KuwaitInternationalBankK.S.C. · PDF fileEmail: [email protected] Deloitte & Touche AI-Fahad,AI Wazzan & Co. Fahad AI-Salem Street Salhiya Complex, Entrance 2 P.O. Box 23049, ... Facsimile:

Kuwait International Bank K.S.C.

Interim Condensed Financial Information

For the period ended 30 September 2010(Unaudited)

Deloitte111111111111" ",rllill S!J ERNST&YOUNG

Ernst & YcunoAI Al ban, AI Osaimi & PartnersP.O. s,» 74 S,ii,'i13001 S",lat , KuwaitBaitak Tower, 18- 21st FloorSafat SquareAhm ed AI Jaile r St reet

Te l : 22452880/2295500 0Fax: 2245 64 19Email: kuwait @kw.ey.com

Deloitte & ToucheAI-Fahad, AI Wazzan & Co.

Fahad AI-Salem Street

Salhiya Complex, Entrance 2

P.O. Box 23049, Safat 13091

Kuwait City, Kuwait

Tel: +96522438060

Fax:+965 22452080

www.deloitte .com

Ahmed AI-Jaber Street

Dar AI-Awadi Complex

yth Floor, P.O. Box 20174

Safat 13062

Sharq - Kuwait

Telephone : +96522408844

Facsimile: +965 22408855

REPORT ON REVI EW OF INTERI M CO NDENSED FINANCIAL INFORMATION TO THE BOARD OFDIR ECTORS OF KUWAIT INTERNATIONAL BANK K.S.c.

Int roduc tionWe have reviewed the accompanying interim condensed statement of financial position of Kuwait Intemational BankK.S.C. ("the Bank") as at 30 September 20 I0 and the related interim condensed statements of income and comprehensiveincome for the three month and nine month periods then ended, and the related interim condensed statements of changes inshareholders' equity and cash flows for the nine month period then ended. The management of the Bank is responsible forthe preparation and presentation of this interim condensed financial information in accordance with the basis ofpresentation set out in note 2. Our responsibilit y is to express a conclusion on this interim condensed financial informationbased on our review.

Scope of ReviewWe conducted our review in accordance with Intem ational Standard on Review Engagements 24 10, "Review of InterimFinancia l Information Perfo rmed by the Independent Auditor of the Entity". A review of interim financial informationconsists of making inquiri es, primarily of persons responsib le for financial and accou nting matters, and app lying analyticaland other review procedures. A review is substantially less in scope than an audit conducted in accordance withIntemational Standards on Auditing and consequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

ConclusionBased on our review, nothing has come to our attention that causes us to believe that the accompanying interim conden sedfinancial informati on is not prepared, in all material respect s, in accordance with the basis of presentation set out in note 2.

Report on other Legal an d Reg ulatory RequirementsFurthermore, based on our review, the interim condensed financial informati on is in agreement with the books of account ofthe Bank. We further report that, to the best of our knowledge and belief, we have not become aware of any materialviolations of the Commercial Companies' Law of 1960, as amended, or of the Articles of Assoc iation of the Bank duringthe period ended 30 September 20 I0 that might have had a material effect on the business of the Bank or on its financialposition.

BADER A. AL-WAZZ~

LICENCE NO. 62 ADELOITTE & TOUCHEAL-FAHAD, AI-WAZZAN & CO.

WALEED A. AL OSAIMILICENCE NO. 68 AOF ERNST & YOUNGAL AlBAN, AL OSAIMI & PARTNERS

We further report that, during the course of our review, to the best of our knowledge and belief, we have not become awareof any material violations of the provisions of Law No. 32 of 1968, as amended, concemi ng currency, the Central Bank ofKuwait and the organization of banking business, and its related regulations, during the nine-month period ended 30September 20 IO.

13 October 20 I0Kuwait

Kuwait International Bank K.S.C.INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION(UNAUDITED)30 September 2010

Note

30 September2010

](D'OOO

(Audited)31 December

2009KD'OOO

30 September2009

KD 'OOO

ASSETSCash and balances with banks and fmancial institutionsDue from banks and other fmancial institutionsFinancing receivablesLoans and advancesInvestment securi tiesInvestment in associatesInvestment propertiesOther assetsProperty and equipment

TOTAL ASSETS

3

45

7,122 4,302 5,521284,860 267,160 267,330734,771 761,893 759,069

3,132 2,546 2,54655,701 61,022 59,409

4,800 4,800 9,54613,186 5,970 6,4095,100 5,374 4,627

26,333 27,269 15,218

1,135,005 1,140,336 1,129,675

LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIESDue to banks and other fmancia l institutionsDepositors' accountsOther liabilities

TOTAL LIABILITIES

SHAREHOLDERS' EQUITYShare capitalShare premiumTreasury sharesOther reserves

TOTAL SHAREHOLDERS' EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Sheikh Mohammed Jarrah Al-SabahChairman

6 207,644 232,513 207,855719,837 713,284 739,572

20,845 21,336 22,138

948,326 967,133 969,565

103,732 103,732 103,73249,480 49,480 49,480

(45,234) (45,234) (45,234)78,701 65,225 52,132

186,679 173,203 160,110

1,135,005 1,140,336 1,129,675

Dr. Mahmoud ul EyounChief Exe tive Officer

The attached notes 1 to 14 form part of the interim condensed fmancial information.

2

Kuwait International Bank K.S.C.INTERIM CONDENSED STATEMENT OF INCOME (UNAUDITED)For the period ended 30 September 2010

Three months ended 30 September Nine months ended 30 September2010 2009 2010 .2009

Note KD'OOO KD'OOO KD'OOO KD'OOOINCOMEMurabaha and other Islamic financing

income 10,806 12,896 32,510 39,071Estimated distribution to depositors 7 (3,659) (4,526) (11,307) (17,274) .

Net financing income 7,147 8,370 21,203 21,797Investment income 318 62 1,716 2,229Share of loss from associate (234)Net fees and commission income 667 558 2,262 1,887Net gain from foreign exchange 83 69 331 132Other income 4 274 6 320

8,219 9,333 25,518 26,131

EXPENSESStaff costs (2,689) (2,872) (8,084) (8,720)General and administrative expenses (872) (856) (2,400) (2,382)Depreciation (828) (505) (2,485) . (1,497)Unrealized loss on fmancial assets at

fair value through statement ofincome (1,460)

Impairment loss and otherprovisions (192) (6,494) (2,253) (19,235)

Reversal of impairment loss 5 4,827 237 4,827 1,057

246 (10,490) (11,855) (30,777)

OPERATING PROFIT (LOSS)BEFORE DEDUCTIONS · 8,465 (1,157) 13,663 (4,646)

Provision for contribution to KuwaitFoundation for the Advanced ofSciences (49) (49)

Provision for National Labor SupportTax (212) (342)

Zakat (95) (137)

PROFIT (LOSS) FOR THE PERIOD 8,109 (1,157) 13,135 (4,646)

BASIC AND DILUTED EARNINGS8(LOSS) PER SHARE (FILS) 8.68 (1.24) 14.07 (4.98)

The attached notes 1 to 14 form part of the interim condensed financial information.

3

Kuwait Internati onal Bank K.S.C.INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME(UNAUDITED)For the period ended 30 September 2010

Three months ended 30 September Nine months ended 30 September2010 2009 2010 2009

KD'OOO KD'OOO KD'OOO KD'OOO

Profit (loss) for the period 8,109 (1,157) 13,135 (4,646)

Other comprehensive income (loss)Net unrealised gain (loss) on fmancial assets

available-for-sale 583 (489) 341 (242)Share ofcomprehensive income of associate 180

Other comprehensive income (loss) for theperiod included directly in equity 583 _(489) 341 (62)

Total comprehensive income (loss) for theperiod 8,692 (1,646) 13,476 (4,708)


4

I ( I ( {I

Kuwait International Bank K.S.C.INTERIM CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)For the period ended 30 September 2010

ReservesRetained

Treasury earnings FairShare Share Treasury Statutory Voluntary shares (accumulated valuat ion Revaluation Totalcapital premium shares reserve reserve reserve loss) reserve surplus reserves Tota lKD'OOO KD 'OOO KD 'OOO KD 'OOO KD'OOO KD 'OOO KD'OOO KD 'OOO KD'OOO KD'OOO KD'OOO

Balance as at 31 December 2009 (audited) 103,732 49,480 (45,234) 22,633 16,550 4,846 (8,235) 9,584 19,847 65,225 173,203Profit for the period - - - - - - 13,135 - - 13,135 13,135Other comprehensive income for the period - - - - - - - 341 341 34 1

Total comprehensive income for the period - - - - - - 13,135 341 - 13,476 13,476Transfer for incremental depreciation - - - - - - 861 - (86 1)

Balance as at 30 September 2010 103,732 49,480 (45,234) 22,633 16,550 4,846 5,761 9,925 18,986 78,701 186,679--

Balance as at 31 December 2008 (audited) 94,302 49,480 (45,234) 22,633 16,550 4,846 9,430 4,455 8,356 66,270 164,818Loss for the period - - - - - - (4,646) - - (4,646) (4,646)Other comprehensive loss for the period - - - - - - - (62) - (62) (62)

Tota l comprehensive loss for the period - - - - - - (4,646) (62) - (4,708) (4,708)Issue of bonus shares 9,430 - - - - - (9,430) - - (9,430)

Balance as at 30 September 2009 103,732 49,480 (45,234) 22,633 16,550 4,846 (4,646) 4,393 8,356 52,132 160,110

The attached notes 1 to 14 form part of the interim condensed fmancial information.

5

~--------------------------------------------------

Kuwait International Bank K.S.C.INTERIM CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)For the perio d ended 30 September 2010

OPERATING ACTIVITI ESProfit (loss) for the periodAdjustments for:

Dividend incomeNet gain from foreign exchangeNet gain from investment securitiesShare of loss from associateDepreciationRenta l incomeUnrealized loss on financial assets at fair value through statementof income

Impairment loss and other provisionsReversal of impairment loss

Operating profit before changes in operating assets and liabilitiesChanges in operating assets and liabilities:Due from banks and other financia l institutionsFinancing receivablesLoans and advancesOther assetsDue to banks and other financial institutionsDepositors' accountsOther liabilities

Net cash used in operating activities

INVESTING ACTI VITIESPurchase of investment securitiesProceeds from sale of investment securitiesPurchase of investment propertiesPurchase of property and equipmentDividend income receive d

Net cash (used in) from investing activities

DECREASE IN CASH AND CASH EQUIVALENTS

Cash and cash equivalents at beginning of the period

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD

Nine mo nths ended 30 September2010 2009

Note KD'OOO KD 'OOO

13,135 (4,646)

(1,385) (2,174)(331) (132)

(55)234

2,485 1,497(288)

1,4602,253 19,235

(4,827) (1,057)

12,502 12,902

(25,332) (63,159)24,595 (57,739)

(295) (150)274 4,422

(24,869) (55,273)6,553 103,3031,568 2,522

(5,004) (53,172)

(664)217 2,032

(392)(1,529) (1,838)1,385 2,174

(319) . 1,704

(5,323) (51,468)

251,466 259,004

9 246,143 207,536


6

Kuwait International Bank K.S.C.NOTES TO INTERIM CONDENSED FINANCIAL INFORMATION (UNAUDITED)30 September 2010

1 CORPORATE INFORMATION

Kuwait International Bank K.S.C ("the Bank") is a public shareholding Company incorporated in State of Kuwaiton 13 May 1973 as a specialized bank and was registered with the Central Bank of Kuwait as an Islamic bank on1 July 2007.

The Bank is engaged principally in providing Islamic banking services, the purchase and sale of properties,leasing, and other trading activities. Trading activities are conducted on the basis of purchasing ViJiouscommodities and selling them on murabaha at negotiated book margin which can be settled in cash or oninstallment credit basis.

The registered office of the Bank is at West Tower - Joint Banking Center, P.O. Box 22822, Safat 13089,Kuwait.

This interim condensed financial information has been approved for issue by the Board of Directors on13 October 2010.

2 BASIS OF PREPARATION

The interim condensed fmancial information has been prepared in accordance with International AccountingStandard (lAS) 34 "Interim Financial Reporting" except as noted below.

The accounting policies used in the preparation of the interim condensed financial information are consistent withthose used in the preparation of the annual fmancial statements for the year ended 31 December 2009 which areprepared in accordance with International Financial Reporting Standards (IFRS) as adopted in the State of Kuwait .for financial institutions regulated by the Central Bank of Kuwait. These regulations require adoption of all IFRSexcept for the lAS 39 requirement for collective provision, which has been replaced by the Central Bank ofKuwait 's requirement for a minimum general provision.

The interim condensed fmancial information does not contain all information and disclosures required for fullfmancial statements prepared in accordance with the IFRS. For more details please refer to the financialstatements for the year ended 31 December 2009. In the opinion of management, all adjustments consisting ofnormal recurring accruals considered necessary for a fair presentation have been included.

Operating results for the period ended 30 September 2010 are not necessarily indicative of the results that may beexpected for the financial year ending 31 December 2010. For more details please refer to the fmancial statementsand its related disclosures for the year ended 31 December 2009.

3 DUE FROM BANKS AND OTHER FINANCIAL INSTITUTIONS

(Audited)30 September 31 December 30 September

2010 2009 2009KD'OOO KD'OOO KD'OOO

Tawarruq transactions with Central Bank ofKuwait 145,224 84,179 60,164Murabaha finance with other banks and financial institutions -

93,797contractual maturity of 90 days or less 162,985 141,851

Murabaha fmance with other banks and financial institutions -45,839

contractual maturity of more than 90 days 19,996 65,315

284,860 267,160 267,330

7


4 INVESTMENT IN ASSOCIATES

The Bank holds an equity interest of approximately 50% in Financial Group of Kuwait KSCC (FGK) which isclassified as investment in associate. During the years 2005 and 2006, the Bank wrote down the value of thisinvestment to KD Nil. During the three-month period ended 30 June 2010, Bank wrote off the investmentamounting to KD 5,572 thousand which was fully provided in previous years. The Bank retains a provision ofKD 521 thousand (31 December 2009: KD 6,093 thousand and 30 September 2009: KD 6,094 thousand) asreliable financial information about its financial position as of30 September 2010 is not available.

5 INVESTMENT PROPERTIES

In December 2008, the Bank paid KD 4,827 thousand as a partial payment toward the acquisition of aninvestment property which was fully provided for during 2009. During the three month period ended 30September 2010, the Bank completed the acquisition of the investment property at a cost of KD 7,236 thousandwhich was determined based on an independent valuation, and has accordingly released the provision ofKD 4,827to the interim condensed statement of income.

6 DUE TO BANKS AND OTHER FINANCIAL INSTITUTIONS


2010 2009 2009KD'OOO KD 'OOO KD'OOO

Murabaha payable 203,096 227,641 147,384Current and call accounts from banks and other financial

4,548institutions 4,872 40,471

Term fmancing 20,000

207,644 232,513 207,855

7 ESTIMATED DISTRIBUTION TO DEPOSITORS

The distribution to depositors is estimated based on judgment, and is not an indicative rate of distribution ofprofitto depositors for the period ended 30 September 2010, or for the year ending 31 December 2010.

The actual profit to be distributed to depositors will be determined by the Board of Directors of the Bank inaccordance with the Bank's Articles of Association, based on the annual audited results for the year ending 31December 2010. .

8 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

Earnings (loss) per share is computed by dividing the profit (loss) for the period attributable to the shareholdersby the weighted average number of shares outstanding during the period as follows:

Three months ended 30 September Nine months ended 30 September2010 2009 2010 2009

Profit (loss) for the period (KD '000)

Weighted average number of sharesoutstanding (shares '000)

Basic and diluted earnings (loss) pershare (fils)

8,109

933,689

8.68

8

(1,157)

933,689

0.24)

13,135

933,689

14.07

(4,646)

933,689

(4.98)

Kuwait International Bank K.S.C .NOTES TO INTERIM CONDENSED FINANCIAL INFORMATION (UNAUDITED)30 September 2010

9 CASH AND CASH EQUIVALENTS

Cash and balances with banks and fmancial institutions

Tawarruq transactions with Central Bank of KuwaitMurabaha finance with other banks and financial institutions

less than 90 days

10 RECOVERY OF PROVISIONS

30 September2010

KD'OOO

7,122

145,224

93,797

246,143

(Audited)31 December

2009KD'OOO

4,302

84,179

162,985

251,466

30 September2009

KD'OOO

5,521

60,164

141,851

207,536

Under the terms of Amiri Decree Nos . 32 0[1992,41 of 1993 and subsequent amendments, there were no cedableprovisions as at 30 September 2010 which are no longer required, and should any arise during the remainder ofthe year, they will be ceded to the Central Bank of Kuwait depending on the situation at the year end. Theidentification of provision no longer required, if any, will be made on a basis consistent with that adopted at 31December 2009 and in accordance with the instructions of the Central Bank ofKuwait.

11 RELATED PARTIES

These represent transactions with certain related parties (associates, major shareholders, directors, executiveofficers and key management of the Bank, close members of their families and companies which they control orover which they are able to exercise significant influence) who were customers of the Bank during the period. Theterms of these transactions are approved by the Bank's management.

In the normal course of business, directors, executi ve officers and parties related to them have deposits with thebank and credit facilities granted to them by the Bank. The balances and transactions with related parties includedin the interim condensed fmancial information are as follows:

BalancesFinancing receivables and loans and

advancesDeposits


2010 2009 2009KD 'OOO KD'OOO KD 'OOO

KeyAssociates management Total

167 167 253 1,7502,850 748 3,598 4,448 5,772

TransactionsMurabaha and other Islamic

financing incomeEstimated distribution to depositors 13 13 16

156

Compensation to key management personnel:Three months ended 30 September

2010 2009KD 'OOO KD '000

Nine months ended 30 September2010 2009

KD'OOO KD 'OOO

Short-term benefits

Post-employment benefits

337

42

9

271

52

915

139

948

133


12 COMMITMENTS AND CONTINGENT LIABILITIES

Acceptances

Letters of credit

Letters of guarantee

Commitments to extend credit

Capital commitments


2010 2009 2009KD'OOO KD'OOO KD'OOO

2,905 3,674 4,838

1,864 1,771 1,488

46,141 46,187 44,275

39,379 51,262 61,801

1,422 1,434 1,433

13 SEGMENT INFORMAnON

The Bank's operating segments are determined based on the reports reviewed by the General Manager that areused for strategic decisions . These segments are strategic business units that offer different products and services.They are managed separately since the nature of the products and services , class of customers and marketingstrategies of these segments are different.

These operating segments meet the criteria for reportable segments and are as follows:

• Commercial and international - comprising of range of banking services and investment products to corporatecustomers providing commodity and real estate murabaha fmance, Ijara and wakala facilities;

• Retail - comprising of range of banking services and investment products to individual customers, providingcommodity and real estate murabaha finance, Ijara and wakala facilities;

• Treasury, Fund Management and Institutional Banking - comprising of liquidity management, correspondentbanking, clearing , murabaha investments , exchange of deposits with banks and financial institutions ;

• Investment Management - comprising of investment in associates and other investments .

Management monitors the operating segments separately for the purpose of making decisions about resourceallocation and performance assessment.

The Bank measures the performance of operating segments through measure of segment revenue and results inmanagement and reporting system.

Segment assets princip ally comprise of all assets and segment liabilities comprise of all liabilities that areattributable to the segment.

The following table presents revenue , profit (loss) for the period , total assets and total liabilities informationregarding the Bank 's reportable segment.

10

Kuwait International Bank K.S.C .NOTES TO INTERIM CONDENSED FINANCIAL INFORMATION (UNAUDITED)30 September 2010

13 SEGMENT INFORMATION (continued)

Treasury, FundCommercial Management and

alld Institutional InvestmentInternational Retail Ballkillg Mallagemellt Others Total

KD 'OOO KD'OOO KD'OOO KD 'OOO KD'OOO KD'OOO

30 September 2010

Revenue 9,489 8,035 6,642 (729) 2,081 25,518

Profit (loss) for the period 5,126 3,888 6,314 (2,014) (179) 13,135

Total assets 638,876 117,750 291,982 53,068 33,329 1,135,005

Total liabilities 64,962 350,626 511,893 20,845 948,326

30 September 2009

Revenue 10,624 7,718 5,721 (459) 2,527 26,131(Loss) / profit for the period (2,191) 2,812 5,267 (6,797) (3,737) (4,646)

Total assets 672,257 107,686 272,851 54,665 22,216 1,129,675

Total liabilit ies 61,307 293,901 592,218 22,139 969,565

14 CAPITAL ADEQUACY

The Bank is required to comply with Capital Adequacy Regulation for Islamic banks issued by CBK as stipulatedin CBK circular no. 2/RBA/44/2009 dated 15 June 2009.

The Bank's regulatory capital adequacy ratio as at 30 September 2010 was 23.86% based on the following capitalstructure and risk-weighted assets:

KD'OOO

Tier 1 capital

Tier 2 capital

Total risk weighted assets

Capital adequacy ratio

11

142,165

18,324

672,698

. 23.86%

Documents

KuwaitInternationalBankK.S.C. · PDF fileEmail: [email protected] Deloitte & Touche AI-Fahad,AI Wazzan & Co. Fahad AI-Salem Street Salhiya Complex, Entrance 2 P.O. Box 23049, ... Facsimile: