According to the credit policy, the frequency of revaluing the collateral depends on the type of collateral. Specifically, daily revaluation is required for share collateral and also where the collateral is in a different currency than the exposure. This process is handled by a department independent of the business groups to ensure objectivity. Acceptable collateral includes cash, bank guarantees, shares, real estate etc. Market risk may arise from open positions in profit rate, currency and equity products, all of which are exposed to general and specific market movements and changes in the level of volatility of market or prices such as profit rates, credit spreads, foreign exchange rates and equity prices.
The Risk Management Group is responsible for development of detailed Market Risk Management policies and for the periodic review of their implementation, while it is the responsibility of Investment Banking Group and Treasury to proactively manage and control market risk generated from various market positions in investments, financial instruments and over-the-counter deals. The Bank is required to comply with the guidelines and regulations of the Central Bank of Kuwait, in addition to its internal policies and procedures.
Liquidity risk management is one of the vital components of the management of day-to-day banking business. The Bank continuously monitors liquidity risk by measuring the maturity profile of its assets and liabilities on a daily basis and the liquidity gaps position is reviewed by Asset Liability Management Committee ALCO on a monthly basis. Furthermore, the liquidity coverage ratio, Net Stable Funding Ratio, liquidity reserve position and the ratio of financing facilities to eligible deposits are monitored on a daily basis.
The Bank has in place a Contingency Funding Plan CFP which will be used as a blueprint of the action plan to be followed during any liquidity contingencies. It identifies trigger events that could potentially cause a liquidity crisis, details the actions to be taken to manage the crisis, and also lays down the administrative structure and responsibilities to ensure accountability in handling an emergency.
It aims to ensure that a bank has adequate unencumbered High Quality Liquid Assets HQLA that can be converted into cash easily and immediately to meet its liquidity needs for a 30 calendar day liquidity stress scenario. LCR has been defined as: Stock of high quality liquid assets HQLAs Total net cash outflows over the next 30 calendar days Liquid assets comprise of high quality assets that can be readily sold or used as collateral to obtain funds in a range of stress scenarios.
There are two categories of assets included in the stock of HQLAs, viz. Level 1 and Level 2 assets. The total net cash outflows is the total expected cash outflows minus total expected cash inflows for the upcoming 30 calendar days. Total expected cash outflows are calculated by multiplying the outstanding balances of various categories or types of liabilities and off balance sheet commitments by the rates at which they are expected to run off or be drawn down.
The Treasury of the Bank manages liquidity by constant monitoring of future cash flows and liquidity needs. This incorporates an assessment of expected cash flows and the availability of high quality assets which could be used to secure additional funding if required. The bank also conducts stress tests to assess impact of stress on liquidity under various scenarios.
Furthermore the bank has established a Contingency Funding Plan to manage liquidity during stressed conditions. Average cash outflows over a 30 day horizon amounted to KD Management of liquidity is centrally managed through the Treasury within the bank. The Bank has sufficient liquidity sources for outflows and management is of the view that we are adequately liquid as required by LCR regulations.
The Bank conducts stress testing and scenario analyses regularly to manage profit rate risk inherent in the balance sheet. Earnings-at-Risk analysis is conducted monthly, to determine the impact of changes in the cost of funds and yield on assets on profitability. These investments are held for the purpose of generating income through dividends as well as capital gains that may arise due to improving valuations.
For equity investments quoted in organized financial markets, fair value is determined by reference to quoted bid prices. Fair values of unquoted equity investments are determined by reference to the market value of a similar investment, or the expected discounted cash flows, or other appropriate valuation models. Equity investments whose fair value cannot be estimated accurately are carried at cost less impairment if any.
During the year, the Bank has recorded realized gain from sale of available-for-sale equity investments amounting to KD Nil thousand in the income statement and unrealized loss from changing in fair value of the quoted securities amounting to KD 81 thousand 31 December KD 59 thousand in the other comprehensive income. The minimum required capital for equity investment as at 31 December was KD 1, thousand 31 December KD 1, thousand.
When controls fail to perform, it can have legal or regulatory implications, or lead to financial or reputational loss. Operational risk is managed under the Risk Management Group. The Bank pays special attention to operational risks that may arise from non-compliance to Islamic Sharia principles and any possible failure in fiduciary responsibilities. The Bank receives deposits from customers as part of unrestricted Wakala investment accounts either for limited or renewable periods.
Funds are invested in financing and investing activities that will achieve a targeted return. The Bank also receives funds from depositors through unrestricted Mudarabah Agreements, where depositors grant the bank Mudarib the right to invest these funds against a share in profit. The Mudarib would bear the loss in case of negligence or violation of any of the terms and conditions of the Mudaraba. Pools of Assets in which the funds are invested is determined along with the relevant costs and revenues costs or expenses included are those that are only directly related to general pool assets, meanwhile indirect expenses as General and Administrative expenses and staff cost are not charged , based on which the net profit is determined and shared between the bank and the depositors proportionately based on each contribution to the pools and the specificity of the contractual agreements with the depositors.
Profit percentage distributed to the profit-sharing investment accounts were as follows: SN Account Category 1 Saving accounts Q 1. Sami ALRusheid , and includes as members Mr. Musaab Al Fulaij , and Mr. Abdulaziz Abdullah Al Jaber. The Committee has hired Mercer consultancy firm as an external advisor to prepare a long-term and short-term incentive scheme , the performance management framework, new salary structure , remuneration policy for the senior management and all the employees and review the incentive scheme for the employees.
The variable deferred remunerations are subject to the following criteria: Remunerations are subject to the clawback arrangements in case of breaches, misrepresentation or exceeding risk thresholds previously approved. Compensation according to staff various categories at Warba Bank: 1. Capital Adequacy Disclosures 3. For Material Risk Takers, included fixed wages basic salaries, benefits and allowances as well as end of service benefits. This category includes senior management, department heads with financial authorities who delegate their responsibilities to their departmental staff but bear the ultimate responsibility and accountability for the risk taken.
Warba Bank sets a compensation Policy that provides fair, equitable and competitive compensation for its employees; encouraging and rewarding high performance; attracting individuals of the right caliber, qualifications and experience for the positions in the Bank; and providing flexibility to adapt to business market changes and requirements in a structured and standardized manner.
Remunerations paid to staff categories at the Bank: Senior Management: This categoryincludes the CEO, deputies, assistants and key executive managers whose appointment is subject to the approval of regulatory and supervisory bodies. The number of employees in this category is 15 staff member and their remunerations include basic salaries, benefits, allowances and end of service benefits.
The Financial Control and Risk employees: The number of staff in this category is15 employees. The remunerations paid to this category include basic salaries, benefits, allowances and end of service benefits. Risk takers: Total compensations paid to this category includebasic salaries, benefits, allowances and end of service benefits.
The Number of employees is 11 staff members. This category includes Top Management, Groups and Departments Heads, with financial authorities who delegate responsibilities to their staff members but still have the ultimate responsibility and accountability for the risks.
Warba Bank has a compensation policy that provides fair, equitable and competitive compensation for its employees; it is based on encouraging and rewarding high performance; attracting individuals of the right caliber qualifications and experience to work for the Bank. The Board of Directors provides effective oversight on remuneration systems and schemes and reviews salaries structures to ensure sound implementation in close connectionwiththe BNRC whose duties include setting the Remuneration Policy and submitting it for Board approval, conducting periodic review of the policy and providing recommendations thereon so as to ensure proper remuneration payment.
Risk Management Group, Internal Audit Department and Compliance Department are independent functions that report to their ad -hoc committees of the Board which undertake the assessment of these functions. The Remuneration Policy is in line with prudent risk taking.
Capital Adequacy Disclosures Job Assessment: 1. Job evaluation is used to determine the fair financial value of individual functions within the Bank. The elements to be taken into consideration in the job evaluation process, using the IPE methodology, are based on the following factors: - Impact on the organization - Communication internal and external - Knowledge - Innovation - Risk Environments 3.
For each of these elements, the work is evaluated on a separate scale. The Total Rewards Unit is responsible for job evaluation based on accurate job descriptions No employees were awarded remunerations on signing employment contracts sign-on awards during 31 December One employee awarded a remuneration of KD 10 thousand on signing employment contract.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December , and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Intemational Financial Reporting Standards IFRSs , as adopted for use by the State of Kuwait.
We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgtnent, were ofmost significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in fottning our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description ofhow our audit addressed the matter is provided in that context. Impairment of financing receivables Financing receivables are accounted for at amortised cost less any impairment charges.
Impairment of financing receivables is a highly subjective area due to the level of judgrnent applied by management in determining provisions and the management is required to identify those financing receivables that are deteriorating, make an objective assessment for evidence of impainnent, the value of collateral and its assessment and future cash flows expected from financing receivables..
Due to significance of financing receivables and the related estimation uncertainty, this is considered a key audit matter. Our audit procedures included assessment of controls over the granting, booking and monitoring processes of financing receivables and the impairment provisioning process, to confirm the operating effectiveness of the key controls in place which identify the impaired financing receivables and the required provisions against them.
In addition to testing the key controls, we selected samples of financing receivables outstanding as at the reporting date and assessed the criteria for determining whether an impairment event had occurred and therefore, whether there was a requirement to calculate an impairment provision. For the samples selected, we also verified whether impainnent events identified by us had also been identified by management.
For the unimpaired financing receivables, we assessed whether any indicators existed of default risk. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit ofthe consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statanents or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted for use by the State of Kuwait, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAS will always detect a material misstatement when it exists. As part of an audit in accordance with ISAs, we exercise professional judgrnent and maintain professional scepticism throughout the audit. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
However, future events or conditions may cause the Group to cease to continue as a going concern. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal confrol that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independelce, and to comnunicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit ofthe consolidated financial statements of the current period and are therefore the key audit matters. We further report that, during the course ofour audit, we have not become aware of any violations of the provisions of Law No.
Al Ghanem Chief Executive Officer The accompanying notes 1 to 21 form an integral part of these consolidated financial statements. Box , Safat , State of Kuwait. The Annual General Assembly of the shareholders has the power to amend these consolidated financial statements after issuance. Basis of preparation The consolidated financial statements are prepared under the historical cost convention modified to include the measurement at fair value of available-for-sale investments.
The nature and the impact of each amendment is described below: Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes such as foreign exchange gains or losses. Notes to the Consolidated Financial Statements as at and for the year ended 31 December 2.
The Group intends to adopt those standards when they become effective. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January , with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.
The Group will avail of the exemption allowing it not to restate comparative information for prior periods. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 will be recognised in opening retained earnings and reserves as at 1 January This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group, until the Group presents its first consolidated financial statements that include the date of initial application.
The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale. Consequently, all fair value gains and losses will be reported in other comprehensive income, no impairment losses will be recognised in consolidated income statement and no gains or losses will be classified to consolidated income statement on disposal.
The Group analysed the contractual cash flow characteristics of those instruments and concluded that they meet the criteria for amortised cost measurement under IFRS 9. Therefore, reclassification for these instruments is not required. The derecognition rules have been transferred from IAS 39 Financial Instruments: Recognition and Measurement and have not been changed.
This will require considerable judgement about how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis. Under IFRS 9, the impairment requirements apply to financial assets measured at amortised cost, debt instruments classified as fair value through other comprehensive income and certain financing facilities and financial guarantee contracts.
The Bank will determine the potential impact of the expected provision for credit losses in accordance with IFRS 9 during the period ended 31 March The Bank will also comply with instructions of Central Bank of Kuwait in this regard. IFRS 15 defines principles for recognising revenue and will be applicable to all contracts with customers. However, interest and fee income integral to financial instruments and leases will continue to fall outside the scope of IFRS 15 and will be regulated by the other applicable standards e.
Revenue under IFRS 15 will need to be recognised as goods and services are transferred, to the extent that the transferor anticipates entitlement to goods and services. The standard will also specify a comprehensive set of disclosure requirements regarding the nature, extent and timing as well as any uncertainty of revenue and corresponding cash flows with customers.
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS At the commencement date of a lease, a lessee will recognise a liability to make lease payments i.
Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events e. The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 is effective for annual periods beginning on or after 1 January Early application is permitted, but not before an entity applies IFRS A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach.
In , the Group will continue to assess the potential effect of IFRS 16 on its consolidated financial statements. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of a wholly owned special purpose vehicle begins when the Group obtains control over the wholly owned special purpose vehicle and ceases when the Group loses control of the wholly owned special purpose vehicle.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a wholly owned special purpose vehicle, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a wholly owned special purpose vehicle, it derecognises the related assets, liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value at the date of loss of control. The principal operating wholly owned special purpose vehicles of the Group are as follows: Name of company Abyat Real Estate Company L.
Thamer Al Omania Company L. Management determines the appropriate classification of each instrument at the time of acquisition. Recognition A financial asset or a financial liability is recognised when the Group becomes a party to the contractual provisions of the instrument.
All regular way purchase and sale of financial assets are recognised using settlement date accounting. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulations or conventions in the market place. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group would be required to pay.
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired. Where an existing financial liability is replaced by another from the same financer on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the consolidated statement of income.
Measurement All financial assets or financial liabilities are initially measured at fair value. Transaction costs are added to the cost of all financial instruments except for financial assets classified as investments at fair value through profit or loss. Transaction costs on financial assets classified as investments at fair value through profit or loss are recognised in the consolidated statement of income. Category of financial instruments Placement with banks and financing receivables These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Placement with banks and financing receivables are stated in the consolidated statement of financial position at amortised cost using effective profit method, less impairment. The amount due is settled either by installments or on a deferred payment basis. Wakala is an agreement whereby the Group provides a sum of money to a customer under an agency agreement, who invests it according to specific conditions in return for a fee.
The customer is obliged to return the amount in case of default, negligence or violation of any terms and conditions of the Wakala. Ijara could end by transferring the ownership of the asset to the lessee. Available-for-sale investments Available-for-sale investments include equity investments and debt securities i.
Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial measurement, available-for-sale investments are subsequently measured at fair value with unrealized gains or losses recognised in other comprehensive income and included in the fair value reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in the consolidated statement of income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the fair value reserve to the consolidated statement of income.
Profit earned, whilst holding the available-for-sale investments, is reported as investment income using the effective profit rate method. The Group evaluates whether the ability and intention to sell its available-for-sale financial assets in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets, the Group may elect to reclassify these financial assets if the management has the ability and intention to hold the assets for foreseeable future or until maturity.
Notes to the Consolidated Financial Statements as at and for the year ended 31 December Financial liabilities other than at fair value through profit or loss These financial liabilities are subsequently measured at amortised cost using the effective profit method.
Amortised cost is calculated by taking into account any discount or premium on the issue and costs that are an integral part of the effective profit rate. Financial guarantees In the ordinary course of business, the Group gives financial guarantees, consisting of letters of credit, guarantees and acceptances.
Financial guarantees are initially recognised in the consolidated financial statements at fair value, being the premium received, in other liabilities. The guarantee liability is subsequently measured as the higher of the amount initially recognised less amortisation or the best estimate of the expenditure required to settle the present obligation at the reporting date. Offsetting Financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to set off the recognised amounts and the Group intends to settle on a net basis.
Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 - Quoted unadjusted prices in active markets for identical assets or liabilities Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For financial instruments quoted in an active market, fair value is determined by reference to quoted market prices.
Mid prices are used for assets. Notes to the Consolidated Financial Statements as at and for the year ended 31 December For financial instruments carried at amortised cost, the fair value is estimated by discounting future cash flows at the current market rate of return for similar financial instruments. For investments in instruments, where a reasonable estimate of fair value cannot be determined, the investment is carried at cost less impairment. For assets and liabilities that are recognised in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation based on the lowest level input that is significant to the fair value measurement as a whole at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. Impairment of financial assets The Group assesses at each reporting date whether there is any objective evidence that an individually significant financial asset or a group of financial assets is impaired.
A financial asset or a group of financial assets are impaired if and only if, there is objective evidence of impairment as a result of one or more loss events that has occurred after the initial recognition of the financial asset and that the loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets.
For the purpose of assessing impairment, the financial assets are grouped at the lowest levels for which there are separately identifiable cash flows. For financing receivables, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant.
If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
The carrying amount of the asset is reduced by the amount of impairment and the amount of impairment loss is recognised in the consolidated statement of income. Financial guarantees and letter of credit are assessed and provisions are made in a similar manner as for financing receivables. In addition, in accordance with CBK instructions, a minimum general provision on all financing facilities net of certain categories of collateral, to which CBK instructions are applicable and not subject to specific provision, is made.
For available-for-sale equity investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
Where there is evidence of impairment, the impairment loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the consolidated statement of income is removed from fair value reserve and recognised in the consolidated statement of income. Impairment losses on equity investments are not reversed through the consolidated statement of income; increases in their fair value after impairment are recognised directly in other comprehensive income.
Notes to the Consolidated Financial Statements as at and for the year ended 31 December Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount.
Investments in joint venture A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Under the equity method, the investment in joint venture is initially recognised at cost. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.
In addition, when there has been a change recognised directly in the equity of the investee, the Group recognises its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in joint venture is impaired. Upon loss of significant influence over the joint control over the joint venture, the Group measures and recognises any retained investment at its fair value.
Any difference between the carrying amount of the joint venture upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in consolidated statement of income. Investment properties Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day to day servicing of an investment property.
Subsequent to initial recognition, investment properties are stated at depreciated cost less impairment. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the consolidated statement of income in the year of derecognition.
Notes to the Consolidated Financial Statements as at and for the year ended 31 December Depreciation is provided on a straight-line basis over the estimated useful lives of properties other than freehold land which is deemed to have an indefinite life. Depreciation on the building is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives that range from 20 to 40 years.
Property and equipment Property and equipment is stated at historical cost less accumulated depreciation and any impairment in value. Historical cost includes expenditure that is directly attributable to the acquisition of the items. All other repairs and maintenance are charged to the consolidated statement of income during the financial year in which they are incurred. Land is not depreciated. Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired.
Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.
In determining fair value less costs to sell an appropriate valuation model is used. These calculations are corroborated by available fair value indicators. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased.
If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the consolidated statement of income. End of service indemnity The Group provides end to service benefits to its employees.
The expected costs of these benefits are accrued over the period of employment. Notes to the Consolidated Financial Statements as at and for the year ended 31 December Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized: i.
Placement and financing income is income from Wakala, Murabaha and Ijara investments and is determined by using the effective profit method. The effective profit method is a method of calculating the amortised cost of a financial asset and of allocating the financing income over the relevant period. Rental income from investment properties is recognized on an accrual basis.
Dividend income is recognized when the right to receive payment is established. Fee and commission income is recognized at the time the related services are provided. Foreign currency Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded at the spot rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date. Any resultant gains or losses are recognised in the consolidated statement of income. In case of non-monetary assets whose change in fair values are recognised directly in other comprehensive income, foreign exchange differences are recognised directly in other comprehensive income and for non-monetary assets whose change in fair value are recognised directly in the consolidated statement of income, foreign exchange differences are recognised in the consolidated statement of income.
Exchange differences arising on translation are taken directly to other comprehensive income. On disposal of a foreign wholly owned special purpose vehicle, the deferred cumulative amount recognised in other comprehensive income relating to that particular wholly owned special purpose vehicle is recognised in the consolidated statement of income.
Any goodwill or fair value adjustments to the carrying amounts of assets and liabilities arising on acquisition are treated as assets and liabilities of the respective wholly owned special purpose vehicles and translated at the rate of exchange ruling on the reporting date.
As per the law, cash dividends from listed companies which are subjected to NLST has to be deducted from the profit for the year. Segment information A segment is a distinguishable component of the Group that engages in business activities from which it earns revenue and incurs costs. The operating segments are used by the management of the Group to allocate resources and assess performance. Operating segments exhibiting similar economic characteristics, products and services, classes of customers where appropriate are aggregated and reported as reportable segments.
Provisions Provisions are recognised when, as a result of past events, it is probable that an outflow of economic resources will be required to settle a present, legal or constructive obligation and the amount can be reliably estimated.
Contingencies Contingent assets are not recognised in the consolidated financial statements, but are disclosed when an inflow of economic benefit is probable. Contingent liabilities are not recognised in the consolidated financial statements, but are disclosed unless the possibility of an outflow of resources embodying economic benefit is remote.
Use of estimates In accordance with the accounting principles contained in IFRS, management is required to make estimates and assumptions that may affect the carrying values of financing receivables. The basis used by management in determining the carrying values of financing receivables and the underlying risks therein are discussed below: Impairment losses on financing receivables The Group reviews its financing receivables on a regular basis to assess whether an impairment loss should be recorded in the consolidated statement of income.
In particular, considerable judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of provisions required. Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty. Fair value measurement When the fair values of financial assets and financial liabilities recorded in the consolidated statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model.
The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Any changes in these estimates as well as the use of different, but equally reasonable estimates may have an impact on their carrying amounts. Considerable judgement by management is required in the estimation of the fair value of the assets acquired and liabilities assumed as a result of business combination including intangibles and contingent liabilities.
Notes to the Consolidated Financial Statements as at and for the year ended 31 December Impairment of available-for-sale equity investments The Group treats investments available-for-sale as impaired when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. Classification of property Management decides on acquisition of a real estate property whether it should be classified as investment property or property and equipment.
Wherever necessary, financing receivables are secured by acceptable forms of collateral to mitigate the related credit risk. Management has performed a review of the financial assets to assess whether impairment has occurred in the value of these financial assets. Based on the assessment, management has recorded an impairment loss of KD thousand KD nil in the consolidated statement of income for the year in respect of available for sale investments.
The hierarchy for determining and disclosing the fair values of financial instruments by valuation techniques are presented in note Notes to the Consolidated Financial Statements as at and for the year ended 31 December 6. The joint ventures have no contingent liabilities or capital commitments as at 31 December KD nil. Notes to the Consolidated Financial Statements as at and for the year ended 31 December 7.
The fair values of the properties are based on valuations performed by accredited independent valuers, who are specialists in valuing these types of investment properties. For the purpose of measuring fair value, the income approach is used where the present value technique is employed to reflect the current market expectations about the future estimated rental value, based on per square meter per month rental rate and annual growth rate in the country in which the investment properties are located.
Fair value hierarchy disclosures for investment properties have been provided in note Non-investment deposits in the form of current accounts These deposits are not entitled to any profits nor do they bear any risk of loss as the Bank guarantees to pay the related balances on demand. Accordingly, these deposits are considered Qard Hasan from depositors to the Bank.
Investment deposits These include Mudaraba, Murabaha and Wakala deposits, which have fixed maturity as specified in the term of the contract except for investment saving accounts which are valid for an unlimited period. Notes to the Consolidated Financial Statements as at and for the year ended 31 December EQUITY Share capital The authorised, issued and paid up capital of the Bank comprises 1, million ordinary shares of fils each 1, million shares of fils each.
The share capital has been contributed in cash. No transfer has been made to the statutory reserve in the current year and prior year due to accumulated losses. Such annual transfer can be discontinued by a resolution of shareholders in the annual general assembly meeting upon recommendation by the Board of Directors.
There are no restrictions on the distribution of this reserve. No transfer has been made to the voluntary reserve in the current year and prior year due to accumulated losses. Tier 1 Sukuk is a perpetual security in respect of which there is no fixed redemption date and constitutes direct, unsecured, subordinated obligations senior only to share capital of the Bank subject to the terms and conditions of the Mudaraba Agreement. The net proceeds of Tier 1 Sukuk are invested by way of Mudaraba with the Bank as Mudareb , on an unrestricted co-mingling basis, by the Bank in its general business activities carried out through the general Mudaraba pool.
Tier 1 Sukuk bears a profit rate of 6. After that, the expected profit rate will be reset based on then prevailing 5 years U. S Mid Swap Rate plus initial margin of 4. The Bank made profit payment during the year on 13 September Such transactions were made on substantially the same terms including profit and collateral as those prevailing at the same time for comparable transactions with unrelated parties and did not involve more than a normal amount of risk.
The remuneration of Board members is subject to the approval of the Annual General Assembly. Notes to the Consolidated Financial Statements as at and for the year ended 31 December risk types like credit, market, liquidity risks and operational risk. Risk management policies are established to identify, quantify, control, mitigate, and analyze the risks faced by the Group to set appropriate risk limits and controls and to monitor risks and ensure adherence to the risk appetite limits.
Risk management policies and systems are subject to review regularly, on an ongoing basis, to reflect changes in economic environment, market conditions, products and services offered by the Group. This includes the risk of decline in the credit standing of the customer. While such decline does not imply default, it increases the probability of the customer defaulting.
Financial instruments that create credit risk include financing receivable and commitments to extend credit and investment in debt securities i. For risk management control purposes, the Group considers and consolidates all elements of credit risk exposure such as individual obligor default risk, country risk and sector risk in one measure about the riskiness of an exposure. The Risk Management Group provides independent opinion and assessment of risk for every financing and investment proposal presented to the approving authorities for decision making.
The Group manages its credit facilities portfolio with the objective of ensuring that it is well diversified and it earns a level of return commensurate with the risks it assumes, at the same time, seeks to ensure the quality of the credit portfolio. Notes to the Consolidated Financial Statements as at and for the year ended 31 December Maximum exposure to credit risk without taking account of any collateral The following table summarizes the maximum exposure to credit risk for the components of the consolidated statement of financial position, including off statement of consolidated financial position items.
The maximum exposure is shown net of impairment, before the effect of mitigation through the use of master netting and collateral agreements, where applicable. The maximum credit exposure to a single counterparty as at 31 December amounted to KD 25, thousand KD 15, thousand before taking account of collateral. These include exposures to entities with financial strength and risk factors indicative of capacity to repay all contractual obligations, and those exposures that are significantly collateralized with tangible securities.
Standard quality: All other exposures whose payment performance is fully compliant with contractual conditions and which are not impaired. The table below shows the credit quality of assets by class and grade before deducting the provision for impairment. Notes to the Consolidated Financial Statements as at and for the year ended 31 December The table below shows the credit quality of assets by class and grade before deducting the provision for impairment.
Market risk management The Risk Management Group is responsible for development of detailed Market Risk Management framework and for the periodic review of their implementation, while it is the responsibility of the Treasury function to proactively manage and control market risk generated from various market positions in investments, financial instruments and over-the-counter deals. Notes to the Consolidated Financial Statements as at and for the year ended 31 December Profit rate risk Profit rate risk arises from the changes in profit rates affecting future cash flows or the fair value of the underlying financial exposure or instrument.
Prepayment risk Prepayment risk is the risk that the Group will incur a financial loss because its customers and counterparties repay or request repayment earlier than expected, such as fixed rate financial exposures when profit rates fall. Due to the contractual terms of its Islamic products, the Group is not significantly exposed to prepayment risk.
Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Any long or short open position in any currency exposes the Group to currency risk. The tables below indicate the currencies to which the Group had significant exposure at 31 December on its non-trading monetary assets and liabilities and its forecasted cash flows. The analysis calculates the effect of a reasonably possible movement of the currency rate against the KD, with all other variables held constant, on the result and the fair value reserve due to the change in fair value of available-for-sale investments.
The Group conducts sensitivity analysis on regular intervals in order to assess the potential impact of any major change in fair value of listed equity instruments. For such investments classified as available-for-sale, a five percent increase in stock prices as at 31 December would have increased equity by KD 38 thousand 31 December KD 42 thousand. An equal change in the opposite direction would have had equal, but opposite effect to the amounts shown above, on the basis that all other variables remain constant.
Notes to the Consolidated Financial Statements as at and for the year ended 31 December d Liquidity risk Liquidity risk arises when the Group may be unable to meet its obligations associated with its financial liabilities. Liquidity risk can be caused by market disruptions, credit downgrades or market perception, which may cause certain sources of funding to dry up immediately.
To limit this risk, the Group has arranged diversified funding sources in addition to its core deposit base, manages assets with liquidity in mind, and monitors future cash flows and liquidity on a daily basis. This incorporates an assessment of expected cash flows and the availability of High Quality Liquid Assets HQLA which could be used to secure additional funding and liquidity if and when required.
The Group has in place a Contingency Funding Plan CFP to ensure required action is implemented in the event of any liquidity contingencies. Treasury co-ordinates with all business groups, details of projected cash flows required or arising from potential ensuing business opportunities.
Treasury is required to maintain a portfolio of short-term liquid assets, largely made up of short-term high-quality liquid investment securities and availability of inter-bank lines at short notice, to ensure that sufficient liquidity is maintained with the Group. Integrated Technology Holding Company ITH through its subsidiaries provides best in class IT, professional audio visual and enterprise software solutions to both public and private sector companies.
In , AAU was granted a license for a four-year undergraduate degree in aviation engineering, becoming the first university in Jordan to offer such a program. HOT Engineering and Construction Company is one of the leading multidisciplined, engineering, construction and maintenance companies in Kuwait. HOTECC caters to the oil and gas, industrial, civil infrastructure, building construction and non-destructive testing industries.
A majority of the order book is attributable to Government initiated projects. The Kuwait National Development Plan aims to position Kuwait as a global hub for the petrochemical industry and increasing direct foreign investment significantly by With this economic background, the company is well positioned to strengthen its order book as infrastructure and energy capital spending plans are implemented in the coming years. Majd Food Company was founded in and is a leading food processing and packaging company in Kuwait engaged in grinding and packaging of a wide variety of high-quality spices, grains and herbs.
My Portfolio. My Watchlists. Investment themes. Top News. Top Fundamentals. Top Technicals. Top Movers. Investment selections. Technical Rankings. Fundamental Rankings. Stock Screener Home. MarketScreener tools. Dynamic chart. Our Services. MarketScreener Portfolios. Add to my list. Alimtiaz Investment Group Co KSCP is a Kuwait-based company engaged in the direct investment, financial structuring and asset management in accordance with the provisions of the Islamic Sharia in the Gulf countries markets.
We have undertaken a full transformation of the Call Centre implementing new systems and introducing a dedicated team to handle customer interactions through all social media channels. Again, this has successfully enhanced the customer experience and ensured that our service quality is maintained at the highest levels.
In support of the growing credit card business the bank has implemented FALCON a market leading real time fraud management system. This provides our customers with the assurance and comfort that their cards are fully protected at all times. The CBG operations expansion also included a quantum and qualitative development in line with the growth in the financing portfolio; it has significantly succeeded in attracting non-cash operations compared to previous years, while maintaining acceptable risk levels that paved the way for securing revenues growth.
CBG enhanced diversification of its operations by focusing on value added business sectors such as construction, retail and development projects. Despite the relatively short years of operation of Warba Bank, being the most recent bank in the Kuwait Market, as well as the big difference in terms of size compared to its peers, CBG has been able to position itself as a strong competitor by virtue of service excellence provided by high standard of professional skilled national caliber delivering outstanding performance.
As well, in , CBG launched the financing operations for residential properties as well as industrial plots. Several notable transactions were concluded during the year for customers in Kuwait and across the region. In addition to the aforementioned transactions, Warba Bank was successful in participating in several landmark cross-border financing opportunities. These properties are geographically diversified across various states and gateway cities in the USA, namely, Dallas, Houston, Austin, Atlanta, Phoenix and Pittsburgh, and are strategically located in suburban markets that are supported by strong demographic fundamentals.
A risk budget for the Portfolio is developed periodically based on goals, time horizon and tolerance for volatility. Subsequently, the IBG frames an allocation strategy that diversifies across asset classes and geographies while monitoring total factor exposures. This allows for a better structuration of the investment process from an asset-liability management perspective and enables more efficient harvesting of risk premia. FID, which manages banking and non-banking financial institutions relationships, witnessed decent growth in its trade and cash business in Looking ahead, FID will continue to enhance business relations with local and international financial institutions on trade finance, and FI bilateral facilities.
The Bank is working on fulfilling licensing requirements for the following securities activities, namely, investment portfolio manager, collective investment scheme manager, investment advisor, subscription agent and custodian. Warba Bank is set to launch its fiduciary investment management services in mid to late Operations Group being a resilient back-end support partner has developed its function and processes supporting revenue generation and ultimate customer satisfaction.
Operations Group capabilities are properly aligned with overall business objectives and goals which has shown the significant impact on business performance, enhanced and exceeded the service level throughout the year, catered for the existing and new business products, timely executed critical transactions applying regulatory and operations controls and maintained a high level of accuracy that ultimately resulted in excellent customer service.
Operations Group has paid substantial attention towards identifying, optimizing, enhancing and automating many major processes which resulted in cost and time saving which are not limited to: automation; of exchange house transactions currency wise, retail customer clearance certificate, reconciliation process, online salary processing, LC contract generation, Bloomberg integration with core banking system and an initiative towards paperless banking.
With full commitment, ITG fostered creative and innovation use of technology giving the Bank a strategic advantage. ITG promoted effective stewardship of information assets and provided a secure, highly reliable technology infrastructure along with the high-quality customer-oriented services and support to meet the everchanging requirements of the business. ITG made significant progress in the enhancement of several business applications and systems in the year With the adoption of agile development and project management methodologies, ITG played a vital role in the development and deployment of leading digital and smart banking solutions that directly benefit customers.
With the delivery of innovation-centred initiatives in , ITG helped the Bank improve the efficiency of its operations, secure its future, and ensure both the acquisition and retention of customers. Focus continues to be on the training and upskilling of Treasury personnel. During the year, they attended numerous courses locally and regionally.
Additionally, four of the junior team members were sent on a two-week attachment in London with our business partners in order to provide them with training and exposure. Training and development will continue to be a key area of focus in as we look forward to an even better year for the Bank and the Group.
These take the form of quarterly awareness training sessions delivered by external experts. Attendance by all staff is compulsory. A Certified Audit Firm provides independent assurance that Warba Bank has complied with these requirements as promulgated in Kuwait prior to the Banks submission of these reports to the Ministry of Finance.
As part of its commitment to support the various sectors of the Kuwaiti society, the Bank took part in and sponsored numerous social activities and events in various sectors including health, sports, culture, and education, amongst many others. Committed to the virtuous Islamic principles that underline compassion and mercy, Warba Bank has been actively practicing voluntary and humanitarian works with the objective of maintaining the principle of brotherly compassion and social relationships within the community.
During the Holy Month of Ramadan, the bank carried out a number of activities including a partnership with the Food Bank to distribute meals to those fasting as well as serving prayers at the Grand Mosque during the last ten days of the Holy Month. Warba Bank is also keen on promoting the a healthy lifestyle with the aim of helping curtail the spread of obesity which has become a threat to the Kuwaiti society.
With regard to the corporate social responsibility towards its workforce, the bank organized a number of recreational events and professional skill-enhancement functions designed specifically for its staff. The events included a football championship as well as a Holy Quran memorization competition for staff children during Ramadan.
Furthermore, the bank honored its volunteers for their great efforts and invaluable work. The total assets of the Bank grew to KD 2. The Bank realized profit of KD The global economy is projected to slow moderately from 3. Commodity prices are expected to generally stabilize in , following sharp movements last year. Agricultural prices are projected to remain broadly stable in The forecast of positive GDP growth is mainly due to an increase in the oil output and higher oil prices that would result in a moderate GCC government spending, which is a major source of growth in the region.
The overall GDP growth is estimated to be at 2. Fiscal position has improved during the last two years due to higher oil prices and spending restraints. The deficit is forecasted to be narrowed to just 0. Based on an assumption of two interest rate hikes during , the banks may see average margins increase by up to seven basis points.
Infrastructure and the government spending is forecasted to grow at steady pace which may benefit the Banks and ease pressure on the core earnings. Liquidity is also expected to remain ample backed by government and related entity deposits.
The effective strategy execution enabled the Bank to leverage and further build-up its strengths, primarily in the domains of innovation-driven differentiation, high customer satisfaction, and superior product offerings with competitive pricing. To support its strategy, Warba has completely overhauled its Brand in and switched to a distinctive new identity that stands out for its employees, clients and external stakeholders.
On the efficiency front, series of initiatives will be undertaken in the domains of process optimization and digitization to support a sustainable growth of the Bank. A rigorous focus will be put forth into customer experience through a variety of initiatives for delivering a best-in-class experience for our corporate, investment and retail customers. Finally, for its people pillar, several initiatives related to HR, culture, staff engagement, employee experience and talent capitalization will be pursued by Warba to position the bank as the best employer, creating a culture with highly motivated and engaged staff.
The Bank has fully complied with these regulations in terms of designing the systems, organizational structures and functions that ensure institutional control. In addition, the Bank pays due diligence for full commitment to the implementation of the nine key pillars of the governance rules and regulations at Kuwaiti banks.
In addition, Warba Bank believes that having robust corporate governance principles safeguards the interests of all key stakeholders as well as serving as a shield against all forms of mismanagement and fraud activities and enhances the accountability and transparency at the Bank. Throughout , Warba Bank has updated all relevant governance charters, manuals, policies and procedures as part of a comprehensive review for improvements. Therefore, Warba Bank prides itself on having a robust and sound governance framework, based on regulatory instructions, that helps to apply best practices of sound governance.
These generally focus on preserving the interests of depositors, shareholders, creditors and employees. The Board of Directors also monitors the implementation of such strategies. The Board of Directors, in cooperation with the Executive Management, reviews the policies and regulatory controls on regular basis, including internal control and supervisory functions, in order to identify and tackle weaknesses and risks areas for improvements; and ensures that control and supervision functions are performed satisfactorily, have the required functional support and that they perform effectively and independently.
In its meeting dated 29 March , the Board of Directors approved the resignation of Mr. He commenced his career as a faculty member and head of Business Administration department at the Commercial Institute during the period from to , and then assumed the position of Department Director and Assistant Undersecretary in the Ministry of Awqaf and Islamic Affairs from to He gained banking experience from his career extending over 23 years at the Central Bank of Kuwait from to where he held several leading positions such as the Director of the Off-Site Supervision Department, Director of Foreign Operations Department and finally the Executive Director of Operations and Research Sector.
He has long experience in the oil sector acquired throughout his career at Kuwait National Petroleum Company from to where he held several positions such as the Board Chairman and Managing Director in the last three years of his tenure. He has been a Chairman or member of the board of directors in a number of companies operating in the oil sector such as Kuwait Oil Company, Kuwait Petroleum Corporation and Kuwait National Petroleum Company.
He began his career in Kuwait Oil Company from to , where he held several positions until he became the Executive Assistant of the Managing Director for Administration Affairs. He currently holds the position of Investment Manager at the Kuwait Investment Authority from to date. He participated in several training courses, programs and seminars in various fields. He has gained professional experience from his service over 30 years at Kuwait Investment Authority since where he held various positions including the Treasury Department Manager from to date.
He also participated in many theoretical and practical courses with leading banks and global financial institutions in areas of portfolios management, investment and capital markets. He participated as a member in the board of directors in several companies and committees such as the International Civil Company in France, the Advisory Committee of the Agricultural Portfolio at Kuwait Industrial Bank.
He has been participating as a member in the Advisory Committee of the Industry Finance Portfolio in accordance with the provisions of Islamic Sharia since This in addition to participating in many courses, training programs and seminars in various fields. He has deep experience in the oil sector gained through his career of over 35 years in Kuwait Petroleum Corporation. He has appointed Oil Minister in the Kuwaiti Government by virtue of an Amiri Decree in February and continued holding this position until He is currently a member of the board of the Supreme Council of Planning and a member of the Board of directors of Kuwait Foundation for the Advancement of Sciences.
He commenced his career in Kuwait Foreign Trading and Contracting Investment Company from to , assuming several positions, the last of which was the Deputy General Manager. The respective committees are established in line with corporate governance principles at banks and the applicable regulatory requirements. The Committee has specific delegated approval authority for Credit Financing and Investment decisions.
Abdulaziz A. Hisham A. The Committee ensures sufficiency of the resources designated for control functions. BAC evaluates the performance of the Chief Internal Auditor and his remunerations and considers the recommendation of the Executive Management regarding the appointment and termination of external auditors and determining their fees. Mohamed A. The Committee submits reports to the Board of Directors on these issues, reviews the contents to be published in the annual report in respect of corporate governance.
Basel Ahmed AlHaroun Mr. Saleem Mr. Abdulwahab A. Al Houti Mr. Hani A. Al Terkait Mr. Basel Ahmed AlHaroun was a member. Mohammed Riad Al -Mutawa Mr. Al Rezouqi Mr. The committee has engaged Mercer Management Consulting as an external consultant to update the long and short-term incentive programs, the performance management framework, the new salary structure, the remuneration policy for senior management and all Bank staff, and the commission system for staff of profit centers.
The Committee is composed of the following members: The Committee is composed of the following members; Mr. Sami Fahad AlRushaid Mr. Abdulaziz Abdullah Al Jaber Mr. Member Position 1. Abdulwahab Abdullah Al Houti Chairman 2. Ahmad Abdulaziz Al Ghannam Member 4. Abdulaziz Abdullah Al Jaber Member 5. Mohamed Riyad Al Mutawa Member 7. Mohamed Abdulredha Saleem Member 8. Musab Omar Al Fulaij Member 9. Basel Ahmad Al Haroon in the board of directors continued till the Board of Directors approval on resignation on 29 March Membership of Mr.
The Board of Directors approved the nomination of Mr. Hisham Abdulrazzaq Al Razzuqi. All the committees are chaired by Mr. The Committee approves such proposals or refers them to the Board Credit and Investment Committee as per delegated authority. The Committee is responsible for supervising all aspects of optimal balance of assets and liabilities on the short, medium and long term to ensure business growth and profitability while maintaining compliance with the regulatory and financial requirements.
In addition, the Committee is delegated to review debt write-offs and provide relevant recommendations to the Board of Directors. It also tackles and decides on all other issues which do not fall within the remit of any specific committee. The Committee ensures that procurement is carried out in proper time, at the right place and against the appropriate cost in such a manner that balances the overall corporate requirements of consumption rationalization, transparency and accountability.
It also ensures that the procurement activity is performed in accordance with the highest ethical standards of fair and equitable treatment with suppliers and vendors who provide the Bank with services and goods. He has broad and long experience for more than 30 years in banking and investment. He began his career in the oil sector from to , then moved to the financial and investment sector where he served as assistant chief financial officer in the International Investor Company in He moved to Kuwait Finance House in where he held several positions in various departments, the last of which was general manager of international banking department in and acting chief investment officer in Alghanem joined Warba Bank in as Deputy CEO for Investment and Treasury then has assumed the position of chief executive officer since to date.
He worked at a number of the top global biggest audit and consultancy firms, as well, he held an executive position in Kuwait Finance House. He joined Warba since incorporation and has contributed in setting the Bank, its infrastructure and organization. Currently, he holds the position of the Chief Financial Officer. He has more than 40 years experience in banking, academia and public administration. He has long experience extending for more than 38 years.
He has previously held senior executive positions at several leading banks where he headed the operations and technology group. He has also successfully managed the retail business of two mid—sized Kuwaiti banks in recent years. As a senior executive, Clements has developed and implemented strategies at several institutions with significant success.
He attended many key specialized training courses on IT sciences. Al Terkait has over 30 years of experience in this field acquired throughout his career, as he worked for Kuwait Institute for Scientific Research from to and Kuwait Finance House from to as Infrastructure Services manager. He has long experience for over 28 years of experience in the banking and finance industry. Then he moved to Warba Bank as manager of the Central Operations He has 13 years of experience in banking and finance.
He started his career at The International Investor in and then moved to Boubyan Bank in as senior financial analyst. Mendani has held several positions, including the position of a member of the Board of Directors of Ahli Capital Investment Co. He has 13 years of experience, starting his career in the public sector in The Policy also ensures flexibility to adapt to market changes and imperatives in a structured and standardized manner.
The compensation package salaries and remunerations includes a number of items given to the employees. The annual compensation package fixed and variable is reviewed by the Nominations and Remunerations Committee and approved by the Board of Directors. Total compensations paid to the Financial Control and Risk employees, i.
Total compensations paid to the risk takers employees i. This category includes the Top Management, Groups and Departments Heads, with financial authorities who delegate responsibilities to their staff members but still have the ultimate responsibility and accountability for the risks. This approach ensures full compliance with all legislative and regulatory requirements. Most importantly, dealing with customers in accordance with risk assessment associated with money laundering and financing of terrorism and identification of risk factors associated with customers and banking transactions.
Further, the Bank seeks to comply with the relevant international guidelines and best practices as per FATF recommendations in this regard. In order to combat money laundering and prevent financial crimes, Warba Bank ensures the effectiveness of its human resources and systems in identifying any unusual or suspicious transactions.
Also staff are given guidance and tools that enable them handle any such cases. It is noteworthy that Warba has set the required systems to mitigate the risks of money laundering and financing of terrorism. Compliance Department applies best international standards and sound practices to enhance compliance culture across the Bank, improve Compliance control over the banking systems and maintain full compliance with the instructions of the regulatory authorities.
The system of internal control can only provide reasonable but not absolute assurance against the risk of gross loss. The Board, through its Committees, reviews regularly the effectiveness of the internal control systems as assessed by the various internal control functions. The Board also ensures that these functions are properly positioned, staffed and resourced and are carrying out their responsibilities independently and effectively.
The Board also reviews the management letters issued by the external financial auditors and reviews the report on Accounting and other Records and Internal Control System issued by the external auditor ICR report. The actions taken by the Bank, for remedy of the issues raised in the report including issues from previous years, were satisfactory.
Bank warba is working with local and international companies to design specific and intensive development plans as part of our succession planning program for High Potential Kuwaiti Talents using world class measures to ensure the best preparation on a Managerial and Technical levels to assist them qualify to handle managerial and executive positions. This year, the executive management began prepping cadres and give greater opportunities for career development, whilst prioritizing job vacancies for more experienced and more capable staff to fill new vacancies.
Also, this year, the Bank exceeded the prescribed Kuwaitization percentage, reaching As well the percentage reached more than Box: As members of the Board of Directors of the Bank, you are responsible for establishing and maintaining adequate accounting and other records and internal control systems, taking into consideration the expected benefits and relative costs of establishing such systems and complying with the requirements contained in the CBK instructions mentioned in the above paragraph.
The objectives of this report is to provide reasonable, but not absolute, assurance on the extent to which the adopted procedures and systems are adequate to safeguard the assets 48 WARBA BANK K. P ANNUAL REPORT against loss from unauthorized use or disposition ; that key risks are properly monitored and evaluated; that transactions are executed in accordance with established authorization procedures and are recorded properly; and to enable you to conduct the business in a prudent manner.
Because of inherent, limitations in internal control system, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the systems to future periods is subject to the risk that management information and control procedures may become inadequate because of changes in conditions or that the degree of compliance with those procedures may deteriorate. The accounting and other records and internal control systems of the bank were established and maintained in accordance with the requirements of the Manual of General Directives issued by the CBK on 15 June and letter issued by CBK on 17 January , B.
The findings raised in the examination and assessment of the internal controls do not have a material impact on the fair presentation of the financial statements of the bank for the year ended 31 December , and C. The actions taken by the bank to address the findings referred in the report are satisfactory.
Disclosures related to Capital Adequacy Standards under Basel III are based on calculating the minimum capital required to cover credit and market risks using the Standardized Approach, and the minimum capital required to cover operational risk using the Basic Indicator Approach.
Directly issued qualifying common share capital plus related stock surplus 2. Eligible Minority Interest in Consolidated Subsidiaries 3. Retained earnings loss 4. Treasury shares 2. Dividends Declared but not incurred 3. Goodwill 4. The offer price was fils per Share par value of fils and share premium of 80 fils.
Accordingly, the authorized, issued and fully paid up share capital as at 31 December consists of 1,, shares 31 December 1,, shares at a par value of fils per share. The capital base is assessed to support the current and future growth of the business and the capital allocation is determined on the basis of financing and investments growth expectations for each business line.
The Bank is currently operating well above the minimum regulatory capital ratios, with ability to cover any eventuality and intervene at an early stage in situation of any stress. Capital Adequacy Ratios are as follows: No. Ratio Description 1. On-balance sheet exposures On-balance sheet items excluding Sharia compliant hedging contracts, but 1.
Deductions of receivables assets for cash variation margin provided in with 7. Total exposures of Sharia compliant hedging contracts sum of lines 4 to 8 Other off-balance sheet exposures Off-balance sheet exposure before any adjustment for credit conversion Adjustments for conversion to credit equivalent amounts Off-balance sheet items sum of lines 10 and 11 Capital and total exposures Tier 1 capital Total exposures sum of lines 3, 9 and 12 Leverage ratio Summary comparison of accounting assets versus leverage ratio exposure measure: Item No.
Exposures to Sharia compliant hedging contracts off-balance sheet exposures i. Market Risk Market Risk-weighted exposure during the financial year amounted to KD 3, thousand 31 December KD 3, thousand , based on the standardized approach. The minimum required capital for market risk exposures amounts to KD thousand 31 December KD thousand. The minimum required capital for operational risk exposures amounts to KD 9, thousand 31 December KD 6, thousand.
The risk appetite is reviewed and recommended by the BRC to the Board of Directors for approval and periodic updates. Through the risk appetite statements, the Board communicates to management the acceptable level of risk for the Bank, determined in a manner which meets the objectives of shareholders, depositors and regulators.
RMG aims to identify early warning signs of potential breaches to risk appetite limits; and is responsible for notifying the executive management of action required to mitigate or avoid such risks. Risk Management Systems In order to manage risks in a holistic manner and to measure risks on a consolidated basis, the Bank has a formal Risk Governance Framework, which provides detailed guidelines for a sound framework for Enterprise-wide Risk Management.
The objectives of risk management are supported by various risk policies that are reviewed and updated regularly. The risk policies, in general, cater to detailed planning for various risks based on business strategies, past performance, future expectations, economic conditions, and internal as well as external events.
The policies also require comprehensive analysis of a set of pre-determined parameters prior to introduction of new products or instruments. The Risk Management policies are established to identify, quantify, control, mitigate, and analyze the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and ensure adherence to the risk appetite limits.
Risk Management policies and systems are subject to review regularly, on an ongoing basis, to reflect changes in economic environment, market conditions, products and services offered by the Bank. Categories of Risks The following are the main risks the Bank is exposed to: 5. For risk management control purposes, the Bank considers and consolidates all elements of credit risk exposure such as individual obligor default risk, country risk and sector risk in one measure about riskiness of an exposure, based on models and inter-play of matrices.
Risk Management Group provides independent opinion and assessment of risk for every financing and investment that is proposed and presented to the approving authorities for decision making. According to the credit policy, the frequency of revaluing the collateral depends on the type of collateral.
Specifically, daily revaluation is required for share collateral and also where the collateral is in a different currency than the exposure. This process is handled by a department independent of the business groups to ensure objectivity. Acceptable collateral includes cash, bank guarantees, shares, real estate etc.
Market risk may arise from open positions in profit rate, currency and equity products, all of which are exposed to general and specific market movements and changes in the level of volatility of market or prices such as profit rates, credit spreads, foreign exchange rates and equity prices.
The Risk Management Group is responsible for development of detailed Market Risk Management policies and for the periodic review of their implementation, while it is the responsibility of Investment Banking Group and Treasury to proactively manage and control market risk generated from various market positions in investments, financial instruments and over-the-counter deals.
The market risk framework comprises of the following elements: Limits for all market risk parameters and regular limits monitoring to ensure that Bank does not exceed aggregate risk and concentration parameters set by the CBK limits and internal limits. Mark-to-market valuation based on independently published market data, and continuous review of all open positions.
The Bank is required to comply with the guidelines and regulations of the Central Bank of Kuwait, in addition to its internal policies and procedures. Liquidity risk management is one of the vital components of the management of day-to-day banking business. The Bank continuously monitors liquidity risk by measuring the maturity profile of its assets and liabilities on a daily basis and the liquidity gaps position is reviewed by Asset Liability Management Committee ALCO on a monthly basis.
Furthermore, the Liquidity Coverage Ratio, Net Stable Funding Ratio, liquidity reserve position and the ratio of financing facilities to eligible deposits are monitored on a daily basis. The Bank has in place a Contingency Funding Plan CFP which will be used as a blueprint of the action plan to be followed during any liquidity contingencies.
It identifies trigger events that could potentially cause a liquidity crisis, details the actions to be taken to manage the crisis, and also lays down the administrative structure and responsibilities to ensure accountability in handling an emergency. It aims to ensure that a bank has adequate unencumbered High Quality Liquid Assets HQLA that can be converted into cash easily and immediately to meet its liquidity needs for a 30 calendar day liquidity stress scenario.
LCR has been defined as Stock of high quality liquid assets HQLAs Total net cash outflows over the next 30 calendar days Liquid assets comprise of high quality assets that can be readily sold or used as collateral to obtain funds in a range of stress scenarios. There are two categories of assets included in the stock of HQLAs, viz. Level 1 and Level 2 assets.
The total net cash outflows is the total expected cash outflows minus total expected cash inflows for the upcoming 30 calendar days. Total expected cash outflows are calculated by multiplying the outstanding balances of various categories or types of liabilities and off balance sheet commitments by the rates at which they are expected to run off or be drawn down. The Treasury of the Bank manages liquidity by constant monitoring of future cash flows and liquidity needs.
This incorporates an assessment of expected cash flows and the availability of high quality assets which could be used to secure additional funding if required. The bank also conducts stress tests to assess impact of stress on liquidity under various scenarios. Furthermore the bank has established a Contingency Funding Plan to manage liquidity during stressed conditions.
Average cash outflows over a day horizon amounted to KD Management of liquidity is centrally managed through the Treasury within the bank. The Bank has sufficient liquidity sources for outflows and management is of the view that we are adequately liquid as required by LCR regulations. The objective is to reduce maturity mismatches between the asset and liability items on the balance sheet and thereby reduce funding risk.
Assets that are more liquid and more readily available to act as a source of extended liquidity in the stressed environment identified above receive lower RSF factors and require less stable funding than assets considered less liquid in such circumstances and, therefore, require more stable funding. In ensuring this the Bank has focused on increasing its funding from long term sources.
P 81 Sr. P Unweighted Values i. The Bank conducts stress testing and scenario analyses regularly to manage profit rate risk inherent in the balance sheet. Earnings-at-Risk analysis is conducted monthly, to determine the impact of changes in the cost of funds and yield on assets on profitability. During the year, the Bank has recorded realized gain from sale of equity investments amounting to KD Nil thousand in the income statement and unrealized loss from change in fair value of the quoted securities amounting to KD thousand 31 December KD 81 thousand in the other comprehensive income.
The minimum required capital for equity investment as at 31 December was KD 3, thousand 31 December KD 1, thousand. When controls fail to perform, it can have legal or regulatory implications, or lead to financial or reputational loss. Operational risk is managed under the Risk Management Group.
The Bank pays special attention to operational risks that may arise from noncompliance to Islamic Sharia principles and any possible failure in fiduciary responsibilities. The Bank receives deposits from customers as part of unrestricted Wakala investment accounts either for limited or renewable periods.
Funds are invested in financing and investing activities that will achieve a targeted return. The Bank also receives funds from depositors through unrestricted Mudarabah Agreements, where depositors grant the bank Mudarib the right to invest these funds against a share in profit. The Mudarib would bear the loss in case of negligence or violation of any of the terms and conditions of the Mudaraba.
Pools of Assets in which the funds are invested is determined along with the relevant costs and revenues costs or expenses included are those that are only directly related to general pool assets, meanwhile indirect expenses as General and Administrative expenses and staff cost are not charged , based on which the net profit is determined and shared between the bank and the depositors proportionately based on each contribution to the pools and the specificity of the contractual agreements with the depositors.
Profit percentage distributed to the profit-sharing investment accounts were as follows: SN 1 Account Category Saving accounts Q1 1. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period.
For the matter below, our description of how our audit addressed the matter is provided in that context. Recognition of specific provision on impaired facility under the CBK instructions is based on the rules prescribed by the CBK on the minimum provision to be recognized together with any additional provision to be recognised based on management estimate of expected cash flows related to that credit facility.
Due to the significance of credit facilities and the related estimation uncertainty and judgement in the impairment calculation, this was considered as a key audit matter. Our audit procedures included assessing the design and implementation of controls over, inputs and assumptions used by the Group in developing the models, its governance and review controls performed by the management in determining the adequacy of credit losses.
Further, for CBK provision requirements, we have assessed the criteria for determining whether there is a requirement to calculate any credit loss in accordance with the related regulations and, if required, it has been computed accordingly.
For the selected samples which also included impaired credit facilities, we have assessed the valuation of collateral and checked the resultant provision calculations. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We have nothing to report in this regard. P 89 Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted for use by the State of Kuwait , and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
However, future events or conditions may cause the Group to cease to continue as a going concern. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
P ANNUAL REPORT We communicate with those charged with governance regarding , among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.
We further report that, during the course of our audit, we have not become aware of any violations of the provisions of Law No. Al Houti Chairman 3 4 5 13 Shaheen H. Al Ghanem Chief Executive Officer The accompanying notes 1 to 25 form an integral part of these consolidated financial statements. Box , Safat , State of Kuwait. The shareholders of the Bank have the power to amend these consolidated financial statements in the Annual General Assembly Meeting. The consolidated financial statements have been prepared under the historical cost convention except for the measurement at fair value of financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties and profit rate swaps.
The management believes that the application of the fair value method in measurement of investment properties provides reliable and relevant information for the users of the consolidated financial statements and this aligns with the widely accepted policy of valuing investment properties. Therefore, comparative information of prior years has been adjusted in order to apply the new accounting method retrospectively as detailed in Note The accounting policies used in the preparation of these consolidated financial statements are consistent with those used in the previous financial year, except for the change in the above mentioned accounting policy and the adoption of IFRS 9: Financial Instruments and IFRS Revenue from Contracts with Customers.
IFRS 15 outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue guidance, which is found currently across several Standards and Interpretations within IFRS. It established a new five-steps model that will apply to revenue arising from contracts with customers.
P 97 Under IFRS 15 , revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new standard brings fundamental changes to the accounting for financial assets and to certain aspects of the accounting for financial liabilities. Financial assets at amortised cost 2. Financial assets at FVTPL 1 Financial assets at amortised cost A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and profit SPPP.
Financial assets at amortised cost are subsequently measured at amortised cost using the effective profit method. The amortised cost is reduced by the ECL. Financing income, foreign exchange gains or losses, ECLs and gain or loss on de-recognition are recognised in the consolidated statement of profit or loss. Cash, balances with banks, placements with banks, balances with the Central Bank of Kuwait, financing receivables and other assets are classified as financial assets at amortised cost.
Financing income, foreign exchange gains or losses and ECLs are recognised in the consolidated statement of profit or loss. On de-recognition, cumulative gains or losses previously recognized in OCI will be reclassified from equity to the consolidated statement of profit or loss. The management of the Group classifies and carries certain quoted and unquoted Sukuk within Financial assets instruments at FVOCI in the consolidated statement of financial position. Such classification is determined on an instrument-by- instrument basis.
Changes in fair values including foreign exchange component are recognised in OCI and are presented within the cumulative changes in fair value as a part of equity. Cumulative gains or losses previously recognized as OCI are transferred to retained earnings on de-recognition and are not recognized in the consolidated statement of profit or loss.
Dividend income on equity investments at FVOCI is recognised in the consolidated statement of profit or loss unless it clearly represents a recovery of part of the cost of the investment in which case it is recognised in other comprehensive income. The management of the Group classifies and carries certain unquoted equity within Financial assets instruments at FVOCI in the consolidated statement of financial position.
Changes in fair value, financing income and dividend are recorded in the consolidated statement of profit or loss according to the terms of the contract, or when the right to payment has been established. Included in this classification are certain equity securities and funds that have been acquired principally for the purpose of selling or repurchasing in the near term.
Business model assessment The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objectives. The most significant elements of profit within a lending arrangement are typically the consideration for the time value of money and credit risk. To make the SPPP assessment, the Group applies judgement and considers relevant factors such as the currency in which the financial asset is denominated and the period for which the profit rate is set.
In contrast, contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are solely payments of principal and profit on the amount outstanding.
Reclassification of financial assets The Group does not reclassify its financial assets subsequent to their initial recognition apart in the exceptional circumstances in which the Group acquires, disposes of or terminates a business line. The new impairment model applies to financial assets measured at amortised cost, contract assets and financing investments at FVOCI, but not to investments in equity.
The credit losses are based on ECL associated with the probability of default in the next twelve months unless there has been a significant increase in credit risk since initial recognition. If the financial asset meets the definition of purchased or originated credit impaired POCI , the credit loss is based on the change in ECL over the life of the asset.
Equity investments are not subject to ECL. The Group provides for credit losses on financing facilities according to the CBK guidelines and records the impairment of financing facilities at the higher of ECL under IFRS 9 according to the CBK guidelines, and the provisions required by the CBK instructions described in policy applicable before 1 January below. Stage 2: Lifetime ECL — not credit impaired The Group measures loss allowances at an amount equal to lifetime ECL on financial assets where there has been a significant increase in credit risk since initial recognition but are not credit impaired.
Stage 3:Lifetime ECL — credit impaired The Group measures loss allowances on financial assets determined as a credit impaired based on an objective evidence on impairment at an amount equal to lifetime ECL. Lifetime ECL is ECL that result from all possible default events over the remaining expected life of a financial instrument. The 12 month ECL is the portion of lifetime expected credit loss that result from default events that are possible within the 12 months after the reporting date.
Both lifetime ECL and 12 month ECL are calculated on either an individual basis or a collective basis depending on the nature of the underlying portfolio of financial instruments. Determining the stage of impairment At each reporting date, the Group assesses whether there has been significant increase in credit risk since initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting date with the risk of default at the date of initial recognition.
The quantitative criteria used to determine a significant increase in credit risk is a series of relative and absolute thresholds. All financial assets that are 30 days past due are deemed to have significant increase in credit risk since initial recognition and migrated to stage 2 even if other criteria do not indicate a significant increase in credit risk. At each reporting date, the Group also assesses whether a financial asset or group of financial assets is credit impaired.
The Group considers a financial asset to be credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred or when contractual payments are 90 days past due. All credit impaired financial assets are classified as stage 3 for ECL measurement purposes.
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