of the Operational Loss data base.
The Board has setup an ALCO with the objective to drive the most
appropriate strategy for the Bank in terms of mix of assets and liabilities,
given its expectations of the future and potential consequences of protrate movements, liquidity constraints and foreign exchange exposures.
RMG supports ALCO functioning on a periodic basis.
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about us
Risk Management
(continues)
Compliance
The Compliance Department is a unit within the Risk Management
To minimise its exposure to signicant losses from reinsurers
Group. Its main responsibilities are to ensure that the Al Hilal Bank
insolvencies, the Group evaluates the nancial condition of its
Group complies with all laws and regulations governing its operations
reinsurers and monitors concentrations of credit risk arising from
and that the bank is protected from Financial Crime Risk. The unit also
similar geographic regions, activities or economic characteristics of the
ensures that the Group is up-to-date and compliant with the Regulatory
reinsurers. The takaful business maintains adequate reserves as required
bodies and international conventions on Anti Money Laundering,
by Takaful regulations to protect against future claims.
Combating Terrorism Financing and Fraud.

Business Continuity Management (BCM), Information Security (IS), Fraud
Prevention and Operational Risk are also managed under the umbrella of
Compliance function. The teams core responsibilities are a combination
of governance, assurance, assessment and evaluation of the risks
associated with the organisations current and proposed future business
Basel Implementation
The Risk Management Group is also responsible for ensuring seamless
implementation and compliance of Basel regulations on Capital
Adequacy Ratio (CAR) requirements, across the Bank with reference to
Credit, Market, Operational Risk and Other Residual Risks through:
activities, projects, new products, new business relationships and any
Assessment of overall readiness of the Bank with respect to
extension of operations or network on local or international basis to
Basel-II and Basel-III regulations by developing models in Credit
ensure sustainability, resilience and minimisation of risks.
risk for assessing the counterparties (Pillar 1).
The Groups aim is to achieve

an optimised degree of risk
and return and mitigate any
potential adverse impact
on the Groups financial
performance.
Alleviation of gaps identied during analysis stage and providing
Takaful risk
feedback to senior management on the status of gap lling
Takaful risk is where the Groups takaful subsidiary agrees to indemnify
exercise and updating the models accordingly.
the insured parties against the happening of unforeseen future insurable
Ensuring that the Bank migrates to advanced stages of Basel-II
events. The frequency and severity of claims are the main risk factors.
in compliance as per the requirements set forth by Central Bank
Due to the inherent risk in the takaful business, actual claim amounts
of UAE including implementation of ICAAP (Pillar 2).
can vary marginally compared to the outstanding claim reserves but are
Ensuring that the Bank provides adequate disclosure
not expected to have a material impact.
(Pillar 3) to various stake-holders as required by CBUAE and
The Groups risk policy sets out the internal controls and processes that
Basel guidelines.
must be adhered to. These internal controls are designed to mitigate
Banks are currently using the Standardised Approach (StA) for Credit
operational risks and help ensure that robust and accurate data are input
and Market Risk as propounded under Basel II Accord. Under this
into our models. Actuarial Analysis plays a key role in ensuring that we
approach the Bank is required to assign a risk weight individually to
manage these risks pro-actively. Actuarial models are used to calculate
all their on-balance sheet and off-balance sheet exposures depending
premiums and monitor claims and risk patterns.
upon the nature of claims. Risk weights are based on external rating
In order to minimise nancial exposure arising from large claims, the

Group, in the normal course of business, may enter into agreements
with other parties for re-takaful purposes. Such re-takaful arrangements
provide for greater diversication of takaful business risk, allow
management to control exposure to potential losses arising from large
risks and provide additional capacity for growth.
43
grades or a xed weight that is broadly aligned with the likelihood of

counterparty default. The Bank will migrate to the Internal Ratings
Based Approach with passage of time upon availability of adequate
internal data. For Operational Risk, the Bank has currently applied Basic
Indicator Approach (BIA). The Bank has been in compliance with Basel-II
regulations since 2009.
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Its all about

simplicity
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about you
The Institutional You
Al Hilal Banks institutional banking

philosophy is rather unique. Thats because
its formulated from your perspective rather
than the Banks. We first and foremost make
sure were looking out for your business. We
also recognise that your demand for services
span boundaries and are conscious of the
value of timely and personalised service.
Islamic Financing Services

Project and contract nance
Asset acquisition nance
Working capital nance
Trade Finance
Services
We aspire to full our philosophy through embracing the

following pillars:
Letters of credit
Letters of guarantee
Personalised Service
Cash Management
Services
Account services
Transaction management
Channel management
Financial Advisory
Services
Initial offerings
Mergers and Acquisitions
Finance restructuring
Sukuk raising
Assigning a specialised relationship manager dedicated to

manage and oversee your entire relationship with Al Hilal Bank.
Meeting with you regularly to keep abreast of your needs and
your business development.
Extending personal service and attention to each of your
transactions, regardless of size, in the context of our partnership.
Respecting the condentiality of your business and the
competitive implications of divulged information or records.
Timely Service
Delivering timely decisions, made by professionals
knowledgeable of your business and your industry.
Granting you access to decision makers.
Investment
Management Services
Asset management
through funds
Investment mandate
management
Islamic Hedging
Services
Foreign currency
solutions
Prot rate solutions
Islamic Takaful
Services
Medical and auto
Marine and non-marine
Relieving you from excessive red tape, unnecessary

requirements and onerous policies.
Comprehensive Service
Dedicating a team of specialists to the development of tailored
Islamic solutions that meet your requirements.
Offering you access to a comprehensive suite of Sharia
compliant services outlined in the proceeding chart.
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Accounts and Cash Management
The Individual You
We appreciate that you require a firm

partner to support you in building your
future. A partner to offer you support
during the defining moments of your life,
the purchase of your home and your life
savings to name a few. We extend a firm
commitment to support you during these
milestones and as you progress through
your life, supporting your needs without
compromising your religious beliefs.
Simpler and Fresher
Real time, Anytime
Our approach is to offer Banking, Simpler and Fresher. Simple and
We offer SMS Banking and a 24 hour Contact Centre where you can bank
practical in our solutions and fresh in our outlook, personied in the
real time, anytime. We are also developing additional technological
following solutions:
applications and delivery channels to offer you instant solutions without
Current and Saving accounts

Wakala deposit accounts
Transaction management
Channel management
Foreign currency solutions
Takaful
Assets
Medical
Dental
Personal Finance
Personal nance
Home nance
Construction nance
Vehicle nance
Financial Mall
Personal Banking
Wealth Management
Etihad kiosk
Etisalat kiosk
Emirates Identity authority
Safe deposit lockers
Ladies and childrens banking
compromising safety. The blueprint of our Bank is to dene a bank

Our Walk in and drive out motoring solution is a complete solution
around your needs and preferences.
which includes the sale, nancing, takaful and registration of your vehicle
in one step. Simplied, keeping you in mind.
Our Financial Mall branch is designed to offer you a unique experience.
An experience that allows you to plan your holiday, book airline tickets,
apply for your Emirates Identity card and pay your phone bill whilst
banking. The Financial Mall branch also offers safe deposit lockers, a
Card services
Electronic Channels
Comprehensive Service
Dedicating a team of specialists to the development of tailored
Islamic solutions that meet your requirements.
Offering you access to a comprehensive suite of Sharia
compliant services outlined in the proceeding chart.
Shopping cards
Credit cards
SMS Banking
Call Centre
Wealth Management desk and distinguished banking facilities for ladies

and children. Fresher, keeping you in mind.
Investment Funds
Equity funds
Investment mandate management
49
Al Hilal Auto
Vehicle purchase
Vehicle registration
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about you
Serving You
The Banks approach is client centric. We are committed to
Best Web Design 2009
understanding the needs of our clients and delivering them with suitable
The Bank received two Gold awards for its website at the Pan Arab
solutions in a timely manner. We continuously monitor customer
Web Awards. The gold awards were based on online excellence,
satisfaction by engaging with customers through discussions, conducting
personalisation and ease of navigation in the Finance category under
internal surveys and commissioning external surveys.
Corporate and Consumer segments. The awards are judged by the
Our approach has been manifested by the results of the independent

customer satisfaction survey commissioned by the Bank which included
the top Islamic and conventional banks in the UAE. The survey revealed
that the Al Hilal Bank has the highest satisfaction rate of surveyed
banks, a testimony to the Banks commitment to customer service.
Distinctions Awards
industries experts on key parameters such as concept, ease of use,

structure, interactivity and design aesthetics.
AED 2.5 billion Government of Dubai Sukuk

Al Hilal Bank co-arranged the structuring and issuance of the landmark
AED 2.5 billion Sukuk issue for the Government of Dubai in 2009.
Middle East Deal of the Year 2009
A testimony to our excellence, our awards encourage and motivate
Al Hilal Bank was awarded the 2009 Middle East Deal of the Year by
us to serve you better. An outline of distinctions and awards to
both Project Finance Magazine and Euro money for its AED 3.8 billion
date is set out hereinafter.
project nancing agreement with Zayed University.
Best Entrant 2008
AED 3 billion Al Maqsed Development Company
The Bank was awarded Best Entrant in the UAE Bank Benchmarking
Study 2008, performed by Ethos consulting. The study is carried out
AED 3 billion Islamic hedge for Al Maqsed Development Company in 2009.
You are at
the centre of
everything we
do including
our awards.
by experienced researchers and mystery shoppers who focus on real

scenarios whereby a prospective customer approaches a retail bank via
Middle East Islamic Finance Deal of the Year 2010
three channels: branch, call centre or website. These channels are then
Al Hilal Bank was awarded the 2010 Middle East Islamic Finance Deal
evaluated on two key differentiators that dene customer experience at
of the Year by Project Finance Magazine for arranging AED 4 billion
a bank: response time and service quality.
dual tranche Islamic and conventional nancing deal to Emirates Steel

Industries, the UAEs largest steel manufacturer.
Best Customer Experience 2008

The Bank was awarded the prestigious Middle East Retail Banking Award
Best Retail Bank 2010
for its agship Financial Mall Branch in Abu Dhabi, UAE. The award,
In recognition of the Banks emphasis on customer service, the
issued for the category of Best Customer Experience by the Institute for
Bank was awarded the Best Retail Bank at the fth Annual Islamic
International Research Middle East (IIRME), recognises those who have
Business and Finance Awards ceremony by CPI Financial, considered
made a difference in organisations of all sizes and in all sectors across
to be one of the most prominent events in the nance industry
the Middle East.
throughout the Gulf region.
Middle East Deal of the Year 2008
AED 1 billion Government of Ras Al Khaimah Sukuk
Al Hilal Bank was awarded the 2008 Middle East Deal of the Year by Air
France Journal for arranging an AED 405 million Ijara aircraft nancing
AED 1 billion Sukuk issue for the Government of Ras Al Khaimah in 2010.
deal with Etihad Airways, the UAEs National airline.
51
BEST RETAIL
BANK 2010
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about you
Building Around You
Al Hilal Bank has earned the reputation of being

a leader in UAE sponsorship, based on strategic
partnerships and the recognition for a strong
social dimension to sponsorship. The underlying
philosophy is the alignment of Al Hilal Bank
event sponsorship with the Abu Dhabi 2030
Economic Vision. Al Hilal Bank sponsorships
have been fixed on raising the profile of Abu
Dhabi as an international destination for
financial services and commerce.
Abu Dhabi Economic Forum
Global Financial Markets Islamic Forum
The Bank is a Diamond Sponsor of the 4th Abu Dhabi Economic Forum.
The Bank is a sponsor of the Global Financial Markets Islamic Forum.
The forum is organised by the Abu Dhabi Department of Economic
The forum complements efforts to further develop Abu Dhabi as a
Development (DED) and Al Iktissad Wal-Aamal, and highlights Abu
regional nancial services centre in line with the emirates long-term
Dhabis position in the global economy, the fundamental strengths of its
Vision 2030 development plan. Key objectives of the forum were to
economic model and the strategies put in place to ensure continued and
assess the status of our regions banks and compare their development
sustained development of the country.
with their global counterparts. The platform allowed for industry to
1.
2.
3.
4.
Abu Dhabi Motor Show

UAE Presidents Cup
Best Retail Bank Award
Abu Dhabi Econonic Forum
formulate effective strategies for bolstering Abu Dhabis status as a
Abu Dhabi Innovation Forum
rapidly-growing hub for regional nance and for highlighting the special
The Bank is a Platinum Sponsor of the Abu Dhabi Innovation Forum
role of Islamic banking in this regard.
which is presented by the Abu Dhabi University and Khalifa Fund for
Enterprise Development. One of the key objectives of the forum is to
Abu Dhabi Motor Show
equip the UAE to compete globally through the delivery of innovative
The Bank is an exclusive Platinum Sponsor of the Abu Dhabi
ideas and practices.
International Motor Show (ADIMS). The Banks participation this year
featured numerous fun activities drawing visitors to the Banks booth
UAE Presidents Cup
at ADIMS, showcased via specically built stands that featured large
Al Hilal Bank is a proud sponsor of the UAE Presidents Cup. This
display screens and a gaming area with virtual auto racing. One of the
unique association with the UAEs main sport represents a high level of
stands notable features was an interactive multimedia touch table,
commitment for three straight years. The Bank is the rst and exclusive
where visitors designed their own cars, calculated and budgeted for a
sponsor in the football Cups 35 year history and provides perks to
dream car and learnt more about the Bank.
football loving fans across the UAE.
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1 - 2. Al Hilal Golf Tournament
Building Around You (continues)

Armed Forces Ofcers Club Festival
and Abu Dhabi Police Tent
Al Hilal Bank Auto Festival
The Bank sponsored the 14th Armed Forces Ofcers Club (AFOC) Open
families and curious visitors to its 3rd annual Al Hilal Auto Festival at
Sports Festival for the second time. The tournament, held under the
Abu Dhabis Corniche Road next to the beach parking area. The festival
patronage of His Highness General Sheikh Mohammed bin Zayed Al
included an exhibition of Harley Davidson motorcycles, a display of
Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander
over 300 cars from more than 30 world-class brands and activities in a
of the UAE Armed Forces, features various sporting events, such as;
specially-designated childrens area which added excitement and fun to
football, bowling, chess and boxing, in which around 3000 contestants
the family-friendly event. The Al Hilal Auto Festival has become an iconic
of different nationalities competed.
activity for the city of Abu Dhabi, offering a one-of-a-kind venue where
The Bank drew a huge throng of media representatives, car enthusiasts,
people can have fun while viewing and even buying their dream car.
Ramadan campaign - Spare

Themed around the thought of sparing. In commemorating Islams holy
month, the Bank launched Spare, a campaign donating to the poor and
unwell, sponsoring a Ramadan tent, sports events, producing a TV show
and undertaking several other charitable initiatives.
Al Hilal Golf Tournament

In keeping with our motto, Its all about you, the Bank hosted an
exciting day of Golf for clients at the Abu Dhabi Golf Club, followed by an
awards ceremony and dinner. The day was well received afrming our
client relationships and trust.
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The Banks Values

impose a moral obligation
to contribute to the social
development and well
being of communities
and its people.
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Standing by You
Al Hilal Banks values impose a moral
obligation towards the communities in which
it operates as well as communities in need.
This responsibility extends beyond the realm of
responsible behaviour and financial contribution.
It is an obligation to contribute to the social
development and well being of communities and
its people.
Our approach is to identify opportunities to contribute by being
proactively engaged with our communities, welfare and educational
organisations. Thereafter the Bank commits its human and nancial
resources directly or via partnerships to fulll its obligations.
Our social commitment is further demonstrated by aligning our social
responsibility with the Abu Dhabi Economic Vision 2030.
Since inception, the Bank has engaged in many initiatives such as:
Islamic Banking Seminars

As Al Hilal Islamic Bank was the rst Islamic Bank in Kazakhstan, our
teams immediately embarked to Kazakhstan to hold and sponsor
seminars explaining the fundamentals and practicality of Islamic
Banking and Finance. The seminars were well received by educators,
regulators, legislators, business leaders and individuals and have been
encouraged to continue with the initiative on a regular basis.
Swine u campaign
The Bank responded to the H1N1 pandemic Swine Flu by launching
the Al Hilal Bank Swine Flu Campaign. During the campaign the Bank
distributed over 1 million hand sanitisers via our branches, shopping
malls, universities and schools throughout the UAE. The Bank also
conducted several sessions throughout UAE schools educating people
about the u and prevention thereof.
Derasti programme
In partnership with Tawteen, the Bank has developed a sponsorship
programme aimed at the development of 14 UAE national students.
Education: Islamic nance
The programme entails attaining Islamic Banking Diploma at the
Despite great strides made by Islamic Banking in recent years, overall
Emirates Institute for Banking and Financial Studies (EIBFS) and
awareness of the basis of Islamic nance remains largely limited and
subsequent employment at the Bank upon the successful completion of
indistinguishable from conventional nance to some.
the Diploma programme.
With the objective of instilling the culture of Islamic banking amongst

the next generation and educating them on how to use money
responsibly, the Bank is in discussions with regional organisations to
introduce Islamic nance material in school curriculums.
UAE Red Crescent

In collaboration with the UAE Red Crescent, the Bank donated AED 1
million from the charity account towards aid relief of ood devastated
areas in Pakistan.
The curriculums will include school visits to our branches and deliver
bank training, i.e. how the branch teller operates, money supply, safe
Make A Wish
lockers in addition to class room training for children about saving and
In collaboration with the UAE Make a Wish Foundation, the Bank
investment plans as well as Islamic nancing principles.
became a Wish Maker and helped in realising 25 wishes of children

with life-threatening medical conditions.
59
1.
2.
3.
Presidents Cup
Educational Programmemes
Swine Flu Campaign
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Its all about

partnership
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Business Environment
Overview
Overview
UAE Real GDP Growth (per cent)
UAE Real GDP Growth
Gold Prices
Gold Prices (USD/oz)
Gold prices have rallied strongly since 2005. It registered a compound

annual growth rate (CAGR) of more than 18 per cent from the period
1,421
8.85%
The UAE real gross domestic product (GDP)

growth of more than 5 per cent from 2005
to 2008 was broken in 2009 as the economy
contracted to negative 3.15 per cent. Due to a
sharp rise in crude oil prices, the UAE real GDP
sharply rebounded to 3.23 per cent in 2010
according to IMF.
8.60%
Ination, average consumer prices
Ination, average consumer prices (per cent)
1,097
6.55%
5.32%
517
637
833
882
2007
2008
rising demand for gold as a hedge against ination.
3.23%
-3.15%
2005
2005
2006
2007
2008
2009
2006
2009
2010
2010
3M LIBOR and EIBOR rates (per cent)
3M LIBOR and EIBOR rates

The UAE interbank rates were mostly stable throughout 2010.
3.00%
The IMF data shows that ination in UAE was at 0.90 per cent in 2010.
This is lower than in 2009 when ination was at 1.56 per cent. The
11.13%
lower ination is mostly attributed to continuous decline in rental rates.
2.50%
12.25%
9.29%
2.28%
As a result the interest differentials between the EIBOR and LIBOR were
2.14%
0.50%
0.90%
2007
2008
2009
2010
Crude Oil, Murban Average Spot Price (USD, barrel)
fairly constant in 2010. The three month EIBOR rate averaged 2.33 per
has provided banks with the much needed breathing room to build up
0.53%
0.29%
0.29%
0.30%
30-Sep-10
31-Dec-10
necessary provisions.
0.00%
31-Mar-10
2006
2.31%
cent compared to 2.53 per cent in 2009. Perseverance of low prot rates
1.50%
1.56%
2005
2.34%
2.00%
6.20%
Crude Oil, Murban Average Spot Price
of 2005 to 2010. The trend looks set to continue in 2011 on the back of
30-Jun-10
USD Libor 3 month

EIBOR 3 month
Crude oil prices traded at an average price of USD 79.85 per barrel in
2010 as compared to USD 63.06 per barrel in 2009. The higher oil
99.54
prices have contributed to a marked improvement in the scal position

and balance of payments.
54.07
2005
66.02
2006
79.85
72.68
2007
63.06
2008
2009
2010
Source: eia.doe.gov
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Business Environment (continues)

Overview (continues)
Overview (continues)
UAE Banking Sector
UAE Credit Default Swap (bps)
UAE Banks Total Provisions
UAE Banks Total Provisions (AED bn)
UAE banks loan loss provisions rose signicantly from 2008 to 2010 as
Country Risk - UAE Credit Default Swaps
the banking sector grappled with deterioration in asset quality due to
The cost of protecting Dubais debt against default dropped to 424 basis
43
points at the end of 2010. The ve-year credit default swaps had surged
470
Dubai World announced plans to restructure about $25 billion of debt.

230
444
144
basis points compared to 230 basis points in 2008. Standard & Poors
recently reafrmed its AA long-term and A-1+ short-term sovereign
2008
Source: Bloomberg
424
2008
94
nancing issues.
Similarly, the Abu Dhabi ve-year credit default swaps improved to 94
2009
2010
Dubai
2009
Dhabi Government.
2010
Source: UAE Central Bank
UAE deposits (AED bn)
UAE deposits
Abu Dhabi
According to Central Bank data, UAE deposits marginally increased in
credit ratings despite increased concerns over the real estate and
nancial sectors. This is a testament to the nancial strength of the Abu
increasing retail and corporate impairments and debt restructuring.
25
from 39 basis points at the end of 2007 to 655 in November 2009 after
However the premium remains high due to lingering concerns on Dubais
57
923
2008
983
2009
1,050
December of 2010 to reach AED 1,050 billion compared to AED 983 billion
in December of 2009; an indication of the easing of the liquidity crises.
2010
UAE nancings (AED bn)
UAE nancings
According to Central Bank data, UAE nancing increased marginally in
994
1,018
1,031
2008
2009
2010
December of 2010 to reach AED 1,031 billion compared to AED 1,018

billion in December of 2009.
65
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nancial review
Business Environment (continues)

UAE Markets
UAE Markets
ESCA Index (points)
ESCA Index
According to ESCA (Emirates Securities and Commodities Authority)
2,954
data, the UAE bourses continued to drift lower in multi-year downtrend.
2,859
2,713
2009
2010
The Abu Dhabi Securities Index nished the year at 2,713 points vis-avis 2,859 points in 2009, whilst the DFM Index ended at 1,630 in 2010
compared to 1,803 points in 2009.
Daily Trading Average
2008
Daily Trading Average (ml)
Average daily trading volumes of ADX and DFM amounted to AED 223
million compared to AED 593 million in 2009.
593
512
Concerns over economic performance (sovereign nancings as well as
223
the nancial and real estate sectors) and the lack of local catalysts have
derailed the recovery of the UAE markets despite the attractive price to
earnings ratios.
UAE Real Estate
2008
2009
2010
UAE Real Estate
Massive over-supply coupled with mis-investment drove the crash of the

real estate market last year. The deterioration of the real estate market
Dubai House Price Index (points)
continued in 2010, albeit to a lesser extent in Abu Dhabi.
Dubai House Price Index
199
115
108
2009
2010
According to Colliers data, the decline in the real estate market in Dubai
during 2010 amounted to 6 per cent (2009: 42 per cent).
2008
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Total Financings
Share of Total Sector Growth
Total Deposits
in 2010
in 2010
in 2010
in 2010
Total Financings
Financial Highlights
Deposits
Total nancing amounted to AED 15.3 billion, 49 per cent higher than
Despite tight liquidity in the UAE and competitive bidding over deposits,
18.0
at 31 December 2009. The Bank has successfully overcome market
1.35% 1.43%
1.40%
0.95%
1.00%
the Bank has attained 9% of total UAE deposit growth in 2010. By the
1.80%
16.0
entry challenges in a highly competitive environment in which 51 banks
14.0
end of 2010, the strong growth of deposits improved the overall UAE
1.60%
0.68%
operate and attained 37% of total UAE nancing growth in 2010. By the
rank of the Bank to 11th rank.
1.40%
12.0
end of 2010, the strong growth of nancing improved the overall UAE
0.35%
9.7
10.2
12.3
13.8
14.8
15.3
8.0
rank of the Bank to 12th rank.
6.0
4.0
6.8
2.0
3.5
0.00%
0.0
1.57%
1.33% 1.21%
1.20%
Total deposits amounted to AED 18.1 billion, 53 per cent higher than at
1.00%
31 December 2009 driven by growth in Wakala placements.
0.80%
The chart alongside outlines the Banks underlying performance in over
Balance
Market Share
0.60%
0.20%
1.20%
10.0
0.80%
0.40%
1.08%
1.48%
Total Deposits (AED bn)
the last two years on quarterly basis.
Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10
0.60%
Market Share
1.60%
Deposits
Financings
Total Financings (AED bn)
1.20%
18 1bn 9%
0.55%
20.0
18.0
16.0
1.36%
14.0
12.0
0.92%
13.0
11.9
13.1
15.5
16.6
18.1
10.0
8.0
6.0
8.8
0.40%
0.20%
1.66% 1.73%
4.0
5.3
2.0
0.00%
0.0
Balance
15 3bn 37%
Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10
The Banks share growth in Financing
The growth of the Banks branch network has facilitated the growth of
Total retail deposits have increased to AED 3.4 billion at the end of 2010
the personal nance to reach 37% by the end of 2010.
compared to AED 2.4 billion in 2009 (45% growth).
The Banks share growth in Deposits

12%
35%
37%
28%
37%
85%
72%
63%
2%
2008
2009
2010
2008
1%
2008
71
2009
2010
9%
15%
2009
2010
20%
20%
19%
80%
80%
81%
2008
2009
2010
Personal nance portfolio
Personal deposits
Wholesale nance portfolio
Wholesale deposits
72
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Total Assets
Net Profit
in 2010
in 2010
in 2010
25 7bn 10%
Assets
133 5ml
Financial Highlights (continues)
Growth of the Banks market share
Assets
Net Profit
Total assets amounted to AED 25.7 billion, 48 per cent higher than at
Ground breaking year
31 December 2009 driven by growth in customer nance.

1.61%
1.49%
1.37%
Net Profit
Consolidated Net Prot (AED ml)
133.5
The Bank made a consolidated net prot of AED 133.5ml in 2010.
The chart alongside outlines the Banks underlying performance over the
last year on quarterly basis.
1.25%
(74.0)
1.15%
2009
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Basic earnings per share for 2010 amounted to AED 0.07 per share, an
2010
2009
2010
Change
-0.05
0.07
0.12
increase of AED 0.12 per share over 2009 (the nominal value of issued
Total Assets
shares is 1 Dirham per share).
Earnings per share (AED)
Overall weight of investments decreased to 15% mainly due to
The Banks share growth in Assets
allocation of incremental risk weight pool to nancing.

19%
18%
22%
15%
82%
78%
85%
10%
2%
Provisions
Provisions
Credit Coverage Ratios
The Bank has continued the build up of provisions for risks inherent in
2008
2009
2010
2008
2009
2010
Investments
Financing
the portfolio. During 2010, the Bank increased the impairment charges
by AED 171 million compared to AED 50 million in 2009 resulting
in signicant improvement in credit coverage ratios as highlighted
alongside.
Collective provisions as a per

centage of risk weighted assets
Specic provisions as a per centage
of non performing facilities
2009
2010
Change
0.48%
1.11%
131%
61%
64%
5%
214%
328%
53%
Total impairment allowances

outstanding as a per centage of
non performing facilities
73
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Its all about

transparency
nancial information
Independent Auditors Report to the Shareholder - Al Hilal Bank PJSC

Report on the consolidated financial statements
Opinion
We have audited the accompanying consolidated nancial statements
In our opinion, the consolidated nancial statements present fairly, in
of Al Hilal Bank PJSC (the Bank) and its subsidiaries (collectively
all material respects, the consolidated nancial position of the Group
referred to as the Group), which comprise the consolidated statement
as at 31 December 2010, and its consolidated nancial performance
of nancial position as at 31 December 2010, and the consolidated
and its consolidated cash ows for the year then ended in accordance
statement of comprehensive income, changes in equity and cash ow
with International Financial Reporting Standards and comply with the
statement for the year then ended, and notes, comprising a summary of
relevant Articles of the Company and the UAE Federal Law No. 8 of
signicant accounting policies and other explanatory information.
1984 (as amended).
Managements responsibility for the consolidated Report on other legal and regulatory
financial statements
requirements
Management is responsible for the preparation and fair presentation of
As required by the Federal Law No. 8 of 1984 (as amended), we further
these consolidated nancial statements in accordance with International
conrm that we have obtained all information and explanations
Financial Reporting Standards and the Islamic Sharia principles and for
necessary for our audit, that proper nancial records have been kept
such internal control as management determines is necessary to enable
by the Group, and the contents of the Directors report which relate
the preparation of consolidated nancial statements that are free from
to these consolidated nancial statements are in agreement with the
material misstatement, whether due to fraud or error.
Groups nancial records. We are not aware of any violation of the above
Auditors responsibility
Our responsibility is to express an opinion on these consolidated
nancial statements based on our audit. We conducted our audit in
mentioned Law and the Articles of Association having occurred during

the year ended 31 December 2010, which may have had a material
adverse effect on the business of the Groups or its consolidated
nancial position.
accordance with International Standards on Auditing. Those standards

require that we comply with relevant ethical requirements and plan
and perform the audit to obtain reasonable assurance whether the
consolidated nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the consolidated nancial statements. The
procedures selected depend on our judgment, including the assessment
of risks of material misstatement of the consolidated nancial statements,
whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the Groups preparation and fair
presentation of the consolidated nancial statements in order to design
audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Groups
internal control. An audit also includes evaluating the appropriateness of
accounting principles used and reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of
the consolidated nancial statements.
We believe that the audit evidence we have obtained is sufcient and
appropriate to provide a basis for our opinion.
77
KPMG
Munther Dajani
Registration No.:268
16 March 2011
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Fatwa and Sharia Supervisory Board Report - Al Hilal Bank Group

For the Financial Year Ended on 31 December 2010

Praise be to Allah and peace be upon His Messenger,
Mohammed and upon his family and companions.
To: Abu Dhabi Investment Council
Accordingly, FSSB is of the opinion that:
In line with Article No. 44 of the Banks Articles of Association, the
With the help of the Sharia Supervision Division, we have planned and
The contracts, operations and transactions executed by the Bank
All the revenues earned through non-Sharia compliant sources and
Fatwa and Sharia Supervisory Board (FSSB) is pleased to present its
performed the Sharia audit on the transactions executed during the
(and its subsidiaries), the investments entered into and the activities
means have been forfeited for the charity account to be spent for charity
report as follows:
year and obtained all the information and explanations which we deem
conducted by it during the nancial year ended on 31 December 2010
causes as per our guidelines, far away from being utilised by the Bank in
necessary to give us reasonable assurance that the Bank has not violated
as presented to us, are overall in accordance with Sharia rules and
any manners whatsoever.
Sharia rules and principles. Likewise, we have reviewed periodical
principles. And whatever discrepancies found in some of the cases, the
reports and observations raised to us by the Sharia Audit unit including
Management has been guided as how to correct them and tackle with
different kinds of operations carried out by the Bank. The Sharia
their effects and consequences as required by Sharia.
We have examined the policies, procedures and the contracts related to

the products and transactions, which the Bank has executed or launched
during the period of our required monitoring and supervision, in order to
pronounce whether or not the Bank has complied with the Sharia rules
and principles as well as with the opinions, resolutions and instructions
issued by us.
audits ndings have been reviewed by us in the light of the concerned

departments clarications and justications and according to which
resolutions and appropriate instructions have been given. This is in
The FSSB asserts that the responsibility of ensuring the Banks
addition to our review of the Banks Consolidated Financial Statements
conformity, in its practice, with Sharia rules and principles rests solely
and the associated notes, and also the monthly distribution of prots
with the Executive Committee and Board of Directors of the Bank.
among the depositors and shareholders.
However, the responsibility of FSSB is conned only to express an

independent opinion based either on its direct supervision of the Banks
activities or through the Sharia Supervision Division, and to report our
ndings thereof to you, in the light of the details shown by the minutes
and reports of our meetings and audit.
We have reviewed all products launched by the Bank during the year
in question, including manuals, execution mechanisms and standard
Distribution of prots and sharing of losses on investment accounts

(including allocating costs and expenses to these accounts and that of
the shareholders) are in conformity with the standards approved by us
as per Sharia rules and principles.
Given that the Banks Articles of Association do not entitle the

Management to directly give out Zakat payable by the Bank, the
obligation of discharging of Zakat falls on the shareholders themselves
as their own duty in fullling the third pillar of Islam.
The FSSB extends its thanks to the Management of the Bank, and prays
Allah to enable them to serve the Islamic economy, and to bless the
wealth of the Banks shareholders and its customers and to bestow us
all with wholesome goods, and integrity in our words and deeds.
The FSSB held a total of six meetings during the year, answered queries
raised to it, approved a number of new products proposed by the
Management and has delivered highly advanced training programmes
to the Banks top management, managers of Al Hilal Islamic Bank in
Kazakhstan and a number of ofcials and representatives from public
and private nancial institutions in Kazakhstan.
contracts as well as non-standard agreements, especially contracts related

to syndicated nance which the Bank has concluded with third parties.
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nancial information
Consolidated statement of financial position
Consolidated statement of comprehensive income
As at 31 December 2010
For the year ended 31 December 2010
Notes
2010
2009
AED000
AED000
Assets
Notes
1,139,938
589,649
Murabaha and Wakala deposits with banks and other nancial institutions
5,441,380
2,781,567
Income from Wakala investments
Receivables from Islamic nancing activities
11,144,399
7,675,109
Investment income
Ijara
4,163,179
2,567,130
Investment securities
10
2,773,116
2,947,860
Investment property
23
144,584
144,884
Property and equipment
11
568,306
555,347
Other assets
12
365,216
181,925
25,740,118
17,443,471
Total assets
Liabilities and Equity

Liabilities
13
Wakala deposits from banks

Other liabilities
18,109,427
11,841,971
4,930,049
3,111,863
731,529
649,202
23,771,005
15,603,036
14
Total liabilities
Equity
Share capital
2009
AED000
1,032,740
477,589
93,395
58,931
127,778
65,830
128,278
63,814
1,382,191
666,164
(293,234)
(217,018)
Income
Cash and balances with banks
Customers accounts
2010
AED000
Income from Ijara and Islamic nancing activities, net
Commission, fees and foreign exchange income, net
16
17
Expenses
Personnel costs
General and administrative expenses
18
(195,642)
(136,934)
Impairment charges
19
(188,647)
(51,233)
Depreciation
(56,234)
(31,257)
Prot before depositors share of prots
648,434
229,722
(517,378)
(303,003)
131,056
(73,281)
133,506
(74,000)
(2,450)
719
(2,677)
(774)
299
(2,378)
(774)
128,678
(74,055)
131,128
(74,774)
(2,450)
719
128,678
(74,055)
Depositors share of prots
20
Prot / (loss) for the year
Attributable to:
Equity holder of the Bank
15
2,000,000
2,000,000
Statutory reserve
14,017
Other reserves
(3,152)
(774)
(134,974)
(254,463)
1,875,891
1,744,763
93,222
95,672
1,969,113
1,840,435
Accumulated losses
Total equity attributable to the equity holder of the Bank
Non - controlling interest
Total equity
Non-controlling interest
Other comprehensive income
Unrealised revaluation losses on investment securities
Foreign currency translation reserve
Other comprehensive loss for the year
Total comprehensive income / (loss) for the year
Attributable to:
Total liabilities and equity
25,740,118
17,443,471
Equity holder of the Bank

Non-controlling interest
Chairman
Chief Executive Ofcer
16 March 2011
16 March 2011
The accompanying notes 1 to 26 form an integral part of these consolidated nancial statements.
The independent auditors report on the audit of these nancial statements is set out on page 77.
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nancial information
Consolidated statement of changes in equity
Consolidated statement of cash flows
2010
2009
AED000
AED000
131,056
(73,281)
56,234
31,257
188,647
51,233
299
2,600
378,836
9,209
Murabaha and Wakala deposits with banks
1,449,583
(1,970,399)
Total equity attributable of equity holders of the Bank
Operating activities
Share
capital
Translation
reserve
Statutory
reserve
Revaluation
reserve
Accumulated
losses
Total
Non-controlling
interest
Total
equity
Prot / (loss) for the year
AED000
AED000
AED000
AED000
AED000
AED000
AED000
AED000
1,000,000
(180,463)
819,537
819,537
94,953
94,953
Comprehensive loss for the year
(774)
(74,000)
Issue of new shares
1,000,000
1,000,000
1,000,000
(3,636,949)
(6,205,644)
At 31 December 2009
2,000,000
(774)
(254,463)
1,744,763
95,672
1,840,435
Ijara
(1,616,143)
(2,138,168)
Comprehensive income for the year
299
(2,677)
133,506
131,128
(2,450)
128,678
Other assets
(183,291)
(134,595)
Transfer to statutory reserve
14,017
(14,017)
Customers accounts
6,267,456
7,461,298
2,000,000
299
14,017
(134,974) 1,875,891
93,222
1,969,113
82,327
556,130
At 1 January 2009
At 31 December 2010
(3,451)
The revaluation reserve will ultimately be distributed to the Mudaraba pool.

(74,774)
Adjustment for:
Depreciation
719
(74,055)
Impairment charges on nancial assets

Translation reserve
Unrealised revaluation loss on investment property
Changes in operating assets and liabilities:
Other liabilities
Net cash provided by / (used in) operating activities
2,741,819
(2,422,169)
Investing activities
(69,193)
(415,622)
171,172
(2,521,108)
Investment property
(2,300)
(144,884)
Net cash provided by / (used in) investing activities
99,679
(3,081,614)
Financing activities
343,634
150,000
94,953
Issue of share capital
1,000,000
343,634
1,244,953
3,185,132
(4,258,830)
Cash and cash equivalents, beginning of the year
(1,861,610)
2,397,220
Cash and cash equivalents, end of the year (Note 21)
1,323,522
(1,861,610)
Net cash provided by nancing activities
Net increase/(decrease) in cash and cash equivalents
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nancial information
Notes to the consolidated financial statements

1. Legal status and principal activities

Al Hilal Bank PJSC (the Bank) was incorporated in Abu Dhabi,
United Arab Emirates (UAE) on 18 June 2007 by virtue of Amiri
Decree number 21 of 2007, with limited liability, and is registered
as a public joint stock company in accordance with the United Arab
Basis of preparation
The Group has early adopted IFRS 9 from 1 October 2010, as
documentation and effectiveness requirements of IAS 39 that
These consolidated nancial statements have been prepared
well as the related consequential amendments to other IFRSs,
relate to a net investment hedge are satised. In particular, the
in accordance with International Financial Reporting Standards
because this new accounting policy provides reliable and more
Group should clearly document its hedging strategy because of the
(IFRS) and IFRIC interpretations issued by the International
relevant information for users to assess the amounts, timing
possibility of different designations at different levels of the Group.
Accounting Standards Board.
and uncertainty of future cash ows. In accordance with the

transition provisions of the standard, comparative gures have
IAS 1 (amendment), Presentation of nancial statements The amendment claries that the potential settlement of a
Emirates Federal Law number 8 of 1984 (as amended), United
The consolidated nancial statements have been prepared under
Arab Emirates Federal Law number 10 of 1980 (as amended) and
the historical cost convention, as modied by the revaluation of
United Arab Emirates Federal Law number 6 of 1985 regarding
nancial assets and investment property at fair value through
The Groups management has assessed the nancial assets held
as current or noncurrent. By amending the denition of current
Islamic banks, nancial institutions and investment companies.
prot or loss and other comprehensive income.
by the Group at the date of initial application of IFRS 9 (1 October
liability, the amendment permits a liability to be classied as
The preparation of consolidated nancial statements in
2010). The main effects resulting from this assessment were:
non-current (provided that the entity has an unconditional right to
Its registered ofce address is P.O.Box 63111, Abu Dhabi, UAE.

The consolidated nancial statements of the Group as at and for
conformity with IFRS requires the use of certain critical accounting
Investments in Sukuk instruments, previously classied as
the year ended 31 December 2010 comprise the Bank and its
estimates. It also requires management to exercise its judgment
available-for-sale, meet the criteria to be classied as at
subsidiaries (Note 24) (together referred to as the Group). The
in the process of applying the Groups accounting policies. The
amortised cost in accordance with IFRS 9. They are now
Group is primarily involved in Islamic corporate and retail banking
areas involving a higher degree of judgment or complexity, or
therefore classied as nancial assets at amortised cost.
activities, sales and purchase of used and new cars as well as
areas where assumptions and estimates are signicant to the
Islamic insurance (Takaful) and carries out its operations through
consolidated nancial statements are disclosed in the note 4.
its branches in the United Arab Emirates and subsidiaries located

in the United Arab Emirates and Kazakhstan. The consolidated
Standards early adopted by the Group
nancial statements of the Group include the shareholder and
IFRS 9, Financial instruments: Classication and measurement,
depositor funds.
effective 1 January 2013.
The consolidated nancial statements were authorised for issue by
IFRS 9 was issued in November 2009. It replaces the parts of IAS
the Board of Directors on 16 March 2011.
39 that relate to the classication and measurement of nancial
2. Group accounting policies
assets. IFRS 9 requires nancial assets to be classied into two

measurement categories: those measured as at fair value and
not been restated.
Equity investments not held for trading that were previously

measured at fair value and classied as available-for-sale have
been designated as at fair value through other comprehensive
income and prot and loss.
months after the accounting period) notwithstanding the fact that

the entity could be required by the counterparty to settle in shares
at any time.
IAS 36 (amendment), Impairment of assets, effective 1 January
2010 - The amendment claries that the largest cash-generating
unit (or Group of units) to which goodwill should be allocated
for the purposes of impairment testing is an operating segment,
as dened by paragraph 5 of IFRS 8, Operating segments(that
is, before the aggregation of segments with similar economic
standards that are effective for the Groups accounting period
characteristics).
commencing 1 January 2010 but are currently not relevant

to the Group (although they may affect the accounting for
future transactions and events)
those measured at amortised cost. The determination is made
IFRIC 17, Distribution of non-cash assets to owners (effective
these consolidated nancial statements are set out below. These
at initial recognition. The classication depends on the entitys
on or after 1 July 2009) - The interpretation was published
policies have been consistently applied to all the years presented,
business model for managing its nancial instruments and the
in November 2008. This interpretation provides guidance on
unless otherwise stated.
contractual cash ow characteristics of the instrument. Adoption
accounting for arrangements whereby an entity distributes non-
of IFRS 9 is mandatory from 1 January 2013; earlier adoption
cash assets to shareholders either as a distribution of reserves or
is permitted.
as dividends. IFRS 5 has also been amended to require that assets
9 from 1 October 2010, as well as the related consequential
are classied as held for distribution only when they are available
amendments to other IFRSs, because this new accounting policy
for distribution in their present condition and the distribution is
provides reliable and more relevant information to users to assess
highly probable.
the amounts, timing and uncertainty of future cash ows.
defer settlement by transfer of cash or other assets for at least 12
Standards, amendments and interpretations to published
The principal accounting policies applied in the presentation of
The Group has adopted International Financial Reporting Standard
liability by the issue of equity is not relevant to its classication
Standards, amendments and interpretations to published

standards that are effective for the Groups accounting
periods commencing on or after 1 January 2011 and have not
been early adopted
IAS 24 (revised), Related party disclosures, issued in November
2009. It supersedes IAS 24, Related party disclosures, issued in
2003. IAS 24 (revised) is mandatory for periods beginning on or after
1 January 2011. Earlier application, in whole or in part, is permitted.
The revised standard claries and simplies the denition of a
related party and removes the requirement for Government-related
entities to disclose details of all transactions with the Government
and other Government-related entities. The Group will apply the
IFRIC 16, Hedges of a net investment in a foreign operation
revised standard from 1 January 2011. When the revised standard
effective 1 July 2009. This amendment states that, in a hedge
is applied, the Group and the parent will need to disclose any
of a net investment in a foreign operation, qualifying hedging
transactions between its subsidiaries and its associates.
instruments may be held by any entity or entities within the Group,

including the foreign operation itself, as long as the designation,
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Notes to the consolidated financial statements (continues)

(b) Ijara Muntanhia Bittamleek

A form of leasing contract which includes a promise by a lessor
2. Group accounting policies (continues)

Basis of preparation (continues)
IFRIC 19, Extinguishing nancial liabilities with equity instruments,
effective 1 July 2010. The interpretation claries the accounting by
an entity when the terms of a nancial liability are renegotiated
and result in the entity issuing equity instruments to a creditor of
the entity to extinguish all or part of the nancial liability (debt for
equity swap). It requires a gain or loss to be recognised in prot
or loss, which is measured as the difference between the carrying
amount of the nancial liability and the fair value of the equity
instruments issued. If the fair value of the equity instruments
issued cannot be reliably measured, the equity instruments should
be measured to reect the fair value of the nancial liability
extinguished. It is not expected to have any impact on the Group or
either at the end of the term of the Ijara period or by stage
entities) over which the Group has the power to govern the
comprehensive income are reclassied to prot or loss.
during the term of the contract.
nancial and operating policies generally accompanying
(c) Wakala deposits

Wakala deposits are non-derivative nancial assets with xed
or determinable payments that are not quoted in an active
market. Wakala is an act of one party delegating the other to
act on its behalf in what can be a subject matter of delegation
and it is thus permissible. This is an agreement whereby the
Bank provides a certain amount of money to an agent who
an agreed upon prot mark up on the cost of the goods. A

Murabaha contract is of two categories. In the rst category,
the Bank purchases the goods and makes it available-for-sale
without any prior promise from a customer to purchase it. In
the second category, the Bank purchases the goods ordered
by a customer from a third party and then sells these goods to
the same customer. In the latter case, the Bank purchases the
goods only after a customer has made a promise to purchase
them from the Bank.
a shareholding of more than one half of the voting rights.

The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
income are reclassied to prot or loss where appropriate.
(a) Functional and presentation currency
from the date that control ceases.
on transactions between Group companies are eliminated.
with reckless indifference to Banks interest.
Unrealised losses are also eliminated. Accounting policies of

subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(b) Transactions and non-controlling interests
a partnership in prot between capital and work. It may be
The Group treats transactions with non-controlling interests as
conducted between investment account holders as providers
transactions with equity owners of the Group. For purchases
of funds and the Bank as a Mudarib. The Bank announces its
from non-controlling interests, the difference between any
willingness to accept the funds of investment account holders,
consideration paid and the relevant share acquired of the
the sharing of the prots being as agreed between the two
carrying value of net assets of the subsidiary is recorded
parties and the losses being borne by the provider of the funds
in equity. Gains or losses on disposals to non-controlling
except if they were due to misconduct, negligence or violation
interests are also recorded in equity.
such losses would be borne by the Bank.
the amounts previously recognised in other comprehensive
Foreign currencies
fee. The agent shall be held responsible if it acts in bad faith or
of the conditions agreed upon by the Bank, in which case,
signicant inuence is retained, only a proportionate share of
control is transferred to the Group. They are deconsolidated
Inter-company transactions, balances and unrealised gains
(d) Mudaraba
If the ownership interest in an associate is reduced but
Subsidiaries are fully consolidated from the date on which
invests it according to specic conditions in return for a certain
more parties undertake an economic activity. Mudaraba is
active market. A Murabaha contract is a sale of goods with
Group had directly disposed of the related assets or liabilities.

This may mean that amounts previously recognised in other
Islamic nancial assets
xed or determinable payments that are not quoted in an
(a) Subsidiaries
Subsidiaries are all entities (including special purpose
Mudaraba is a contractual arrangement whereby two or
Murabaha receivables are non derivative nancial assets with
income in respect of that entity are accounted for as if the
to transfer the ownership in the leased property to the lessee,
the parent entitys nancial statements.
(a) Murabaha
Consolidation
Items included in the nancial statements of each of the

Groups entities are measured using the currency of the
primary economic environment in which the respective
entity operates (the functional currency). The consolidated
nancial statements are presented in Arab Emirate Dirham
(AED), which is the Groups presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
consolidated statement of comprehensive income, except
When the Group ceases to have control or signicant inuence,
when deferred in other comprehensive income as qualifying
any retained interest in the entity is re-measured to its fair
cash ow hedges and qualifying net investment hedges.
value, with the change in carrying amount recognised in prot

or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest
as an associate, joint venture or nancial asset. In addition,
any amounts previously recognised in other comprehensive
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Foreign currencies (continues)
Land is not depreciated. Depreciation on other assets is calculated
or changes in circumstances indicate that the carrying amount
Land and buildings comprise mainly branches and ofces.
using the straight-line method to allocate their cost or revalued
may not be recoverable. An impairment loss is recognised for
Property and equipment are stated at historical cost less
amounts to their residual values over their estimated useful lives,
the amount by which the assets carrying amount exceeds its
depreciation. Historical cost includes expenditure that is directly
as follows:
recoverable amount. The recoverable amount is the higher of
attributable to the acquisition of the items.
(c) Group companies

The results and nancial position of all the Group entities
Subsequent costs are included in the assets carrying amount or
(none of which has the currency of a hyper-inationary
recognised as a separate asset, as appropriate, only when it is
economy) that have a functional currency different from the
probable that future economic benets associated with the item
presentation currency are translated into the presentation
will ow to the Group and the cost of the item can be measured
currency as follows:
reliably. The carrying amount of the replaced part is derecognised.

All other repairs and maintenance are charged to the consolidated
Assets and liabilities for each consolidated statement
statement of comprehensive income during the nancial period in
of nancial position presented are translated at the
which they are incurred.
closing rate at the date of that consolidated statement of

nancial position;
Increases in the carrying amount arising on revaluation of land

and buildings are credited to other comprehensive income and
Leasehold improvements
7 years
(Prior year: 7 years)
Computer systems and equipment
4 years
Furniture, equipment, safes, and vehicles 4 years

The assets residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
that have suffered impairment are reviewed for possible reversal of

the impairment at each reporting date.
Cash and cash equivalents

In the consolidated statement of cash ows, cash and cash
equivalents comprise cash in hand, due from banks, balances
and nancial institutions with original maturity of less than three
its estimated recoverable amount.
months, which are subject to insignicant risk of changes in their
offset previous increases of the same asset are charged in other
Gains and losses on disposals are determined by comparing the
exchange rates (unless this average is not a reasonable
comprehensive income and debited against other reserves directly
proceeds with the carrying amount and are recognised in the
approximation of the cumulative effect of the rates
in equity; all other decreases are charged to the consolidated
consolidated statement of comprehensive income.
prevailing on the transaction dates, in which case income
statement of comprehensive income. Each year, the difference
comprehensive income.
(cash-generating units). Non-nancial assets other than goodwill
recoverable amount if the assets carrying amount is greater than
of comprehensive income are translated at average
All resulting exchange differences are recognised in other
lowest levels for which there are separately identiable cash ows
with Central Bank, Murabaha and Wakala deposits with banks
shown as other reserves in shareholders equity. Decreases that
transactions); and
purposes of assessing impairment, assets are grouped at the
An assets carrying amount is written down immediately to its
Income and expenses for each consolidated statement
and expenses are translated at the rate on the dates of the
an assets fair value less costs to sell and value in use. For the
fair value, and are used by the Group in the management of its
short-term commitments.
Share capital
Ordinary shares are classied as equity. Incremental costs directly
between depreciation based on the revalued carrying amount of
When revalued assets are sold, the amounts included in other
attributable to the issue of new ordinary shares are recognised as
the asset charged to the consolidated statement of comprehensive
reserves are transferred to retained earnings.
deduction from equity.
income, and depreciation based on the assets original cost is
Impairment of non-nancial assets
Customers accounts and Wakala deposits

from banks
transferred from other reserves to retained earnings.
Assets that have an indenite useful life - for example, goodwill or

intangible assets not ready to use - are not subject to amortisation
Customers accounts and Wakala deposits from banks are
On consolidation, exchange differences arising from the
and are tested annually for impairment. Assets that are subject
translation of the net investment in foreign operations, and
initially recognised at fair value less transaction costs and are
to amortisation are reviewed for impairment whenever events
subsequently measured at amortised cost.
of other nancial instruments designated as hedges of such

investments, are taken to other comprehensive income. When
a foreign operation is partially disposed of or sold, exchange
differences that were recorded in equity are recognised in the
consolidated statement of comprehensive income 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 closing rate.
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of comprehensive income. Financial assets are derecognised
Classication subsequent to 1 October 2010
At initial recognition, the Group measures a nancial asset
when the rights to receive cash ows from the investments have
As from 1 October 2010, the Group classies its nancial assets
at its fair value plus, in the case of a nancial asset not
expired or have been transferred and the Group has transferred
in the following categories: those to be measured subsequently
at fair value through prot or loss, transaction costs that
substantially all risks and rewards of ownership. Available-for-sale
at fair value, and those to be measured at amortised cost. This
are directly attributable to the acquisition of the nancial
Financial assets
nancial assets and nancial assets at fair value through prot
classication depends on whether the nancial asset is a Sukuk or
asset. Transaction costs of nancial assets carried at fair
Classication prior to 1 October 2010
or loss are subsequently carried at fair value. Receivables from
equity investment.
value though prot or loss is expensed in the consolidated
The Group classies its nancial assets in the following categories:

at fair value through prot or loss, receivables from Islamic
Islamic nancing activities are subsequently carried at amortised

cost using the effective prot rate method.
nancing activities, and available-for-sale. The classication
Gains or losses arising from changes in the fair value of the
depends on the purpose for which the nancial assets were
nancial assets at fair value through prot or loss category are
acquired. Management determines the classication of its nancial
presented in the consolidated statement of comprehensive income
assets at initial recognition.
in the period in which they arise.
(a) Financial assets at fair value through prot or loss
statement of comprehensive income. A gain or loss on a
Sukuk Investments
Sukuk investment that is subsequently measured at fair value
(a) Financial assets at amortised cost
and is not part of a hedging relationship is recognised in
A Sukuk investment is classied as amortised cost only if
prot or loss and presented in the consolidated statement
both of the following criteria are met: the objective of the
of comprehensive income in the period in which they arise.
Groups business model is to hold the asset to collect the
A gain or loss on a Sukuk investment that is subsequently
contractual cash ows; and the contractual terms give rise
measured at amortised cost and is not part of a hedging
Changes in the fair value of monetary and non-monetary
on specied dates to cash ows that are solely payments of
relationship is recognised in prot or loss when the
Financial assets at fair value through prot or loss are nancial
securities classied as available-for-sale are recognised in other
principal and prot on the principal outstanding.
nancial asset is derecognised or impaired and through the
assets held for trading. A nancial asset is classied in this
comprehensive income. When securities classied as available-for-
category if acquired principally for the purpose of selling in the
sale are sold or impaired, the accumulated fair value adjustments
short term.
recognised in equity are included in the consolidated statement of
(b) Receivables from Islamic nancing activities
amortisation process using the effective prot rate method.

(b) Financial assets at fair value
If either of the two criteria above are not met, the Sukuk
The Group subsequently measures all equity investments at
instrument is classied as fair value through prot or loss.
fair value. Where the Groups management has elected to
The Group has not designated any Sukuk investment as
present unrealised and realised fair value gains and losses
Receivables from Islamic nancing activities are non-derivative
Prot on available-for-sale securities calculated using the effective
measured at fair value through prot or loss to eliminate
on equity investments in other comprehensive income, there
nancial assets with xed or determinable payments that are
prot method is recognised in the consolidated statement of
or signicantly reduce an accounting mismatch. All equity
is no subsequent recycling of fair value gains and losses to
not quoted in an active market.
comprehensive income. Dividends on available-for-sale equity
investments are measured at fair value. Equity investments
prot or loss. Dividends from such investments continue to be
instruments are recognised in the consolidated statement of
that are held for trading are measured at fair value through
recognised in prot or loss as long as they represent a return
comprehensive income when the Groups right to receive payments
prot or loss. For all other equity investments, the Group can
on investment. The Group is required to reclassify all affected
is established.
make an irrevocable election at initial recognition to recognise
Sukuk investments when and only when its business model for
changes in fair value through other comprehensive income
managing those assets changes.
(c) Available-for-sale nancial assets

Available-for-sale nancial assets are non-derivatives that are
either designated in this category or not classied in any of the
other categories.
rather than prot or loss.
Recognition and measurement
Regular purchases and sales of nancial assets are recognised
Regular purchases and sales of nancial assets are recognised on
on the trade-date the date on which the Group commits to
the trade-date - the date on which the Group commits to purchase
purchase or sell the asset. Financial assets are derecognised
or sell the asset. Investments are initially recognised at fair value
when the rights to receive cash ows from the investments
plus transaction costs for all nancial assets not carried at fair
have expired or have been transferred and the Group has
value through prot or loss. Financial assets carried at fair value
transferred substantially all risks and rewards of ownership.
through prot or loss are initially recognised at fair value, and

transaction costs are expensed in the consolidated statement
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Revenue recognition
Investment property
The Group recognises revenue when the amount of revenue can
Investment property is property held for rental income or for
Claims incurred comprise the settlement, the internal and
be reliably measured, it is probable that future economic benets
capital appreciation, or both, but not for sale in the ordinary course
external handling costs of paid and changes in the provisions
(c) Claims
will ow to the entity and when specic criteria have been met
of business, use in the production, supply of goods or services or
for outstanding claims arising from events occurring during
Financial assets (continues)

Impairment of nancial assets
for each of the Groups activities as described below. The Group
for administrative purposes. Investment property is measured at
the year. Where applicable, deductions are made for salvage
bases its estimates on historical results, taking into consideration
fair value with any change therein recognised in the consolidated
and their recoveries.
(a) Assets carried at amortised cost
the type of customer, the type of transaction and the specics of
statement of comprehensive income.
The Group assesses at the end of each reporting period
each arrangement.
whether there is objective evidence that a nancial asset

or group of nancial assets measured at amortised cost is
(a) Prot income
Claims outstanding comprise provisions for the Groups
Takaful contracts
estimate of the ultimate cost of settling all claims incurred
(a) Classication
but unpaid at the reporting date whether reported or not, and
impaired. A nancial asset or a group of nancial assets is
Prot income is recognised using the effective prot rate
The Group issues contracts that transfer either takaful risk
related internal and external claims handling expenses and
impaired and impairment losses are incurred only if there is
method. When a nancing receivable is impaired, the Group
or both takaful and nancial risks. The Group does not issue
reduced by expected salvage and other recoveries. Claims
objective evidence of impairment as a result of one or more
reduces the carrying amount to its recoverable amount,
contracts that transfer only nancial risks.
outstanding are assessed by reviewing individual reported
events that occurred after the initial recognition of the asset (a
being the estimated future cash ow discounted at the
loss event) and that loss event (or events) has an impact on
original effective prot rate of the instrument, and continues
the estimated future cash ows of the nancial asset or group
unwinding the discount as prot income. Prot income on
of nancial assets that can be reliably estimated.
impaired nance facilities and receivables are recognised using

the original effective prot rate.
(b) Assets classied as available-for-sale (applicable until 30

September 2010)
(b) Dividend income
The Group assesses at the end of each reporting period
Dividend income is recognised when the right to receive
whether there is objective evidence that a nancial asset or
payment is established.
a group of nancial assets is impaired. For debt securities,

the Group uses the criteria refer to (a) above. In the case of
equity investments classied as available-for-sale, a signicant
or prolonged decline in the fair value of the security below
its cost is also evidence that the assets are impaired. If any
(c) Fee and commission income
claims. Provisions for claims outstanding are not discounted.

Contracts under which the Group accepts signicant takaful
Adjustments to claims provisions established in prior periods
risk from another party (the policy-holder) by agreeing to
are reected in the period in which the adjustments are made.
compensate the policy-holder if a specied uncertain future
The methods used, and the estimates made, are reviewed
event (the insured event) adversely affects the policy-holder
regularly by management of the Group.
are classied as takaful contracts.

(d) Gross claims paid
Takaful contracts may also transfer some nancial risk.
Gross claims paid are recognised in the consolidated
Financial risk is the risk of a possible future change in one or
statement of income when the claim amount payable to
more of a specied prot rate, security price, commodity price,
policy-holders and third parties is determined as per the terms
foreign exchange rate, index of prices or rates, credit rating or
of the takaful contracts.
Fees and commission income relating to underwriting and
credit index or other variable, provided in the case of a non-
nancing activities of the Group is recognised when the service
nancial variable that the variable is not specic to a party to
has been provided.
the contract.
(e) Claims recovered

Claims recovered include amounts recovered from retakaful
companies in respect of the gross claims paid by the Group, in
such evidence exists for available-for-sale nancial assets,
Contracts where takaful risk is not signicant are classied as
accordance with the retakaful contracts held by the Group. It
the cumulative loss measured as the difference between the
investment contracts. Once a contract is classied as a takaful
also includes salvage and other claims recoveries.
acquisition cost and the current fair value, less any impairment
contract it remains classied as a takaful contract until all
loss on that nancial asset previously recognised in prot or
rights and obligations are extinguished or expire.
loss is removed from equity and recognised in the separate

consolidated statement of comprehensive income. Impairment
losses recognised in the separate consolidated statement
of comprehensive income on equity instruments are not
reversed through the separate consolidated statement of
(b) Recognition and measurement

Gross written contributions
Gross written contributions, in respect of annual policies, are
recognised in the consolidated statements of comprehensive
income at the inception of the policy. In respect to policies
with a term of more than one year, the contributions are
If, in a subsequent period, the fair value of a Sukuk instrument
spread over the tenure of the policies on a straight line basis,
classied as available-for-sale increases and the increase
and the unexpired portion of such contributions is included
can be objectively related to an event occurring after
under unearned contributions in the consolidated statement
the impairment loss was recognised in prot or loss, the
of nancial position.
impairment loss is reversed through the separate consolidated

statement of comprehensive income.
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Amounts due to and from retakaful are accounted for in
3. Financial risk management
a manner consistent with the related contributions and is

Takaful contracts (continues)
(f) Gross outstanding and IBNR claims
included in retakaful assets.

Retakaful assets are assessed for impairment at the end of
each reporting period. A retakaful asset is deemed impaired
if there is objective evidence, as a result of an event that
Gross outstanding claims comprise the estimated costs of
occurred after its initial recognition, that the Group may
claims incurred but not settled at the consolidated nancial
not recover all amounts due, and that event has a reliably
position date. Provisions for reported claims not paid as at the
measurable impact on the amounts that the Group will receive
end of the reporting period are made on the basis of individual
from the reinsurer. Impairment losses on retakaful assets are
analyse the risks faced by the Bank, to set appropriate risk limits
Financial risk factors
and controls, and to monitor risks and adherence to limits. Risk
Introduction and overview
management policies and systems are reviewed regularly, on an
The Groups activities expose it to a variety of nancial risks and
ongoing basis, to reect changes in market conditions, products
involve the analysis, evaluation, acceptance and management of
and services offered.
some degree of risk or combination of risks. Taking risk is core to

the nancial business, and the operational risks are an inevitable
Credit risk is the risk of nancial loss to the Group if a customer or
achieve an appropriate balance between risk and return and minimise
counterparty to a nancial instrument fails to meet its contractual
potential adverse effects on the Groups nancial performance.
obligations, and arises principally from the Groups receivables
recognised in consolidated statement of income in the year in
the loss, which will eventually be payable on each unpaid
which they are incurred. Commission in respect of retakaful
claim, established by the management in the light of currently
The Groups risk management polices are designed to identify and
contracts is recognised on an accrual basis.
analyse these risks, to set appropriate risk limits and controls,
provision is also made for any claims incurred but not reported
Takaful receivables and payables
(IBNR) at the end of the reporting period, on the basis of
Amounts due from and to policy-holders, agents and
management estimates. The retakaful share of the gross
reinsurers are nancial instruments and are included in other
outstanding claims is estimated and shown separately.
assets and other liabilities, respectively, and not in takaful

contract provisions or retakaful assets.
(g) Unearned contribution reserves

A provision is made for contribution deciency arising from
(i) Liability adequacy test
general takaful contracts where the expected value of claims
At each reporting date, liability adequacy tests are performed
and expenses attributable to the unexpired periods of policies
to ensure the adequacy of the contract liabilities using current
in force at the consolidated nancial position date exceeds
estimates of future cash ows under takaful contracts. In
the unearned contributions provision and already recorded
performing these, current best estimates of future contractual
claim liabilities in relation to such policies. The provision for
cash ows and claims handling and administration expenses,
contribution deciency is calculated by reference to classes of
as well as investment income from the assets supporting such
business which are managed together.
liabilities are used. Any deciency in the carrying amounts
and to monitor the risks and adherence to limits by means of

a realisable and up-to-date information systems. The Group
obligor default risk, country and sector risk).
risk grading in order to categorise exposures according to the
Risk management framework

The Board of Directors (the Board) has overall responsibility for
the establishment and oversight of the Banks risk management
framework. The Board has established a Board Risk Committee,
comprising members from the Board, to monitor the Banks credit,
operational and market risks. The Board has further set up from
within management, Assets and Liabilities Committee (ALCO),
Executive Credit Committee and Executive Operational Risk
Committee to assist it in meetings its responsibilities.
Management Committee, assists in carrying out the oversight
liability adequacy tests (the unexpired risk provision).
responsibility of the Board.
diversication of its risks. Assets, liabilities and income and
Where the liability adequacy test requires the adoption of
The Board has established a Board Audit Committee, which
expense arising from ceded retakaful contracts are presented
new best estimate assumptions, such assumptions (without
is responsible for monitoring compliance with the Banks risk
separately from the assets, liabilities, income and expense
margins for adverse deviation) are used for the subsequent
management policies and procedures, and for reviewing the adequacy
from the related takaful contracts because the retakaful
measurement of these liabilities.
of the risk management framework. The Banks Audit Committee is
arrangements do not relieve the Group from its direct
consolidates all elements of credit risk exposure (such as individual
Risk Management Department develops and maintains the Groups
income by establishing a provision for losses arising from
for the purpose of limiting its net loss potential through the
management reporting purposes, the Group considers and
reect changes in markets, products and emerging best practice.
A separate Risk Management Department, reporting to the Risk
The Group cedes retakaful in the normal course of business
from Islamic nance activities, Ijara and investments. For risk
regularly reviews its risk management policies and systems to
is immediately charged to the statement of comprehensive

(h) Retakaful
3.1 Credit risk and concentrations of risk
consequence of being in business. The Groups aim is, therefore, to
case estimates. This provision is based on the estimate of
available information and past experience. An additional net
The risk management policies are established to identify and
degree of risk of nancial loss faced and to focus management on

the attendant risks. The risk grading system is used in determining
where impairment provisions may be required against specic
credit exposures. The current risk grading framework consists of
twenty ve grades reecting varying degrees of risk of default and
the availability of collateral or other credit risk mitigation. The
responsibility for setting risk grades lies with the Risk Management
Department and the concerned business unit.
Risk Management Department assesses all credit exposures in
excess of designated limits, prior to facilities being committed to
customers by the business unit concerned. Renewals and reviews
of facilities are subject to the same review process.
assisted in these functions by the Internal Audit Department.
obligations to its policy-holders.
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At 31 December 2010 and 31 December 2009, the distribution by geographical region of major categories of assets, liabilities, contingencies and
commitments was as follows:
3. Financial risk management (continues)

31 December 2010:
3.1 Credit risk and concentrations of risk (continues)

In addition, the Group manages the credit exposure by obtaining security where appropriate and limiting the duration of exposure. In certain
cases, the Group may also close out transactions or assign them to other counterparties to mitigate credit risk. Regular audits of business units
and credit processes are undertaken by the Internal Audit Department.
The Bank measures its exposures to credit risk by reference to gross carrying amount of nancial assets less amounts offset, prot suspended
and impairment losses, if any.
and other nancial institutions
as follows:
2010
2009
Kazakhstan
Others
Total
AED000
AED000
AED000
AED000
Assets
Exposure to credit risk
At 31 December 2010 and 31 December 2009, the Banks maximum exposure to credit risk before collateral held or other credit enhancements was
United Arab Emirates
981,865
142,039
16,034
1,139,938
5,375,000
66,380
5,441,380
11,144,399
11,144,399
Ijara
4,163,179
4,163,179
2,773,116
2,773,116
Investment property
144,584
144,584
AED000
AED000
565,764
2,542
568,306
1,139,938
589,649
Other assets
363,596
1,620
365,216
5,441,380
2,781,567
Total assets
25,511,503
212,581
16,034
25,740,118
11,144,399
7,675,109
Ijara
4,163,179
2,567,130
Liabilities
2,773,116
2,947,860
Customers accounts
18,047,762
5,853
55,812
18,109,427
365,216
181,925
4,823,237
106,812
4,930,049
25,027,228
16,443,240
726,523
5,006
731,529
7,831,286
2,349,347
23,597,522
10,859
162,624
23,771,005
7,831,286
7,831,286
Other assets
Contingencies and commitments (Note 22)
Other liabilities
Contingencies and commitments

The above table represents a worst case scenario of credit risk exposure of the Group at 31 December 2010 and 31 December 2009 without
taking account of any collateral held or other credit enhancements attached. For on-balance-sheet assets, the exposures set out above are
based on net carrying amounts as reported in the consolidated statement of nancial position, at those respective dates.
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Impairment and provisioning policies
that have been incurred but have not been identied on facilities
Impaired receivables from Islamic nancing activities
that are considered individually insignicant as well as individually
Impaired receivables from Islamic nancing activities are nancial
signicant exposures that were subject to individual assessment

for impairment but were not found to be individually impaired.
3.1 Credit risk and concentrations of risk (continues)
assets carried at amortised cost for which the Group determines

that it is probable that it will be unable to collect all principal
Individually assessed facilities are required to be classied as
and prot due according to the contractual terms of the related
impaired as soon as there is objective evidence that an impairment
Exposure to credit risk (continues)
nancial assets. These nancial assets are graded in accordance
loss has been incurred. Objective evidence of impairment includes
At 31 December 2010 and 31 December 2009, the distribution by geographical region for major categories of assets, liabilities, contingencies and
with the Groups internal credit risk grading system.
observable data as to when contractual payment of principal or
commitments is as follows (continues):
Past due but not impaired nancial assets

Past due but not impaired nancial assets, are those for which
31 December 2009:
contractual prot or principal payments are past due but the
Kazakhstan
Others
Total
AED000
AED000
AED000
AED000
Assets
568,951
20,698
589,649
2,781,567
2,781,567
7,675,109
7,675,109
Ijara
2,567,130
2,567,130
2,947,860
2,947,860
Investment property
144,884
144,884
555,347
555,347
Other assets
181,925
181,925
Total assets
17,422,773
20,698
17,443,471

Other liabilities
Contingencies and commitments
99
counterparties, credit rating downgrades or original terms of the

contractual repayment are unable to be met.
Group believes that impairment of such nancial assets is not
Write-off policy
appropriate on the basis of the level of security, collateral available
The Group writes off a facility or an investment, and any related
and / or the stage of collection of amounts owed to the Group.
allowances for impairment losses, when the Risk Committee
Financial assets with renegotiated terms

Financial assets with renegotiated terms are facilities that have
been restructured due to the deterioration in the customers
nancial position and where the Group has made concessions that
it would not otherwise consider. Once the facility is restructured it
remains in this category independent of satisfactory performance
after restructuring.
determines that the facility or investment is uncollectible. This

determination is reached after considering information such as
the occurrence of signicant changes in the customers / issuers
nancial position such that the customer / issuer can no longer
pay the obligation, or that proceeds from collateral will not be
sufcient to pay back the entire exposure. For smaller balance
standardised facilities, write-off decisions generally are based on a
product specic past due status.
During the year ended 31 December 2010, the Group

renegotiated facilities with a carrying value of AED 768 million
(2009: AED 953 million).
Allowances for impairment
The Group establishes an allowance for impairment losses on
assets carried at amortised cost that represents its estimate of
Liabilities
Customers accounts
prot is overdue or there is known difculties in the cash ows of
incurred losses on its nancial assets. The main components

11,835,467
6,504
11,841,971
3,111,863
3,111,863
649,202
649,202
15,596,532
6,504
15,603,036
2,349,347
2,349,347
of this allowance are a specic loss component that relates to

individually signicant exposures, and a collective loss allowance
established for groups of homogeneous assets in respect of losses
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3.2.2 Currency risk
The Group is exposed to the effects of uctuations in the prevailing foreign currency exchange rates on its nancial position and cash ows.
3.2 Market risk
currency positions on a daily basis.
Senior management sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, and monitors
The Group is exposed to market risk, which is the risk that the fair value or future cash ows of a nancial instrument will uctuate because
At 31 December 2010 and 31 December 2009, the Groups foreign currency exposure to signicant currencies comprised:
of changes in market prices. Market risk arises from open positions in prot rate, currency and equity products, all of which are exposed to
general and specic market movements and changes in the level of volatility of market rates or prices such as prot rates, credit spreads,
Net open position
foreign exchange rates and equity prices.

Overall authority for market risk is vested in ALCO. The Risk Management Department 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.
Currency
United States Dollar
Euro
3.2.1 Price risk
Various Currencies
2010
2009
AED000
AED000
(25,631)
406,242
1,132
817
45,804
1,164
The Group was exposed to price risk arising from its investment securities portfolio classied on the nancial statements as Available-forsale (AFS) and Fair Value through Prot and Loss (FVTPL) until 30 September 2010 and at fair value through prot and loss and other
Had the exchange rate between the various currencies and the AED increased or decreased by 10%, with all other variables held constant, the
comprehensive income subsequent to the early adoption of IFRS 9.
impact on the results and equity of the Group would not have been material as the exposure primarily related to currencies that were pegged
Most of the Groups investment securities are publicly traded and the table below summarises the impact of a 10% increase / decrease of the
prices of the major components of its investment securities portfolio, on the Groups results and equity for the year ended 31 December 2010.
to the AED.
3.2.3 Profit rate risk
The analysis is based on the assumptions that all other variables will remain constant and, where applicable, the Groups investments moved
The Group is exposed to the effects of uctuations in the prevailing levels of prot rates on cash ows. Senior management sets limits and
according to the historical correlation of the relevant index.
monitors the level of mismatch of prot rate re-pricing that may be undertaken by the Group.
Impact on results and equity

of the Group
10% change in equity prices
2010
2009
AED000
AED000
3,005
573
During the year ended 31 December 2010, had prot rates increased/decreased by 100 basis points, with all other variables remaining constant,
the impact on the results and equity of the Group would have been as follows:
Impact on results and equity

of the Group
100 basis points change in prot rates
101
2010
2009
AED000
AED000
36,062
58,299
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A summary of the Groups prot rate re-pricing as at 31 December 2009 is as follows:
Less than
3 months
3 - 6 months
6 - 12 months
1 - 5 years
Greater than
5 years
Non-sensitive
Total
AED000
AED000
AED000
AED000
AED000
AED000
AED000
Greater than
5 years
Non-sensitive
Total
AED000
AED000
AED000
AED000
589,649
589,649
2,781,567
2,781,567
4,318,090
737,063
232,713
2,387,243
7,675,109
1,097,162
734,600
735,368
2,567,130
1,106,723
1,835,398
5,739
2,947,860
Other assets
39,505
39,505
Total assets
8,196,819
2,578,386
232,713
1,835,398
3,757,504
16,600,820
with banks and other nancial

institutions
Receivables from Islamic
1,139,938
1,139,938
3,240,000
2,135,876
29,013
15,469
21,022
5,441,380
Ijara
2,714,461
2,729,286
1,981,024
1,798,342
1,921,286
11,144,399
Ijara
490,717
3,597,146
51,178
24,138
4,163,179
Customers accounts
5,717,664
1,063,181
1,802,059
1,836,250
1,422,817
11,841,971
429,000
70,000
91,813
2,152,252
30,051
2,773,116
2,961,863
150,000
3,111,863
Other assets
365,216
365,216
Other liabilities
11
426,557
426,568
Total assets
6,874,178
8,532,308
2,153,028
3,990,201
1,921,286
1,556,227
25,027,228
Total liabilities
8,679,538
1,213,181
1,802,059
1,836,250
1,849,374
15,380,402
1,365,205
(1,569,346)
1,908,130
1,220,418
nancing activities
Customers accounts
3,339,016
8,689,377
1,560,142
2,934,165
1,586,727
18,109,427
3,055,299
1,874,750
4,930,049
Other liabilities
731,529
731,529
Total liabilities
6,394,315
10,564,127
1,560,142
2,934,165
2,318,256
23,771,005
592,886
1,056,036
1,921,286
Net position
Liabilities
Net position
Liabilities
103
AED000
nancing activities
institutions
Receivables from Islamic
AED000
Murabaha and Wakala deposits
Murabaha and Wakala deposits

with banks and other nancial
AED000
Assets
Assets
1 - 5 years
A summary of the Groups prot rate re-pricing as at 31 December 2010 is as follows:
6 - 12 months
3.2.3 Profit rate risk (continues)
3 - 6 months
3.2 Market risk (continues)
Less than
3 months
479,863
(2,031,819)
(762,029)
(482,719)
(852)
1,256,223
104
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The Group relies on customers accounts and Wakala deposits
A summary of the Groups maturity prole as at 31 December 2010 is as follows:
from banks as its primary sources of funding. Customers accounts
and Wakala deposits from banks generally have shorter maturities
3.3 Liquidity risk
short-term nature of these deposits increases the Groups liquidity
as possible, that it will always have sufcient liquidity to meet its

liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Groups reputation. The treasury department receives information
from other business units regarding the liquidity prole of their
nancial assets and liabilities and details of other projected
cash ows arising from projected future business. The treasury
Greater than
5 years
Total
The Groups approach to managing liquidity is to ensure, as far
Exposure to liquidity risk
1 - 5 years
Management of liquidity risk
3 - 12 months
obligations associated with its nancial liabilities.
Less than
3 months
Liquidity risk is the risk that the Group will be unable to meet its
and a large proportion of them are repayable on demand. The
The key measure used by the Group for managing liquidity risk
AED000
AED000
AED000
AED000
AED000
risk and the Group actively manages this risk through maintaining
competitive pricing and constant monitoring of market trends.
is the ratio of net liquid assets to customers accounts. For this

purpose net liquid assets are considered as including cash and
balances with banks and Wakala deposits with banks less any
Assets
1,139,938
1,139,938
3,240,000
2,164,889
15,469
21,022
5,441,380
638,899
2,554,356
5,455,932
2,495,212
11,144,399
Ijara
230,833
1,265,161
1,416,922
1,250,263
4,163,179
25,558
91,813
2,647,413
8,332
2,773,116
customers deposits and Wakala deposits from banks, and
commitments maturing within the next month.
department, then maintains a portfolio of short-term liquid assets,
largely made up of short-term liquid investment securities and
Other assets
365,216
365,216
Total assets
5,275,228
6,076,219
9,535,736
4,140,045
25,027,228
inter-bank facilities, to ensure that sufcient liquidity is maintained

within the Group as a whole. The liquidity requirements of
business units and subsidiaries are met through short-term
nancing from the treasury department to cover any short-term
Liabilities
uctuations and longer term funding to address any structural
Customers accounts
4,925,791
10,249,520
2,934,116
18,109,427
liquidity requirements. The daily liquidity position is monitored
3,055,299
1,874,750
4,930,049
Other liabilities
731,529
731,529
liquidity policies and procedures are subject to review and
Total liabilities
7,981,090
12,124,270
2,934,116
731,529
23,771,005
approval by ALCO. Daily reports cover the liquidity position of both
Net position
(2,705,862)
(6,048,051)
6,601,620
3,408,516
1,256,223
and regular stress testing is conducted under a variety of scenarios

covering the normal and more severe market conditions. All
the Group and operating subsidiaries and branches. A summary

report, including any exceptions and remedial action taken, is
submitted regularly to ALCO.
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Fair value estimation
The table below analyses nancial instruments carried at fair value, by valuation method.
The different levels have been dened as follows:
3.3 Liquidity risk (continues)
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
A summary of the Groups maturity prole as at 31 December 2009 is as follows:
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2).
Less than
3 months
3 - 12 months
1 - 5 years
Greater than
5 years
Total
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
AED000
AED000
AED000
AED000
AED000
The following table presents the Groups assets and liabilities that are measured at fair value at 31 December 2010:
Assets
Equity investments
Level 1
Level 2
Level 3
Total
AED000
AED000
AED000
AED000
30,052
30,052
Assets
589,649
589,649
2,781,567
2,781,567
1,032,930
1, 811,913
2,654,909
2,175,357
7,675,109
228,238
117,561
1,264,586
956,745
2,567,130
5,739
2,865,162
76,959
2,947,860
Other assets
181,925
181,925
Total assets
4,638,123
1,929,474
6,784,657
3,390,986
16,743,240
Ijara
Liabilities
The following table presents the Groups assets and liabilities that are measured at fair value at 31 December 2009:
Assets
Equity and other investments
Level 1
Level 2
Level 3
Total
AED000
AED000
AED000
AED000
745,503
745,503
3.4 Takaful and retakaful risk

3.4.1 Takaful risk
Takaful risk is where the Group agrees to indemnify the insured parties against happening of unforeseen future insured events. The frequency
Customers accounts
7,140,481
2,854,186
1,847,304
11,841,971
2,961,863
150,000
3,111,863
Other liabilities
11
649,191
649,202
Total liabilities
10,102,355
3,004,186
1,847,304
649,191
15,603,036
Net position
(5,464,232)
(1,074,712)
4,937,353
2,741,795
1,140,204
and severity of claims are the main risk factors. Due to the inherent risk in the takaful business, actual claim amounts can vary marginally
compared to the outstanding claim reserves but are not expected to have a material impact.
3.4.2 Retakaful risk

In order to minimise nancial exposure arising from large claims, the Group, in the normal course of business, enters into agreements with
other parties for retakaful purposes. Such retakaful arrangement provides for greater diversication of business, allow management to control
exposure to potential losses arising from large risks, and provide additional capacity for growth.
To minimise its exposure to signicant losses from reinsurers insolvencies, the Group evaluates the nancial condition of its reinsurers and
monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers.
Retakaful ceded contracts do not relieve the Group from its obligations and as a result the Group remains liable for the portion of outstanding
claims reinsured to the extent that the reinsurer fails to meet the obligations under the retakaful agreements.
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Impairment charge on other nancial assets

The Group evaluates impairment on nancial assets on an

3.4 Takaful and retakaful risk (continues)
3.4.3 Reserve for claims
within the Bank to particular operations or activities, it is not
least quarterly to assess whether an impairment charge should
The Banks lead regulator the Central Bank of the UAE sets and
the sole basis used for decision-making. Account also is taken of
be recognised in the statement of comprehensive income. In
monitors capital requirements for the Bank as a whole. The Bank
synergies with other operations and activities, the availability of
particular, considerable judgment by management is required
is required to comply with the provisions of the Central Bank of the
management and other resources, and the t of the activity with
in the estimation of the amount and timing of future cash ows
UAE in respect of regulatory capital.
the Banks longer term strategic objectives.
The Banks policy is to maintain a strong capital base so as to
At 31 December 2010, the Banks capital adequacy ratio as per
maintain investor, creditor and market condence and to sustain
Basel II was 12%.
business in order to protect against adverse future claims
estimating these cash ows, management makes judgments
experience and developments. The uncertainties about the
about the counterpartys nancial situation and other means
amount and timing of claim payments are normally resolved
of settlement and the net realisable value of any underlying
within a year.
collateral. Such estimates are based on assumptions about

several factors involving varying degrees of judgment and
assumptions which are not material to the consolidated nancial
the principal basis used in determining how capital is allocated
ongoing basis and a comprehensive review is carried out at
when determining the level of impairment charge required. In
The general takaful claims provision is sensitive to the key
uncertainty, and actual results may differ resulting in future

changes to such impairment charges.
future development of the business. The impact of the level of

capital on return is also recognised and the Bank 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 Bank has complied with
all externally imposed capital requirements throughout the year.
Collective impairment charge on nancial assets
Capital allocation
In addition to specic impairment charge against individually
The allocation of capital between specic operations and activities
impaired assets, the Group also maintains a collective impairment
is, to a large extent, driven by optimisation of the return achieved
allowance against portfolios of Murabaha, Wakala and Islamic
on the capital allocated. The amount of capital allocated to
Estimates and judgments are continually evaluated and are based
Finance with similar economic characteristics which have not
each operation or activity is based primarily upon the regulatory
on historical experience and other factors, including expectations
been specically identied as impaired. In assessing the need
capital, but in some cases the regulatory requirements do not
of future events that are believed to be reasonable under the
for a collective impairment charge, management considers
reect fully the varying degree of risk associated with different
circumstances.
concentrations, credit quality, portfolio size and economic factors.
activities. In such cases the capital requirements may be exed to
In order to estimate the required allowance, assumptions are made
reect differing risk proles, subject to the overall level of capital
to dene the way inherent losses are modelled and to determine
to support a particular operation or activity not falling below
the required input parameters, based on historical and current
the minimum required for regulatory purposes. The process of
economic conditions.
allocating capital to specic operations and activities is undertaken
statements of the Group.
4. Critical accounting estimates and judgments
Impairment of available-for-sale equity

investments
The Group follows the guidance of IAS 39 to determine when
an available-for-sale equity investment is impaired. This
determination requires signicant judgment. In making this
judgment, the Group evaluates, among other factors, the duration
and extent to which the fair value of an investment is less than its
cost; and the nancial health of and short-term business outlook
for the investee, including factors such as industry and sector
performance, changes in technology and operational and
nancing cash ow.
Although maximisation of the return on risk-adjusted capital is
Regulatory capital
The Group maintains adequate reserves in respect of its takaful
3.4.4 Sensitivities
5. Capital management
independently of those responsible for the operation.
Liability arising from claims made under takaful

contracts
The estimation of the ultimate liability arising from claims made
under takaful contracts is a critical accounting estimate by the
Group. There are several sources of uncertainty that need to be
considered in estimating the liability that the Group will ultimately
pay for such claims. The provision for claims Incurred But Not
Reported (IBNR) is an estimation of claims which are expected
to be reported subsequent to the reporting date, for which the
insured event has occurred prior to the reporting date.
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6. Cash and balances with banks
2010
2010
2009
AED000
AED000
Cash on hand
247,509
115,713
Current account with the Central Bank
488,141
30,314
Cash reserve deposits with the Central Bank
388,225
342,647
16,063
100,975
1,139,938
589,649
Due from banks
Performing
Non-performing
Total
Provision for credit losses
Receivables from Islamic nancing activities, net
Corporate
Retail
Total
AED000
AED000
AED000
7,272,073
4,020,983
11,293,056
7,468
42,908
50,376
7,279,541
4,063,891
11,343,432
(110,015)
(89,018)
7,169,526
3,974,873
(199,033)
11,144,399
Non performing facilities comprise facilities past due more than 90 days and impaired facilities.
Cash reserve deposits with the Central Bank are not available for the operations of the Group.
7. Murabaha and Wakala deposits with banks and other financial institutions
2010
2009
AED000
AED000
5,000
5,436,380
2,781,567
5,441,380
2,781,567
Commodity Murabaha with nancial institutions

Wakala deposits
2009
Performing
Corporate
Retail
Total
AED000
AED000
AED000
5,533,328
2,162,862
7,696,190
25,971
25,971
5,533,328
2,188,833
7,722,161
(11,299)
(35,753)
5,522,029
2,153,080
Non-performing
Total
Receivables from Islamic nancing activities, net
(47,052)
7,675,109
8. Receivables from Islamic financing activities

Non-performing investments in Islamic nancing instruments are summarised as follows:
2010
2009
AED000
AED000
Corporate commodity Murabaha
7,279,541
5,533,328
Retail commodity Murabaha
7,020,407
3,813,081
Islamic credit card receivable
56,773
44,581
(3,013,289)
(1,668,829)
(199,033)
(47,052)
11,144,399
7,675,109
Murabaha deferred prot

Allowance for impairment (Note 19)
Past due but not impaired

Impaired
Gross
Net
2010
2009
AED000
AED000
42,395
25,971
7,981
50,376
25,971
(4,193)
(15,865)
46,183
10,106
Allowance for impairment charge against credit card of AED 10.3 million allocated to the Shareholder.
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2010
8. Receivables from Islamic financing activities (continues)

Gross receivables from Islamic nancing activities by sector at 31 December 2010 and 31 December 2009 comprise:
Performing
2010
2009
AED000
AED000
1,810,875
1,111,799
558,999
555,138
Corporate and private sector
3,744,137
2,841,111
Retail sector
5,229,421
3,214,113
11,343,432
7,722,161
Government and public sector

Banking sector
Non-performing
Total
Ijara, net
Corporate
Retail
Total
AED000
AED000
AED000
2,618,371
1,551,930
4,170,301
3,120
15,468
18,588
2,621,491
1,567,398
4,188,889
(11,867)
(13,843)
2,609,624
1,553,555
(25,710)
4,163,179
Ijara assets represent net investment in assets leased for periods which either approximate or cover major parts of the estimated useful lives
of such assets. The lease agreements stipulate that the lessor undertakes to transfer the leased assets to the lessee upon receiving the nal
rental payment.
Movement in allowance for impairment on receivables from Islamic nancing activities, during the year:
2009
2010
2009
AED000
AED000
47,052
4,208
Charge of the year
151,981
42,844
Non-performing
At the end of the year
199,033
47,052
Total
At the beginning of the year
Performing

Ijara, net
9. Ijara
Corporate forward Ijara

Corporate standard Ijara
Retail forward Ijara
Retail standard Ijara
Retail
Total
AED000
AED000
AED000
1,904,545
670,312
2,574,857
1,904,545
670,312
2,574,857
(5,884)
(1,843)
1,898,661
668,469
(7,727)
2,567,130
Non-performing Ijaras are summarised as follows:
2010
2009
AED000
AED000
539,764
198,950
2010
2009
2,081,727
1,705,595
AED000
AED000
313,096
266,186
Past due but not impaired
191
1,254,302
404,126
Impaired
18,397
(25,710)
(7,727)
Gross
18,588
4,163,179
2,567,130
(6,953)
11,635

Net
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Corporate
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At 31 December 2010, nancial assets at fair value through the statement of other comprehensive income comprise:
9. Ijara (continues)
Movement in allowance for impairment on Ijara during the year:
2009
AED000
Transferred from AFS on 1 October 2010
19,118
Fair value movements during the period from 1 October 2010 to 31 December 2010
(1,242)
17,876
2010
2009
AED000
AED000
7,727
36
Charge of the year
17,983
7,691
At the end of the year
25,710
7,727
2010
AED000
At 31 December 2010, nancial assets at fair value through the statement of income comprise:
10 Investment securities
2010
2009
AED000
AED000
Quoted equity investments
5,739
Quoted Sukuk investments
739,764
Sukuk investments
2,203,210
(853)
2,947,860
Available-for-sale investments
Transferred from AFS on 1 October 2010

Fair value movements during the period from 1 October 2010 to 31 December 2010
2010
2009
AED000
AED000
12,321
(145)
12,176
Held to maturity investments
2010
2009
AED000
AED000
30,052
2,744,814
(1,750)
2,773,116
Financial assets at fair value

Quoted equity investments
Financial assets at amortised cost

Sukuk investments
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Furniture and
fixtures
Capital work
in progress
Total
AED000
AED000
AED000
AED000
126,254
68,818
40,747
354,882
590,701
Additions
18,398
10,293
6,413
34,089
69,193
Disposals
(3,826)
(46)
(20)
Transfers
10,176
5,371
4,692
(20,239)
151,002
84,436
51,832
368,732
656,002
At 31 December 2010
(3,892)
Accumulated depreciation
At 1 January 2010
10,813
15,306
9,235
35,354
Charge for the year
24,919
19,142
12,173
56,234
Reversal
(3,826)
(46)
(20)
(3,892)
31,906
34,402
21,388
87,696
119,096
50,034
30,444
368,732
568,306
At 31 December 2010
Net book value at 31 December 2010
117
AED000
AED000
AED000
AED000
AED000
Cost
Cost
At 1 January 2010
Total
Computer
systems
AED000
Capital work
in progress
Leasehold
improvements
Property and equipment at 31 December 2010 comprise:
Furniture and
fixtures
11. Property and equipment
Computer
systems
Property and equipment at 31 December 2009 comprise:
Leasehold
improvements
At 1January 2009
94,867
41,394
35,550
3,268
175,079
Additions
23,709
27,424
13,678
350,811
415,622
Disposals
Transfers
7,678
(8,481)
803
126,254
68,818
40,747
354,882
590,701
317
2,540
1,240
4,097
Charge for the year
10,496
12,766
7,995
31,257
At 31 December 2009
10,813
15,306
9,235
115,441
53,512
31,512
At 31 December 2009
Accumulated depreciation
At 1January 2009
Net book value at 31 December 2009
35,354
354,882
555,347
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14. Other liabilities
12. Other assets
2010
2009
AED000
AED000
2010
2009
Accounts payable
304,964
422,174
AED000
AED000
Accrued expenses
233,525
149,341
Prepaid expenses
49,772
29,161
3,786
4,383
Income receivable
64,352
32,500
8,214
Takaful receivable
27,816
7,005
102,372
48,355
Murabaha inventory
87,000
43,679
Takaful liabilities
42,311
12,470
Prepaid staff allowances
21,945
14,790
Others
44,571
4,265
114,331
54,790
731,529
649,202
365,216
181,925
Others
Charity payable
Unearned revenue
Advance administrative fees - Ijara
Others include promises to buy and sell foreign currencies, which are carried at fair value and are presented within other liabilities and other
Others contain promises to buy and sell foreign currencies which are carried at fair value and presented within other assets and other liabilities,
assets respectively.
respectively. The notional amounts of these contracts are disclosed in note 22 of these consolidated nancial statements.
Others include an amount of AED 4.1 million of Depositors Reserve prot distribution which pertains to depositors.
13. Customers accounts
Charity payable represents prots forfeited by the Fatwa and Sharia Supervisory Board and late payment and over limit fees.
2010
2009
AED000
AED000
By account:
15 Share capital
Share capital
The authorised share capital of the Bank comprises of 4 billion ordinary shares of AED 1 each. The issued and fully paid up share capital
Wakala deposits
15,097,637
9,743,946
Current accounts
1,502,025
1,359,783
Time deposits
781,050
455,908
Savings accounts
728,715
282,334
18,109,427
11,841,971
at 31 December 2010 comprises of 2 billion ordinary shares of AED 1 each (2009: 2 billion ordinary shares of AED 1 each).
The Abu Dhabi Investment Council holds 100% of the issued and fully paid share capital. The Banks shares are not listed on a recognised
stock exchange.
Statutory reserve
The UAE Commercial Companies Law No. (8) of 1984 (as amended) and the Banks Articles of Association require that 10% of the annual
net prot to be transferred to a statutory reserve until it equals 50% of the paid-up share capital. The statutory reserve is not available for
By sector:
distribution. During the year AED 14.1 million (2009: Nil) has been transferred to statutory reserve.
10,465,527
7,827,738
79,761
227,041
Corporate / private
4,162,145
1,440,370
Retail
3,401,994
2,346,822
18,109,427
11,841,971
Government
Public
Government sector deposits include special deposits amounting to AED 70.392 million received from the Ministry of Finance with original
contractual maturity of 3 years which are exempted from the calculation of the cash reserve requirement.
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19. Impairment charges on financial assets
16. Income from Ijara and Islamic financing activities, net

Ijara
2010
2009
AED000
AED000
Income from Murabaha - corporate
397,432
211,509
Income from Murabaha - retail
411,728
182,709
Income from Ijara
223,580
83,371
1,032,740
477,589
17. Commission, fees and foreign exchange income, net
Fee and commission income

Foreign exchange gains
Foreign exchange losses
Other income
At 1 January
Charge for the year
2009
2010
2009
2010
2009
2010
2009
AED000
AED000
AED000
AED000
AED000
AED000
AED000
7,727
36
47,052
4,208
853
155
55,632
4,399
17,983
7,691
155,385
42,844
897
698
174,265
51,233
(3,404)
25,710
7,727
199,033
47,052
1,750
853
2010
2009
AED000
AED000
108,261
58,457
4,636
2,788
(531)
(347)
15,912
2,916
128,278
63,814
18. General and administrative expenses
121
2010
2009
AED000
AED000
Rent expenses
70,796
57,118
Marketing and advertising expenses
19,770
17,088
Consultancy fees
29,745
13,773
1,001
75,331
47,954
195,642
136,934
(3,404)
226,493
55,632
Impairment charges include an amount of AED 14.3 million (2009: Nil) in connection with impairment losses on other assets.
AED 15.1 million (2009: AED 2.7 million) relating to net income from takaful activities.
Other expenses
Total
2010
20. Depositors share of profits

The depositors share of prots for the year ended 31 December 2010 has been supported by the Shareholder and is authorised by the Banks
Fatwa and Sharia Supervisory Board.
21. Cash and cash equivalents

Cash and cash equivalents included in the consolidated statement of cash ows comprise the following amounts with original contractual
maturities of less than three months.
2010
2009
AED000
AED000
1,139,938
589,649
4,620,000
510,604
(4,436,416)
(2,961,863)
1,323,522
(1,861,610)
Commission, fees and foreign exchange income constitute part of prot distributable to the Shareholder. Other income includes an amount of
Recruitment expenses
Investment
securities
AED000
Write offs
At 31 December
Islamic financing
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24. Group entities
(a) Wholly owned company incorporated to carry out takaful activities:
22. Commitments and contingencies

2010
2009
AED000
AED000
653,064
144,396
5,651,414
1,354,265
Irrevocable commitments to extend credit
420,700
357,900
Capital commitments
423,813
18,823
Operating lease commitments
284,802
73,660
Promises to sell foreign currencies
397,493
400,303
7,831,286
2,349,347
Letters of credit
Letters of guarantee
Country of incorporation
Al Hilal Takaful Pr JSC
(b) Wholly owned company incorporated to carry out trading activities:
Al Hilal Auto LLC
Al Hilal Islamic Bank PJSC
23. Investment property

2010
2009
AED000
AED000
144,884
144,884
Other movements
(300)
At 31 December
144,584
144,884
Additions
123
UAE
(c) Wholly owned company incorporated to carry out Islamic banking activities:
At 31 December 2010, the Group had revocable commitments to extend credit of AED 7 billion (2009: AED 5.4 billion).
At 1 January
UAE
Kazakhstan
(d) Subsidiary incorporated to carry out investment activities:
Al Wataniya Development Fund Limited - 47% ownership
Cayman Islands
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nancial information

25. Related parties

Related parties comprise the shareholder, directors, key management of the Group and entities owned and controlled by key management.
All related party transactions are approved by the Groups key management or the Board of Directors of the Bank.
Prot rates earned on Murabaha nancing facilities extended to related parties during the year have ranged from 1.50% to 6.5% per annum
(2009: 1.45% to 6.5%)
Prot distribution rates paid on customers deposits placed by related parties during the year have ranged from 0.73% to 4.70% per annum
(2009: 1% to 6%)
Fees and commissions earned on transactions with related parties during the year have ranged from 0.17% to 1.20% per annum
(2009: 0.17% to 1.2%)
At 31 December 2010, the balances and transactions with related parties comprise:
2010
2009
AED000
AED000
Islamic nancing facilities
4,191,098
2,639,005
Customers accounts
2,377,460
1,109,396
Contingent liabilities
5,845
5,523
13
Financing income
51,526
86,082
Depositors share of prots
25,589
28,283
Fee and commission income
Key management remuneration for the year ended 31 December 2010 and 31 December 2009 comprise:
Salaries
Post employment benets
2010
2009
AED000
AED000
14,839
15,477
1,095
3,836
26. Zakat
The Articles of Association of the Bank do not require management of the Bank to pay Zakat on behalf of the Shareholder. Consequently, the
Zakat obligation is to be discharged by the Shareholder.
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Annual report supplementary information: Pillar III

Executive Summary
Risk Governance and Ownership
Pillar-I
Al Hilal Bank is in compliance with Basel II Accord and Regulations as
The Pillar 3 disclosures being made by the Group comply with the BIS
Risk and capital management strategy is owned and set by the Groups
Pillar I - deals with the computation of Regulatory Capital ratio. It
published by Central Bank of U.A.E. as at December 31, 2010, the Capital
Revised Framework - International Convergence of Capital Measurement
Board of Directors, and implemented by executive management led
involves criteria- based assessment of risk for various asset classes
Adequacy Ratio (CAR), the minimum regulatory requirement was 12%.
and Capital Standards. These disclosures include information on the
by the Chief Executive Ofcer. There are a number of committees and
and calculation of Risk Weighted Assets (RWAs) for credit, market
The Bank has adopted the Standardised Approach for Credit Risk and
Groups risk management objectives and policies, risk assessment
executives that support the execution of the business plan and strategy
and operational risk, to derive the required regulatory capital. All UAE
Market Risk and Basic Indicator Approach for Operational Risk. The
processes and capital adequacy. Quantitative information on risk
including.
banks are subject to a minimum capital adequacy ratio of 12%. This is
details of disclosure required under the regulations are in this report.
assessment (per standardised approach) includes as per the guideline
Overview
Al Hilal Bank PJSC the Bank started its voyage towards achieving the
Board Risk Committee (BRC)

Executive Credit Committee (ExCo)
Credit Risk
Risk Management Objectives and Policies
Asset and Liability Committee (ALCO)
The Bank envisages maintaining a credit risk prole which is line with
vision in United Arab Emirates- Abu Dhabi in June 2008. By the year
Introduction
end December 31, 2010 the Bank attained a prominent level of branch
Al Hilal Bank is in the phase of implementation of a Risk Management
network and ATMs throughout UAE.
structure that ensures identication, measurement, monitoring and
The Bank is a wholly owned subsidiary of the Abu Dhabi Investment

Council (ADIC), which is one of the Sovereign Wealth Funds of Emirates of
Abu Dhabi.
The Islamic Bank key focus has been to build and roll out robust
business models to tap the Wholesale and Retail market segments with
specially tailored Sharia compliant products utilising efcient processes
to deliver these products. The Banks business philosophy also revolves
controlling of risk in accordance with Al Hilal Banks Risk Management

Policy and Regulatory guidelines provided by Central Bank of UAE. In
harmony with the latest regulatory requirements, the Bank is moving
towards a more rened methodology for analysing risk and assigning
Economic Capital.
The Banks risk management philosophy revolves around Seven pillars
of Risk Management:
around the theme of ensuring outstanding service quality, enabled by
Good Corporate Governance
the best people and technology.
Risk Architecture
In its endeavour to develop itself into a dynamic Islamic nancial

institution, the Bank has widened its business by developing subsidiaries
under the banks territory. The subsidiaries include:
Al Hilal Auto
Al Hilal Takaful
Al Wataniya Development Fund
Al Hilal Islamic Bank Kazakhstan
Al Hilal Bank (AHB) and its subsidiaries, collectively known as the
Group assesses its capital adequacy based on the Capital Adequacy
Standards of the Central Bank of UAE (CBUAE) issued in November 2009
under the Standardised Approach.
signicantly higher than the global required minimum of 8%.
provided by CBUAE.
Globally accepted Risk Standards

Quality MIS generated based on International Accounting Standards (IAS)
Risk Appetite and Risk Tolerance

Risk management is difcult to dene precisely, but may be adequately
summarised as the analysis, control and mitigation of risk exposure in
relation to specic business objectives. The classical premise that any
its healthy growth and standing among the other peer banks within
the system. In connection thereto, going forward, the Bank shall lay
down targets to bring its key credit ratios in line with the average
ratios represented by the other top banks within the system and
devise a strategy to actively achieve the same.
business activity should deliver a return on investments (both nancial
In view of the above the Bank has planned to augment its credit
and non-nancial) that at least balances the entire portfolio of risks it is
policy and procedures. Basel II provides three approaches to the
associated with. This concept of balance is essential.
calculation of credit risk regulatory capital the Bank has allocated
Risk exposure results from the business activity. It is controlled from
capital on the basis of standardised approach for year 2010.
a solvency standpoint, and it impacts the pricing of nancial products.
Market Risk
Risk appetite drives business activity. It combines anticipations in
Market risk is dened as exposure to adverse changes in the market
risk and protability with management preferences to control capital

and resource allocation, as well as the distribution of exposure across
activities and portfolios.
value of portfolios and positions in nancial instruments caused

by changes in market factors. With respect to market risk, the Bank
intends to implement internal model approach as its threshold for
trading portfolio which shall determine the volatility of its portfolio
Top Quality Technology infrastructure
Management understands that effective Risk Appetite management
and shall be based on the level of Banks risk appetite. The level of
Skilled and Seasoned Manpower
has an important role in correctly linking risk to business decisions. The
risk tolerance for Prot bearing exposures shall be established using
Right Risk Culture.
Banks detailed risk appetite include both qualitative and quantitative
duration and other market risk model.
The Basel II framework was implemented in the Bank as per the
aspect covering earning volatility, maintenance of CAR at different level

under Pillar I and Pillar II separately, variance in business activities
Currently, the Bank has adopted the Standardised approach for
volume. There are some areas xed by the bank at zero level tolerance
determining the market risk capital requirement.
Pillar 1 - Minimum capital requirements: denes rules for the
in case of variance arise. The Banks risk appetite is comprehensive

and aligned to the regulatory characteristic, business activities and
Operational Risk
calculation of credit, market and operational risk;

Pillar 2 - Supervisory review process: requires banks to undertake an
apprehensions.
guideline. The framework is based upon three Pillars:
The Bank computes Capital charge for operational risk by using

the Basic Indicator Approach as per the guideline. However, it is
Individual Capital Adequacy Assessment Process (ICAAP) for other
strengthening its policy, processes and tools to ensure a gradual
risks; and
transition to higher approaches.
Pillar 3 - Market discipline: requires expanded disclosures to allow

Investors and other market participants to understand the risk
proles of individual banks.
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Annual report supplementary information (continues)

Pillar-I (continues)
Pillar-II
Operational Risk (continues)
The Bank is enhancing the internal models approach and implementing
The Bank has commenced the exercise of internally determining
Internal Capital Adequacy Assessment Process (ICAAP). In compliance
the risk prole of the Bank with respect to operational risk. The
to the regulatory requirement and also in order to compete with the
Bank has a scale depending on the loss severity and frequency
peer group of the industry, ICAAP will facilitate the Bank to optimise the
of occurring. The Bank has also identied the risks inherent in
growth while mitigating the risk.
its processes by the way of an RCSA exercise, with regards to

operational risk. Inherent risk assessment performed for this risk
is on a qualitative basis. The impact and likelihood feed into a heat
map, which assigns overall expected loss for the risk. The bands in
the heat map are determined by the senior management based on
these expert judgment and qualitative assessment. This provides
of Central Bank of UAE wide Circular No. 27/2009 dated 17/11/2009
risks associated with them. The signicance of these risks and the
probability of them occurring have been taken into account.
Residual Risk from CRM techniques

Evaluation of collateral
Standard documentation
Monitoring Collateral
Market Risk
Equity Price Risk: Internal Model VaR

(Variance Co-Variance)
Foreign Exchange Risk: Monitoring
management for risk framework.
mitigating the risk arising from their activities. Each business in the
has been conducted by considering different operations and the
Default Risk : Obligor rating system
will also assist in the Banks internal policy documentation and
operational risk being faced by the Bank.
time being, based on the same impact / likelihood matrix. This
Credit Risk
which requires banks to develop such a process. Whereas; this process
The Banks risk architecture harmonises each business function in
where risk tolerance levels have been conservatively set for the
Risk Assessment Procedure
The purpose of the ICAAP report is to fulll the regulatory requirement
guidance to the management on how to deal with each type of
Currently, a preliminary assessment has been carried out internally
Risk Type
Counterparty Limits
Operational Risk
ORM framework is developed and in

implementation phase
Bank has an independent and dedicated risk management function with

reporting lines to the respective Business Risk Management heads who
RCSA is being conducted by the Banks
report to Chief Risk Ofcer. There are several committees involved in
Operational Risk and Compliance Department
managing the Balance Sheet with reference to risk-taking activities in
Credit
the Bank.
Concentration
Single party exposure
Risk
Sector-wise exposure
In the Bank, Risk Management Group is responsible for ensuring
Concentration limits w.r.t.
Industry Infection Ration (IIR)
seamless implementation of Basel-II across the Bank with reference to

Credit, Market, and Operational Risk and Other Residual Risks. The Bank
Prot Rate Risk
has planned that in future ICAAP shall be used in determining the target
in Banking Book
Earning at Risk analysis
structure of the Bank, used as risk adjusted performance measure,
Liquidity Risk
Liquidity gap ladder (Monitoring)
establishing risk limits and thresholds, quantifying Risk Adjusted Return
Strategic Risk
RCSA has been designed for strategic Risk
on Capital (RAROC), capital management and preparing capital plan of

Strategic risk is being assessed on
the Bank and Strategy for keeping the Bank solvent.
strategic level
Risk Assessment and capital allocation was performed for ICAAP in
detail in 2010. There are few procedures for risk which have been
The conduct of RCSA exercise for new products
developed in the implementation phase, therefore capital is allocated on
and services will be performed as well
the basis of standardised method. Summary of the method of internal

assessment are as follows.
Reputational Risk
Currently, Reputational Risk is being assessed

and monitored on Strategic level
RCSA has been designed for Reputational Risk
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Pillar-III
Consolidated Capital Structure
Pillar III - relates to market discipline and requires the Bank to disclose detailed qualitative and quantitative information of its risk management
As On December 31, 2010
and capital adequacy policies and processes. Disclosures under Pillar III follow the guidelines and formats of the Capital Adequacy Standards
(Standardised Approach) of the CBUAE.
Summary terms and conditions of main

features of all capital instruments
Information on Subsidiaries and Significant Investments
Amount
AED000
Tier 1 Capital
2. Reserves
Total Prot
Capital
Deciencies
Surplus
Capital
Accounting
Treatment
Description
% Ownership
Country of
Incorporation
1. Paid up share capital/common stock
Subsidiaries:
a. Statutory reserve
14,017
b. Special reserve
c. General reserve
(3,152)
3. Minority interests in the equity of subsidiaries
Kazakhstan
100%
Banking
Fully Consolidated
Nil
Nil
Nil
4. Innovative capital instruments 1
Al Hilal Takaful
UAE
100%
Insurance
Fully Consolidated
Nil
Nil
Nil
5. Other capital instruments
Al Hilal Auto
UAE
100%
Trading
Fully Consolidated
Nil
Nil
Nil
6. Surplus capital from insurance companies
Al Hilal Bank Kazakhstan
Sub-total
Significant Investments:
Al Wataniya Development Fund
Cayman Islands
47.20%
Investments
Fully Consolidated
Nil
Nil
Nil
Less: Deductions for regulatory calculation

Less: Deductions from Tier 1 capital
Tier 1 Capital - Subtotal
Tier 2 capital
2,010,865
(134,974)
1,875,891
202,936
Less: Other deductions from capitals
Tier 3 capital
Total Eligible Capital After Deductions
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2,000,000
2,078,827
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AED000
AED000
AED000
3,651,895
2,247,730
5,899,625
AED
11,880,426
497,084
12,377,510
Total
15,532,321
2,744,814
18,277,135
1. Credit Risk
16,414,730
b. Foundation IRB
c. Advanced IRB
Foreign Currency
2. Market Risk
362,309
2,862,104
8,761,729
420,700
3,839,867
4,260,567
16,638,077
420,700
6,701,971
7,122,671
25,399,806
Other
Off- Balance
Sheet Exposures
AED000
AED000
AED000
AED000
AED000
AED000
AED000
AED000
15,532,321
2,743,983
18,276,304
420,700
6,701,971
7,122,671
25,398,975
Asia
831
831
831
Africa
North America
South America
Caribbean
Europe
Australia
Others
15,532,321
2,744,814
18,277,135
420,700
6,701,971
7,122,671
25,399,806
12%

GCC excluding UAE
Arab League
(excluding GCC)
Total
Total
16,827,710
Total
Non- Funded
Hedge
Instruments
Commitments
c. Advanced Measurement Approach
2,862,104
Capital Ratio
133
Total Funded
a. Total for Top consolidated Group
AED000
Gross Credit Exposures by Geography
b. Standardised Approach/ASA
Total Capital requirements
AED000
3. Operational Risk
a. Basic Indicator Approach
AED000
Financing
Securities
b. Models Approach
50,671
AED000
Financings
a. Standardised Approach
Geographic
Distribution
a. Standardised Approach
Total
AED000
Capital Requirements
Total
Non-Funded
Other OffBalance sheet

exposures
Capital Ratio
AED000
Hedge
Instruments
Capital Charge
Commitments
Total Funded
Financing
Securities
Gross Credit Exposures by Currency Type
Financings
Capital Adequacy
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Agriculture, Fishing
and related activities

Crude Oil, Gas, Mining
5,003
5,003
5,003
Manufacturing
710,378
710,378
87,000
128,432
215,432
925,810
Electricity and Water
323,206
323,206
14,073
14,073
337,279
2,662,507
230,280
2,892,787
29,500
835,257
864,757
3,757,544
511,469
511,469
616,790
616,790
1,128,259
679,140
679,140
568,670
568,670
1,247,810
4,560
91,813
96,373
3,621
3,621
99,994
467,220
467,220
467,220
Government
2,034,600
2,422,297
4,456,897
304,200
304,200
4,761,097
Retail/Consumer banking
5,631,289
5,631,289
264,807
264,807
5,896,096
All Others
2,975,172
424
2,975,596
3,798,098
3,798,098
6,773,694
15,532,321
2,744,814
18,277,135
420,700
6,701,971
7,122,671
25,399,806
and Quarrying
Construction
Trade
Transport, Storage
and Communication
Financial Institutions
Services
Total
135
Total
Non- Funded
AED000
Other OffBalance Sheet

Exposures
AED000
Hedge
Instruments
AED000
Commitments
AED000
Total Funded
Total
AED000
Financing
Securities
Total NonFunded
AED000
Financings
Other OffBalance Sheet

Exposures
AED000
AED000
AED000
AED000
AED000
AED000
AED000
AED000
869,732
869,732
1,733,183
1,733,182
3 months to one year
3,819,517
90,281
3,909,798
420,700
1,425,884
1,846,584
One to ve years
7,097,597
2,654,533
9,752,130
3,542,904
3,542,904
Over ve years
3,745,475
3,745,475
15,532,321
2,744,814
18,277,135
420,700
Residual
Contractual
Maturity
Hedge
Instruments
AED000
Industry
Segment
Commitment
Total Funded
FInancing
Securities
Gross Credit Exposures by Residual Contractual Maturity
Financings
Gross Credit Exposure by Industry Segment
Less than 3 months
Total
6,701,971
7,122,671
136
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Impaired Financings by Industry Segment
Impaired Financings by Geographic Distribution
AED000
222
10,654
10,876
5,199
5,677
42,449
1,358
43,807
43,807
2,234
2,234
2,234
Transport, Storage and Communication
Financial Institutions
Services
Government
209,126
56,952
266,078
39,158
48,408
48,408
302,439
68,964
371,403
44,357
Crude Oil, Gas, Mining and Quarrying

Manufacturing
Electricity and Water
Construction
Trade
Retail/consumer banking
All Others
Grand Total
Total Impaired
Assets
AED000
activities
Write-backs
AED000
Agriculture, Fishing and related
Write-offs
Total Impaired
Assets
AED000
AED000
AED000
AED000
(3,404)
323,642
South America
Caribbean
Europe
Australia
Others
(3,404)
223,516
302,439
68,964
371,403
44,357
182,136
323,642
48,408
323,642
182,136*
(3,404)
General
Write-backs
AED000
Specic
Write-offs
AED000
Adjustments
Total
General
AED000
Provisions
90 days
and above
Specic
AED000
Industry Segment
Overdue
Less Than
90 days
Total
Adjustments
90 days
and above
Provisions
Less Than
90 days
Overdue
AED000
AED000
AED000
AED000
AED000
302,439
68,964
371,403
44,357
182,136
GCC (excluding UAE)
Arab League (excluding GCC)
Asia
Africa
North America
Geographic Region
Grand Total
(3,404)
Note*: General Provision is calculated on the Portfolio basis.
137
138
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Add:
55,632
Charge for the year

Specic provisions
28,616
General provisions
145,649
(3,404)
Asset Classes
Add:
Write-off of impaired nancings to income statement
Less:
Recovery of nancings loss provisions
Less:
Recovery of nancings previously written-off
Claims on sovereigns
Less:
Write-back of provisions for nancings
Claims on non-central Government

public sector entities (PSEs)
Adjustments of nancings loss provisions

Closing Balance of Provisions for Impaired Financings
226,493
Claims on multi-lateral
development banks
Claims on banks
Claims on securities rms
Claims on corporates
Claims included in the regulatory
retail portfolio
Claims secured by residential property
Claims secured by commercial
real estate
Past due nancings
Higher-risk categories
Other assets
Claims on securitised assets
On Balance
Sheet
Off Balance
Sheet
Risk Weighted
Assets
Opening Balance of Provisions for Impaired Financings
AED000
After CRM
Description
CRM
Exposure
Before CRM
Net Exposure
After Credit
Conversion
Factors (CCF)
Financings Portfolio as per Standardised Approach
Gross
Outstanding
Reconciliation of Changes in Provision for Impaired Financings
AED000
AED000
AED000
AED000
AED000
AED000
3,083,227
3,083,227
3,083,227
70,335
3,510,838
3,510,838
3,510,838
791,116
5,494,396
4,000
5,498,396
5,498,396
1,370,381
6,922,638
3,295,421
10,218,059
373,173
9,844,886
9,302,197
4,020,569
4,020,569
4,020,569
3,226,386
1,569,691
1,569,691
1,569,691
876,214
69,540
25,183
25,183
25,183
1,046,388
1,046,388
1,046,388
752,918
3,299,421
28,972,351
373,173
28,599,178
16,414,730
Credit hedge instruments

(banks selling protection)
Total claims
139
Credit Risk Mitigation (CRM)
25,717,287
140
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nancial information

Financings Portfolio as per Standardised Approach
Credit Risk Mitigation: Disclosure for Standardised Approach
Rwa Post CRM

AED000
Claims on sovereigns
739,326
3,083,227
70,335
3,037,325
473,513
3,510,838
791,116
entities (PSEs)
-
4,584,837
913,559
5,498,396
1,370,381
2,898,218
7,319,841
10,218,059
373,173
9,302,197
4,020,569
4,020,569
3,226,386
1,569,691
1,569,691
876,214
Past due nancings
25,183
25,183
25,183
Higher-risk categories
Other assets
1,046,388
1,046,388
752,918
12,864,281
16,108,070
28,972,351
373,173
16,414,730
development banks
Claims on banks
Claims on securities rms
Claims on corporates
Claims included in the
regulatory retail portfolio
Risk Weighted Assets
AED000
AED000
28,972,351
16,787,913
Less:
Exposure covered by on-balance sheet netting
Less:
Exposures covered by Eligible Financial Collateral
373,173
373,173
Exposures covered by Guarantees (not deducted)
2,464,913
2,464,913
28,599,178
16,414,730
Less:
Exposures covered by Credit Hedge Instruments
Total Capital Requirement for Market Risk Under Standardised Approach
Market Risk
Amount
Prot Rate Risk
Equity Position Risk

Foreign Exchange Risk
Commodity Risk
Total Capital Requirement
Claims secured by
residential property
Claims secured by
commercial real estate
Claims on
securitised assets
Credit hedge instruments
(banks selling protection)
141
Exposures
Claims on multi-lateral
Total claims
Gross Exposure prior to Credit Risk Mitigation
Net Exposures after Credit Risk Mitigation
2,343,901
Claims on non-central
Government public sector
Quantitative Disclosures
Rwa Post CRM
Post CRM
AED000
Post CRM
Total
AED000
Total
Unrated
AED000
Rated
Rated
AED000
Asset Class
Unrated
Exposures Subject
To Deduction
Gross Credit Exposures
43,693
6,978
50,671
142
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Equity Position
1.
4.
Capital Requirements by Equity Groupings:
Quantitative Details Of Equity Position
Amount
Grouping
Type
Current Year
Previous Year
Publicly Traded
Privately Held
Publicly Traded
Privately Held
AED000
AED000
AED000
AED000
30,052
5,739
Collective investment schemes
Any other investment
30,052
5,739
Equities
Total
AED000
Strategic investments
Available-for-sale (Fair Value Through statement of other Comprehensive Income)
17,876
Held for Trading (Fair Value Through Statement of Income)
12,176
Total capital requirement
30,052
Profit Rate Risk in The Banking Book (PRRBB)

2.
Realised, Unrealised and Latent Revaluation Gains (Losses) During The Year 2010
Shift in Yield Curves
Gains (Losses)
Realised gains (losses) from sales and liquidations
*
Unrealised gains (losses) recognised in the balance sheet but not through prot and loss account
** Latent revaluation gains (losses) for investment recorded at cost but not recognised in
balance sheet or prot and loss account
Total
3.
Regulatory Capital
Amount
+200 basis point
(68,273)
568,942
AED000
-200 basis point
24,692
581
(6,227)
(5,646)
Items in (2) Above Included in Tier 1/Tier 2 Capital:
Tier Capital
Amount
AED000
Amount included in Tier I capital
581
Amount included in Tier II capital
Total
143
Net Prot Income
581
144
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branch network
Branch network - UAE
145
Branch network - Kazakhstan
Location
Branch Name
Branch Manager
Location
Branch Name
Branch Manager
Abu Dhabi
Corniche
Ahmed Al Qubaisi
Astana
Saraishik street
Shamil Bibekov
Abu Dhabi
Mall Branch
Yaaqoub Abdulla Ali
Almaty
Al Farabi Avenue
Timur Alim
Abu Dhabi
Hamadan
Faisal Mohamad Al Jaberi
Abu Dhabi
Al Qarm
Nader Al Maosawi
Abu Dhabi
Muroor
Afaf Al Kendi
Abu Dhabi
Khalifa A
Faisal Mohamad Al Jaberi
Abu Dhabi
Airport road
Amna Hassan
Abu Dhabi
Dalma Mall
Abu Dhabi
Al Hilal Takaful network

Location
Branch Name
Branch Manager
Mohammed Al A
Abu Dhabi
Head ofce
Samer Masoud
Al Falah
Mohamed Abdullah Al Dosari
Abu Dhabi
Mall Branch
Ahmed Nayef
Al Ain
Al Ain
Fatima Jabri
Abu Dhabi
Abu Dhabi Trafc Department
Jalal Al Farawi
Dubai
Al Twar
Easa Al Shamsi
Abu Dhabi
Abu Dhabi Immigration Dept.
Suliman Osman
Dubai
Bur Dubai
Hassan Al Khalsan
Dubai
Garhoud
Fahad Al Kaabi
Dubai
Garhoud
Marwan Ismail Al Zarouni
Dubai
Bel Rmeitha
Iman Mohamed Bin Kally
Dubai
Knowledge Village
Adnan Al Shehhi
Dubai
Muraqqabat
Ayoob Al Hashimi
Dubai
Umm Suqaim
Khaled Al Awadhi
RAK
Ras Al Khaima
Alya Al Shamsi
Sharjah
Qassimiah
Sara Al Kazem
146
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Alhilal Bank Finanacvial Review

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Independent Auditors Report

The Late His Highness Sheikh Zayed Bin Sultan Al Nahyan

Al Hilal Bank Annual Report 2010

Al Hilal Bank Annual Report 2010

His Highness Sheikh Khalifa Bin Zayed Bin Sultan Al Nahyan

His Highness Sheikh Mohamed Bin Zayed Bin Sultan Al Nahyan

Al Hilal Bank Annual Report 2010

Al Hilal Bank Annual Report 2010

Its all about

On behalf of the Board of Directors, I am pleased to present the Annual

Our Wholesale Banking Group continued to play a major role in nancing

critical projects both Government and non-Government, earning an

banking sector remained subdued.

by introducing trade services and cash management solutions, both of

which were strongly received by the market.

challenging, the Bank has delivered a robust nancial performance

with managing the Banks investments and tailoring investment

years of operation. Revenue growth during 2010 is attributable to strong

growth of core businesses. At the same time, the Bank continued to

our customers with a wide range of Sharia compliant investment

realise savings from active management of cost of funds.

solutions tailored to their risk appetite.

Key nancial highlights of 2010:

Following on from an impressive performance in 2010, Al Hilal Bank can,

Total revenues of AED 1.38 billion

The Bank has delivered a

Al Hilal Bank Annual Report 2010

Al Hilal Bank Annual Report 2010

chief executive officers

Robustness, innovation and

by assets at year end.

Bank commenced operations in the least benign conditions.

This growth was paired with a growth of collective provisions to reach

Al Hilal Bank started with a dream to build a very different bank.

The infancy years of the Bank coincided with economic shrinkage,

A bank thats dedicated to making day-to-day banking simpler and

increased governmental and corporate restructuring and the collapse of

fresher, whilst staying true to the principles of Islamic Sharia.

the real estate sector.

A bank where its all about you.

Furthermore, the departure of foreign deposits, speculation over the

I was privileged to be tasked with orchestrating the journey to

resulted in a liquidity shortfall and a tightening of credit.

outlook of the UAE Dirham coupled with disruption of capital markets

realise this dream.

The Distinctions and awards such as Best Customer Experience,

Despite the adversity, the Bank delivered strong performance leaping

Our stepping stone was the articulation of a strategy to penetrate a

into protability in August of 2009 and reporting an annual net prot

are a testimony to the Banks success in realising its vision of becoming

competitive market leveraging on our Islamic identity, shareholder

Total income increased to reach AED 1.38 billion, a 107% increase

strength and a distinctive business model.

compared to 2009, while depositors share of prots increased to reach

model which exploits gaps in surveyed offerings as well as the

engineering of smart processes coupled with a robust framework.

year amounted to AED 133.5 million while Return on Equity (ROE)

In parallel, we commenced the formulation of the Banks governance

framework. Board and management level committees were formed,

Robustness, innovation and an increasingly powerful brand enabled

policies were introduced and procedures were enacted to cement the

the Bank to create genuine partnerships with its customers and to