Condensed consolidated interim statement of cash flows (unaudited)

for the nine-month period ended 30 September

 

	2025	2024
	AED'000	AED'000
Cash flows from operating activities
Net profit before tax for the period	480,324	320,308
Adjustments for:
Depreciation of properties and equipment	16,188	18,416
Gain on sale of properties and equipment	(42)	(792)
Amortisation of discount on debt instruments	(39,502)	199
Provision for employees' end of service benefits	5,121	2,968
Gain on sale of assets acquired in settlement of debts	-	(3,738)
Net impairment loss/ (reversal) on financial assets	19,097	(9,499)
Unrealized gain loss on assets acquired in settlement of debts	(11,262)	(1,781)
Unrealized gain on investment properties	-	(3,950)
Net fair value changes on other financial assets at FVTPL	(8,769)	(17,394)
Realised gain on financial assets	-	(5,026)
Issued bond cost	3,366	1,991
Amortization of the discount and other changes in debt securities	6,246	-
Interest on Lease Liability	1,385	1,733
Dividends income	(16,230)	(1,097)
Shares Adjustment	(21,656)	-
	------------------------	------------------------
Operating profit before changes in operating assets and liabilities	434,266	302,338
Changes in:	------------------------	------------------------
Deposits and balances due from banks maturing after three months from dates of placements	(126,773)	198,467
Statutory deposits with central bank	(658,185)	127,707
Loans and advances	(6,413,253)	(1,318,513)
Other assets	(143,886)	305,212
Customers' deposits	3,409,730	1,178,922
Other liabilities	72,885	(665,203)
Payment for Employees End of Service Benefit	(5,180)	(10,001)
Tax paid	(34,459)	-
	------------------------	------------------------
Cash (used in)/ generated from operations	(3,464,855)	118,929
	=============	=============

 

Cash flows from investing activities
Purchase of properties and equipment	(3,948)	(5,185)
Payment for Right of Use Assets	(14,488)	(11,785)
Proceeds from sale of properties and equipment	42	5,331
Purchase of financial assets	(4,800,217)	(1,292,108)
Proceeds from disposal of investments	4,480,726	114,267
Proceeds from sale of assets acquired in settlement of debts	-	2,000
Dividends received	16,230	1,097
Proceeds from Shares	147	-
	------------------------	------------------------
Cash used in investing activities	(321,508)	(1,186,383)
	=============	=============
Cash flows from financing activities
Proceeds from repo borrowings and due to banks	2,804,026	2,379,484
Proceeds from sale of Issued Bonds	52,541	1,818,484
Settlement of issued bonds	-	(2,247,189)
	------------------------	------------------------
Cash generated from financing activities	2,856,567	1,950,779
	=============	=============
Net (decrease)/ increase in cash and cash equivalents during the period	(929,796)	883,325
	------------------------	------------------------
Cash and cash equivalents at the beginning of the period	2,818,405	2,395,016
	------------------------	------------------------
Cash and cash equivalents at the end of the period (note 6)	1,888,609	3,278,341
	------------------------	------------------------

 

 

The accompanying notes 1 to 26 form an integral part of these condensed consolidated interim financial statements.

 

1.      General information

 

Bank of Sharjah P.J.S.C. (the "Bank"), is a public joint stock company incorporated by an Amiri Decree issued on 22 December 1973 by His Highness The Ruler of Sharjah and was registered in February 1993 under the Commercial Companies Law Number 8 of 1984 (as amended). The Bank commenced its operations under a banking license issued by the United Arab Emirates Central Bank dated 26 January 1974. The Bank is engaged in commercial and investment banking activities. 

 

The Bank's registered office is located at Al Khan Road, P.O. Box 1394, Sharjah, United Arab Emirates. The Bank operates through six branches in the United Arab Emirates located in the Emirates of Sharjah, Dubai, Abu Dhabi, and City of Al Ain. The accompanying condensed consolidated interim financial statements combine the activities of the Bank and its subsidiaries (collectively the "Group").

 

2.      Basis of preparation

 

2.1    Subsidiary held for sale

 

The Central Bank of the UAE continues to support the Bank's strategic effort to delink/deconsolidate its Lebanese Subsidiary, as the underlying accounting anomalies impact is not sustainable for the Bank and pose a threat of unnecessary volatility. Accordingly, the objective remains to cease the consolidation of the Lebanese Subsidiary's financial statements in the Group's financial statements, as per the Central Bank of the UAE recommendations effective 1^st April 2023. This step is necessary to mitigate the accounting anomalies and disruptions resulting from the consolidation of the Lebanese Subsidiary. On 22^nd June 2023, the Board approved the de-linking.

 

When the Group classified the Lebanese subsidiary as an "asset held for sale," all the subsidiary's assets and liabilities were categorized accordingly. Once classified in this category, the group of assets and liabilities is measured at the lower of carrying amount or fair value less costs to sell. If impairment occurs, an impairment loss is recognized in the condensed consolidated interim statement of profit and loss. Impairment losses may be reversed. The fair value less cost to sell estimate remains a significant judgment, determined based on the market offer approach.

 

The previously heightened geopolitical environment in Lebanon had delayed the sale beyond the 12-month timeframe stipulated by IFRS 5. However, recent political and economic developments clearly indicate a more stable and promising outlook, prompting renewed interest from potential buyers. During the period ended 30 September 2025, the Bank received reconfirmed offers from potential acquirers, reflecting a more positive market sentiment. Discussions are advancing, with buyers demonstrating increased confidence in Lebanon's financial sector recovery. The Bank has received expressions of interest from other potential buyers and is engaged in further discussions. An accredited multinational sell-side advisory firm has been appointed to support the sale process, including initiating due diligence procedures.

 

While the Bank remains confident in the successful sale of Emirates Lebanon Bank, it acknowledges that delays may still occur due to external factors. Nonetheless, the improving political and financial landscape is expected to facilitate and expedite the completion of the transaction. Additionally, the Bank has received an updated letter from the regulator reaffirming support for the classification of EL Bank as held for sale under IFRS 5, reflecting the improved market conditions and ongoing strategic efforts to finalize the sale.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.      Basis of preparation (continued)

 

2.1    Subsidiary held for sale (continued)

 

The breakdown of the Lebanese subsidiary's net assets as at 1 April 2023 is as follows:

ASSETS		AED'000
Cash and balances with central bank		2,892,460
Deposits and balances due from banks		10,497
Loans and advances, net		1,090,017
Investments measured at fair value		29,567
Investments measured at amortised cost		43,344
Other intangibles		345
Assets acquired in settlement of debt		79,641
Other assets		17,989
Property and equipment		6,040
		------------------------
Total assets		4,169,900
		------------------------
LIABILITIES
Customers' deposits		2,318,968
Deposits and balances due to banks		617,261
Other liabilities		189,728
		------------------------
Total liabilities		3,125,957
		------------------------
Net assets		1,043,943
		==========
Fair value of net assets		844,790
		==========

 

2.2    Basis of preparation

 

The condensed consolidated interim financial information of the Group have been prepared in accordance with IFRS Accounting Standards as issued by International Accounting Standards Board ("IASB") and applicable requirements of the laws of the United Arab Emirates ("UAE"). Group has also complied with provisions of the UAE Federal Decree Law No. 32 of 2021 ("Companies Law") which was issued on 20 September 2021 and came into effect on 2 January 2022.

 

Basis of measurement - The condensed consolidated interim financial information has been prepared on the historical cost basis except for certain financial instruments, subsidiary held for sale and investment properties that are measured at fair values as explained in the accounting policies below.

 

Functional and presentation currency - The condensed consolidated interim financial information is presented in Arab Emirates Dirham (AED) and all values are rounded to the nearest thousands' dirham, except when otherwise indicated.

 

Basis of consolidation - This condensed consolidated interim financial information incorporates the condensed interim financial information of the Bank and entities controlled by the Bank. Control is achieved when the Bank has:

 

§ power over the investee,

§ exposure, or has rights, to variable returns from its involvement with the investee; and

§ the ability to use its power over the investee to affect its returns.

 

The condensed consolidated interim financial information comprises the financial statements of the Bank and of the following subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting period as that of the Bank, using consistent accounting policies.

 

 

 

 

 

 

2.      Basis of preparation (continued)

 

2.2    Basis of preparation (continued)

 

All intragroup assets, liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group are eliminated in full on consolidation.

 

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries.

 

Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid/payable or received/receivable is recognised directly in equity and attributed to owners of the Group.

 

The Bank's interests, held directly or indirectly, in the subsidiaries are as follows:

Name of Subsidiary	Proportion of ownership interest		Year of incorporation	Year of acquisition	Country of incorporation	Principal activities
	2025	2024
Emirates Lebanon Bank S.A.L.	100%	100%	1965	2008	Lebanon	Financial institution
El Capital FZC	100%	100%	2007	2017	U.A.E.	Investment in a financial institution
BOS Real Estate FZC	100%	100%	2007	2007	U.A.E.	Real estate development activities
BOS Capital FZC	100%	100%	2007	2007	U.A.E.	Investment
Polyco General Trading L.L.C.	100%	100%	2008	2008	U.A.E.	General trading
Borealis Gulf FZC	100%	100%	2010	2010	U.A.E.	Investment & Real estate development activities
BOS Funding Limited	100%	100%	2015	2015	Cayman Islands	Financing activities
Muwaileh Capital FZC	90%	90%	2010	2017	U.A.E.	Developing of real estate & related activities
BOS Repos Limited	100%	100%	2018	2018	Cayman Islands	Financing activities
BOS Derivatives Limited	100%	100%	2018	2018	Cayman Islands	Financing activities
GTW Holding LTD	100%	100%	2022	2022	U.A.E. (ADGM)	Facilitate the sale of real estate assets
GDLR Holding LTD	100%	100%	2022	2022	U.A.E. (ADGM)	Facilitate the sale of real estate assets
BOS Real Estate Egypt	100%	100%	2023	2023	Egypt	Real estate development activities

 

3.       Application of other new and revised International Financial Reporting Standards ("IFRS")

 

3.1     New and revised IFRS Accounting Standards applied with no material effect on the condensed

consolidated interim financial statements

 

The following new and revised IFRS, which became effective for annual periods beginning on or after 1 January 2025, have been adopted in these condensed consolidated interim financial information. The application of these revised IFRS has not had any material impact on the amounts reported for the current

and prior years but may affect the accounting for future transactions or arrangements.

 

·      Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates relating to Lack of Exchangeability

 

Other than the above, there are no other significant IFRS Accounting Standards and amendments that were effective for the first time for the financial year beginning on or after 1 January 2025.

 

3.       Application of other new and revised International Financial Reporting Standards ("IFRS") (continued)

 

3.2 New and revised IFRS Accounting Standards in issue but not yet effective

 

The Group has not early adopted the following new and revised standards that have been issued but are not yet effective. The management is in the process of assessing the impact of the new requirements.

 

Management anticipates that these new standards, interpretations and amendments will be adopted in the Group's condensed consolidated interim financial information for the period of initial application and adoption of these new standards, interpretations and amendments may have no material impact on the condensed consolidated interim financial information of the Group in the period of initial application.

 

4.      Financial risk management

 

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2024.

 

5       Material accounting policies

 

The accounting policies used in the preparation of these condensed consolidated interim financial information are consistent with those used in the audited annual consolidated financial statements for the year ended 31 December 2024.

 

Financial Instruments

 

5.1    Recognition and Initial Measurement

 

A financial instrument is any contract that gives rise to both a financial asset for the Group and a financial liability or equity instrument for another party or vice versa. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. Recognised financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities respectively, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in condensed consolidated interim statement of profit or loss.

 

 

 

 

5       Material accounting policies (continued)

 

Financial Instruments (continued)

 

5.2   Classification of financial assets

 

 

Balances with central banks, due from banks and financial institutions, financial assets and certain items in receivables and other assets that meet the following conditions are subsequently measured at amortised cost less impairment loss and deferred income, if any (except for those assets that are designated as at fair value through profit or loss on initial recognition). IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). On initial recognition, a financial asset is classified as measured at: amortised cost, FVOCI or FVTPL.

 

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 interest on the principal amount outstanding.

 

A debt instrument is measured at FVOCI only 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 achieved by both collecting contractual cash flows and selling financial assets; and

·      the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

On initial recognition of an equity investment that is not held for trading, the Bank may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis. In addition, on initial recognition the Bank may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

 

Financial assets measured at amortised cost

 

The effective interest rate method is a method of calculating the amortised cost of those financial instruments measured at amortised cost and of allocating income over the relevant period. The effective interest rate is the rate that is used to calculate the present value of the estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instruments, or, where appropriate, a shorter period, to arrive at the net carrying amount on initial recognition. Income is recognised in the condensed consolidated interim statement of profit or loss on an effective interest rate basis for financing and investing instruments measured subsequently at amortised cost.

 

Financial assets measured at FVTPL

 

Investments in equity instruments are classified as financial assets measured at FVTPL, unless the Group designates fair value through other comprehensive income (FVTOCI) at initial recognition. Financial assets that do not meet the amortised cost criteria described above, or that meet the criteria but the Group has chosen to designate it as at FVTPL at initial recognition, are measured at FVTPL. Financial assets (other than equity instruments) may be designated at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing the gains or losses on them on different basis. Financial assets are reclassified from amortised cost to FVTPL when the business model is changed such that the amortised cost criteria are no longer met. Reclassification of financial assets (other than equity instruments) designated as at FVTPL at initial recognition is not permitted. Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in the condensed consolidated interim statement of profit or loss at the end of each reporting period. The net gain or loss recognised in the condensed consolidated interim statement of profit or loss.

5       Material accounting policies (continued)

 

Financial Instruments (continued)

 

5.2   Classification of financial assets (continued)

 

Financial assets measured at FVTOCI

 

On initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading. A financial asset is held for trading if:

 

·      it has been acquired principally for the purpose of selling it in the near term;

·      on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a recent actual pattern of short-term profit-taking; or

·      it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.

 

Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs.

 

Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investments fair value reserve. Where the asset is disposed of, the cumulative gain or loss previously accumulated in the investments fair value reserve is not transferred to condensed consolidated interim statement of profit or loss.

 

5.3    Measurement of ECL

 

Credit loss allowances are measured using a three-stage approach based on the extent of credit deterioration since origination:

 

•      Stage 1 - Where there has not been a significant increase in credit risk (SICR) since initial recognition of a financial instrument, an amount equal to 12 months expected credit loss is recorded. The expected credit loss is computed using a probability of default occurring over the next 12 months. For those instruments with a remaining maturity of less than 12 months, a probability of default corresponding to remaining term to maturity is used.

 

•      Stage 2 - When a financial instrument experiences a SICR subsequent to origination but is not considered to be in default, it is included in Stage 2. This requires the computation of expected credit loss based on the probability of default over the remaining estimated life of the financial instrument.

 

•      Stage 3 - Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance for credit losses captures the lifetime expected credit losses.

 

ECLs are an unbiased probability‐weighted estimate of the present value of credit losses that is determined by evaluating a range of possible outcomes. For funded exposures, ECL is measured as follows:

 

·    for financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive arising from the weighting of multiple future economic scenarios, discounted at the asset's coupon rate as a proxy for effective interest rate (EIR);

 

·    financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows;

 

However, for unfunded exposures, ECL is measured as follows:

 

For undrawn loan commitments, as the present value of the difference between the contractual cash flows that are due to the Group if the holder of the commitment draws down the loan and the cash flows that the Group expects to receive if the loan is drawn down; and for financial guarantee contracts, the expected payments to reimburse the holder of the guaranteed debt instrument less any amounts that the Group expects to receive from the holder, the debtor or any other party. The Group measures ECL on an individual basis, or on a collective basis for portfolios of loans that share similar economic and credit risk characteristics. The measurement of the loss allowance is based on the present value of the asset's expected cash flows using the asset's coupon rate, regardless of whether it is measured on an individual basis or a collective basis.

5       Material accounting policies (continued)

 

Financial Instruments (continued)

 

5.3    Measurement of ECL (continued)

 

The key inputs into the measurement of ECL are the term structure of the following variables:

 

·      Probability of default (PD) - PD estimates are estimates at a certain date, which are calculated based on statistical rating models currently used by the Group, and assessed using rating tools tailored to the various categories and sizes of counterparties.

 

·      Exposure at default (EAD) - EAD represents the expected exposure upon default of an obligor. The Group derives the EAD from the current exposure to the counterparty and potential changes to the current amount allowed under the contract and arising from amortisation. The EAD of a financial asset is its gross carrying amount at the time of default. For lending commitments, the EADs are potential future amounts that may be drawn under the contract, which are estimated based on historical observations and forward-looking forecasts. For financial guarantees, the EAD represents the amount of the guaranteed exposure when the financial guarantee becomes payable.

EAD is calculated as below:

 

-      For Direct Facilities: Limit or Exposure whichever is higher

-      For Letters of Credit & Acceptances: Limit or Exposure whichever is higher

-      For all types of Guarantees: Exposure

 

·      Loss given default (LGD) - LGD is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, considering cash flows from the proceeds from liquidation of any collateral.

      LGD is derived as below:

-     Senior Unsecured: 45%

-     Eligible Securities as per Basel lower LGD, taking into consideration applicable Basel haircuts on collateral as well as LGD floors to certain collateral

 

Assessment of significant increase in credit risk

 

The assessment of a significant increase in credit risk is done on a relative basis. To assess whether the credit risk on a financial asset has increased significantly since origination, the Group compares the risk of default occurring over the expected life of the financial asset at the reporting date to the corresponding risk of default at origination, using key risk indicators that are used in the Group's existing risk management processes. At each reporting date, the assessment of a change in credit risk will be individually assessed for those considered individually significant.  This assessment is symmetrical in nature, allowing credit risk of financial assets to move back to Stage 1, if certain criteria are met, if the increase in credit risk since origination has reduced and is no longer deemed to be significant.

 

The group assesses whether credit risk has increased significantly since initial recognition at each reporting date. Determining whether an increase in credit risk is significant depends on the characteristics of the financial instrument and the borrower, and the geographical region. What is considered significant differs for different types of lending, in particular between wholesale and retail. The credit risk may be deemed to have increased significantly since initial recognition based on qualitative factors linked to the Group's credit risk management process that may not otherwise be fully reflected in its quantitative analysis on a timely basis. This will be the case for exposures that meet certain heightened risk criteria, such as placement on a watch list. Such qualitative factors are based on its expert judgement and relevant historical experiences. As a backstop, the group considers that a significant increase in credit risk occurs no later than when an asset is more than 30 days past due. Days past due are determined by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received. Due dates are determined without considering any grace period that might be available to the borrower. If there is evidence that there is no longer a significant increase in credit risk relative to the initial recognition, then the loss allowance on an instrument returns to being measured as 12-month ECL. Some qualitative indicators of an increase in credit risk, such as delinquency or forbearance, may be indicative of an increased risk of default that persists after the indicator itself has ceased to exist. In these cases, the Group determines a probation period during which the financial asset is required to demonstrate good behaviour to provide evidence that its credit risk has declined sufficiently. When contractual terms of a loan have been modified, evidence that the criteria for recognising lifetime ECL are no longer met includes a history of up-to-date payment performance against the modified contractual terms. 

5       Material accounting policies (continued)

 

Financial Instruments (continued)

 

5.3    Measurement of ECL (continued)

 

The group monitors the effectiveness of the criteria used to identify significant increases in credit risk by regular reviews to confirm that:

 

·      the criteria are capable of identifying significant increases in credit risk before an exposure is in default;

·      the criteria do not align with the point in time when an asset becomes 30 days past due;

·      the average time between the identification of a significant increase in credit risk and default appears reasonable;

·      exposures are not generally transferred directly from 12-month ECL measurement to credit impaired; and

·      there is no unwarranted volatility in loss allowance from transfers between 12-month PD [stage 1] and lifetime PD [stage 2].

 

When determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and expert credit assessment and including forward-looking information. The objective of the assessment is to identify whether a significant increase in credit risk has occurred for an exposure by comparing:

·      The remaining lifetime probability of default (PD) as at the reporting date; with

·      The remaining lifetime PD for this point in time that was estimated at the time of initial recognition of the exposure (adjusted where relevant for changes in prepayment expectations)

 

The Group uses three criteria for determining whether there has been a significant increase in credit risk:

·      quantitative test based on movement in PD;

·      qualitative indicators

·      a backstop of 30 days past due.

 

Improvement in credit risk profile

If there is evidence that there is no longer a significant increase in credit risk relative to initial recognition, then the loss allowance on an instrument returns to being measured as 12-month ECL.

 

The Group has defined below criteria in accordance with regulatory guidelines to assess any improvement in the credit risk profile which will result into upgrading of customers moving from Stage 3 to Stage 2 and from Stage 2 to Stage 1.

·      Significant decrease in credit risk will be upgraded stage-wise (one stage at a time) from Stage 3 to Stage 2 and from Stage 2 to Stage 1 after meeting the curing period of at least 12 months.

·      Restructured cases will be upgraded if repayments of 3 instalments (for quarterly instalments) have been made or 12 months (for instalments longer than quarterly) curing period is met.

 

Definition of default

The Bank considers a financial asset to be in default when:

·      the borrower is unlikely to pay its credit obligations to the Bank in full without recourse by the Bank to actions such as realising security (if any is held);

·      the borrower is past due more than 90 days on any material credit obligation to the Bank; or

·      it is becoming probable that the borrower will restructure the asset as a result of bankruptcy due to the borrower's inability to pay its credit obligations.

 

Overdrafts are considered as being past due once the customer has breached an advised limit or been advised of a limit smaller than the current amount outstanding.

 

In assessing whether a borrower is in default, the Bank considers indicators that are:

·      qualitative - e.g. breaches of covenant;

·      quantitative - e.g. overdue status and non-payment on another obligation of the same issuer to the Bank; and

·      based on data developed internally and obtained from external sources.

 

Inputs into the assessment of whether a financial instrument is in default and their significance may vary over time to reflect changes in circumstances.

5       Material accounting policies (continued)

 

Financial Instruments (continued)

 

5.3    Measurement of ECL (continued)

 

Presentation of allowance for ECL in the statement of financial position

 

Loss allowances for ECL are presented in the statement of financial position as follows:

 

·      financial assets measured at amortised cost: (as a deduction from the gross carrying amount of the assets);

·      where a financial instrument includes both a drawn and an undrawn component, and the Group cannot identify the ECL on the loan commitment component separately from those on the drawn component: The Group presents a combined loss allowance for both components. The combined amount is presented as deduction from the gross carrying amount of the drawn component.

·      debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognised in the statement of profit or loss.

 

5.4    Financial liabilities

 

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'amortised cost'. The Group initially recognises financial liabilities such as deposits and debt securities issued on the date at which they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are initially recognised on the trade date at which the Group becomes party to the contractual provision of the instrument.

 

Financial liabilities at FVTPL

 

Financial liabilities are classified at FVTPL where the financial liability is either held for trading or it is designated at FVTPL and measured at fair value. Determination is made at initial recognition and is not reassessed. Financial liabilities at FVTPL are stated at fair value, with any gains / losses arising on remeasurement recognised in profit or loss to the extent that they are not part of a designated hedging relationship. The net gain/ loss recognised in condensed consolidated interim statement of profit or loss incorporates any interest paid on the financial liability. However, for non-derivative financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in OCI, unless the recognition of the effects of changes in the liability's credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a financial liability's credit risk that are recognised in OCI are not subsequently reclassified to condensed consolidated interim statement of profit or loss; instead, they are transferred to retained earnings upon derecognition of the financial liability. In making the determination of whether recognising changes in the liability's credit risk in OCI will create or enlarge an accounting mismatch in profit or loss, the Group assesses whether it expects that the effects of changes in the liability's credit risk will be offset in profit or loss by a change in the fair value of another financial instrument measured at FVTPL. This determination is made at initial recognition.

 

The Group has designated certain financial liabilities as at FVTPL in either of the following circumstances:

-       the liabilities are managed, evaluated and reported internally on a fair value basis; or

-       the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise.

 

Financial liabilities at amortized cost

 

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

5       Material accounting policies (continued)

 

Financial Instruments (continued)

 

5.4    Financial liabilities (continued)

 

De-recognition of financial liabilities

 

Financial liabilities are derecognised when they are extinguished - that is when the obligation specified in the contract is discharged, cancelled or expired.

 

5.5    Estimates and judgements

 

The preparation of condensed consolidated interim financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.

 

Actual results may differ from these estimates. In preparing this condensed consolidated interim financial information, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the audited consolidated financial statements as at and for the year ended 31 December 2024.

 

5.6    Investment properties

 

Investment properties are held to earn rental income and/or capital appreciation. Investment properties include cost of initial purchase, developments transferred from property under development, subsequent cost of development, and fair value adjustments. Investment properties are reported at valuation based on fair value at the end of the reporting period. The fair value is determined on a periodic basis by independent professional valuers. Fair value adjustments on investment property are included in the condensed consolidated interim statement of profit or loss in the period in which these gains or losses arise. 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 condensed consolidated interim statement of profit or loss in the period of derecognition. Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

 

6.      Cash and balances with central bank

 

The analysis of the Group's cash and balances with the central bank is as follows:

 

	30 September		31 December
	2025		2024
	AED'000		AED'000
	(unaudited)		(audited)
Cash on hand	45,081	44,843
Statutory deposits*	728,207	70,022
Time placements	2,558,077	4,524,710
	----------------------------	----------------------------
	3,331,365	4,639,575
	=============	=============

 

*As per the CBUAE regulations, the Bank is allowed to draw their balances held in the UAE reserve account, while ensuring that they meet the reserve requirements over a 14-day period.

 

 

 

 

6.      Cash and balances with central bank (continued)

 

Cash and cash equivalents

 

For the statement of condensed consolidated interim statement of cash flows, cash and cash equivalents includes:

	30 September	30 September
	2025	2024
	AED'000	AED'000
	(unaudited)	(unaudited)
Cash and balances with central bank (Note 6)	3,331,365	3,753,586
Deposits and balances due from banks (Note 7)	1,076,121	686,628
Deposits and balances due to banks (Note 12)	(4,175,492)	(1,976,362)
Repo borrowings (Note 13)*	(3,055,725)	(995,328)
	----------------------------	----------------------------
	(2,823,731)	1,468,524
Less:  Deposits with central banks and balances due from banks - original maturity more than three month	(495,854)	(376,718)
Less:  Statutory deposits with central banks (Note 6)	(728,207)	(192,948)
Add: Deposits and balances due to banks - original maturity more than three month	3,434,975	1,752,275
Add: Repo borrowings - original maturity more than three month	2,501,426	627,208
	----------------------------	----------------------------
	1,888,609	3,278,341
	=============	=============

 

*No Repo borrowing have been deducted from cash and cash equivalents as at 30 September 2025 (31 December 2024: AED 0.8 billion). Considering the underlying substance of the borrowing and nature of the underlying collateral, the Group has classified the proceeds/ repayments from the Repo borrowing as a cash inflow/ outflow from financing activities. (Note 13)

 

7.      Deposits and balances due from banks

 

The analysis of the Group's deposits and balances due from banks is as follows:

 

	30 September		31 December
	2025		2024
	AED'000		AED'000
	(unaudited)		(audited)
Demand		580,267			352,848
Time		495,854			375,806
		----------------------------			----------------------------
		1,076,121			728,654
Expected credit losses (note 16)		(133,646)			(132,682)
		----------------------------			----------------------------
		942,475			595,972
		=============			=============

 

 

 

 

 

 

 

7.      Deposits and balances due from banks (continued)

 

The geographical analysis of deposits and balances due from banks is as follows:

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Banks abroad	1,055,596	697,204
Banks in the U.A.E.	20,525	31,450
	----------------------------	----------------------------
	1,076,121	728,654
Expected credit losses (note 16)	(133,646)	(132,682)
	----------------------------	----------------------------
	942,475	595,972
	=============	=============

 

8.      Loans and advances, net

 

(a)     The analysis of the Group's loans and advances measured at amortised cost is as follows:

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Overdrafts	8,540,812	6,511,448
Commercial loans	20,916,577	16,665,417
Bills discounted	1,476,060	1,180,987
Other advances	1,569,132	1,731,476
	----------------------------	----------------------------
Gross amount of loans and advances	32,502,581	26,089,328
Expected credit losses (note 16)	(1,820,287)	(1,786,570)
	----------------------------	----------------------------
Net loans and advances	30,682,294	24,302,758
	=============	=============

 

(b)     Impairment reserve

 

The CBUAE issued its IFRS 9 guidance addressing various implementation challenges and practical implications for banks adopting IFRS 9 in the UAE.

Banks must ensure that the total provision corresponding to all Stage 1 and Stage 2 exposures is not less than 1.50% of the credit risk weighted assets as calculated under the CBUAE capital regulations. Where the collective provisions held are lower, the shortfall may be held in a dedicated non-distributable balance sheet reserve called "the impairment reserve- general". The amount held in the impairment reserve-general must be deducted from the capital base (Tier 1 capital for banks) when computing the regulatory capital.

 

	30 September			31 December
	2025 AED'000			2024 AED'000
	(unaudited)			(audited)
Non-distributable impairment reserve- General
Minimum provision for stage 1& 2 as per CBUAE requirements			451,047	384,985
Less: Stage 1 and Stage 2 impairment provision taken against income*			174,953	194,669
Shortfall in stage 1 & 2 provision to meet minimum CBUAE requirements			276,094	190,316

8.      Loans and advances, net (continued)

 

*For the purpose of calculation, the movement in impairment reserve provisions under IFRS 9 are determined based on CB UAE classification of loans and advances, only for the purpose of this disclosure.

 

 

(c)     The geographic analysis of the gross loans and advances of the Group is as follows:

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Loans and advances resident in the U.A.E.	28,736,702	24,313,793
Loans and advances non-resident	3,765,879	1,775,535
	----------------------------	----------------------------
	32,502,581	26,089,328
	=============	=============

9.      Investment securities, net

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Investments measured at fair value
Investments measured at FVTPL
Quoted debt securities	337,598	423,181
	337,598	423,181
Investments measured at FVTOCI
Quoted equity securities	871,424	400,844
Unquoted equity securities	81,324	76,173
Quoted debt securities	1,467,944	1,319,444
	2,420,692	1,796,461
Total investments measured at fair value	2,758,290	2,219,642
Investments measured at amortised cost
Quoted debt securities	3,291,170	883,579
Unquoted debt securities	4,501,262	7,001,400
Expected credit losses (Note 16)	(3,851)	(3,051)
Total investments measured at amortised cost	7,788,581	7,881,928
Total investments	10,546,871	10,101,570

 

All of the quoted equity securities are listed on the securities exchanges in the U.A.E. (Abu Dhabi Securities Exchange and Dubai Financial Market).  Included in the debt securities are bonds and sukuk with the fair value of AED 3.44 billion (31 December 2024: AED 2.72 billion) given as collateral against borrowings under repo agreements (Note 13). Included in the quoted equity securities are investments in perpetual bonds amounting to AED 612 million (31 December 2024: AED 186 million).

 

 

 

 

 

 

 

 

 

9.      Investment securities, net (continued)

The composition of the investment measured at fair value and amortised cost by geography is as follows:

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
United Arab Emirates	7,594,217	8,454,142
MENA Region (including G.C.C. countries)	2,494,192	1,593,071
Europe	152,291	57,408
United States of America	110,190	-
United Kingdom	199,832	-
	----------------------------	---------------------------
	10,550,722	10,104,621
Expected credit losses (Note 16)	(3,851)	(3,051)
	----------------------------	---------------------------
	10,546,871	10,101,570
	=============	=============

10.    Other assets

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Acceptances - contra (note 14)	251,830	349,408
Interest receivable	198,720	98,793
Prepayments	17,553	12,492
Others	383,579	247,103
	----------------------------	---------------------------
	851,682	707,796
Expected credit loss (note 16)	(27,964)	(27,964)
	----------------------------	---------------------------
	823,718	679,832
	=============	=============

11.    Customers' deposits

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Current and other accounts	8,438,298	6,324,769
Saving accounts	115,905	95,283
Time deposits	24,560,469	23,284,890
	----------------------------	---------------------------
	33,114,672	29,704,942
	=============	=============

 

12.    Deposits and balances due to banks

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Demand	24,711	1,469
Time	4,150,781	2,821,343
	----------------------------	---------------------------
	4,175,492	2,822,812
	=============	=============

 

12.    Deposits and balances due to banks (continued)

 

The geographical analysis of deposits and balances due to banks is as follows:

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Banks in the U.A.E.	2,671,931	1,887,387
Banks abroad	1,503,561	935,425
	----------------------------	---------------------------
	4,175,492	2,822,812
	=============	=============

13.    Repo borrowings

 

The analysis of the repo borrowing agreements is as follows:

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Banks in the U.A.E.	2,143,676	2,420,284
Banks abroad	912,049	-
	----------------------------	---------------------------
	3,055,725	2,420,284
	=============	=============

 

The Group entered into repo agreements under which bonds with fair value of AED 3.44 billion (31 December 2024: AED 2.72 billion) were given as collateral against borrowings. The risks and rewards relating to these bonds remain with the Group.

 

Repo borrowings include a nil amount in 30 September 2025 (31 December 2024: AED 0.8 billion) which is represented as part of the group's financing activities in the consolidated statement of cashflows. (Note 6)

 

14.    Other liabilities

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Interest payable	478,881	561,938
Acceptances - contra (Note 10)	251,830	349,408
Unearned income	92,070	53,025
Provision for employees' end of service benefits	50,106	50,165
Tax liability	42,898	31,670
Lease liabilities	42,003	55,106
Managers' cheques	22,993	31,044
Accrued expenses	2,337	3,755
ECL on unfunded exposure (Note 16)	1,703	18,104
Clearing balances	-	52,714
Others	314,771	38,113
	1,299,592	1,245,042

 

 

 

15.    Issued Bonds

                                 

On 14 March 2023, the Bank issued Senior Unsecured Fixed Rate Notes, totalling USD 500 million (equivalent to AED 1,836.5 million) for a five-year maturity at a coupon of 7%, classified at amortized cost. The Notes were issued under the Bank's EMTN Programme which is listed on the Irish Stock Exchange.

 

On 12 September 2024, the Bank issued Senior Unsecured Fixed Rate Notes, totalling USD 500 million (equivalent to AED 1,836.5 million) for a five-year maturity at a coupon of 5.25%, classified at amortized cost. The Notes were issued under the Bank's EMTN Programme which is listed on the London Stock Exchange's International Securities Market.

 

16.     Net impairment loss on financial assets

 

The movement in impairment loss by financial asset category during the period ended 30 September 2025 is as follows:

	Opening balance	Net charge/ (reversal) during the period		Write off during the period	Closing balance
	AED'000	AED'000		AED'000	AED'000
Deposits and balances due from banks	132,682	964		-	133,646
Loans and advances	1,786,570	33,717		-	1,820,287
Investments	3,051	800		-	3,851
Unfunded exposure	18,104	(16,401)		-	1,703
Other assets	27,964	-		-	27,964
Total	1,968,371	19,080		-	1,987,451
Charge on FVOCI Bonds		716
Other adjustments		(699)
Net impairment charge on financial assets			19,097

 

 

 

The movement in impairment loss by financial asset category during the period ended 30 September 2024 is as follows:

	Opening balance	Net charge/ (reversal) during the period		Write off during the period	Closing balance
	AED'000	AED'000		AED'000	AED'000
Deposits and balances due from banks	132,582	(76)		-	132,506
Loans and advances	1,731,369	3,640		(38)	1,734,971
Investments	3,599	(3,447)		-	152
Unfunded exposure	30,263	(2,454)		-	27,809
Other assets	27,964	-		-	27,964
Total	1,925,777	(2,337)		(38)	1,923,402
Charge on FVOCI Bonds		5,112
Other adjustments		(12,274)
Net impairment reversal on financial assets			(9,499)

 

 

 

 

17.    Commitments and contingent liabilities

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Financial guarantees for loans	207,829	207,829
Other guarantees	1,742,085	1,540,525
Letters of credit	258,997	292,343
	---------------------------	---------------------------
	2,208,911	2,040,697
Irrevocable commitments to extend credit	516,271	545,953
	---------------------------	---------------------------
	2,725,182	2,586,650
	=============	=============

18.    Related party balances

 

The Group enters into transactions with companies and entities that fall within the definition of a related party as contained in IAS 24 Related Party Disclosures. Related parties comprise companies under common ownership and/or common management and control, their shareholders and key management personnel. Transactions with associate and other related parties are made on substantially the same terms, as those prevailing at the same time for comparable transactions with external customers and parties. Transactions within the Group and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. The related parties' balances included in the condensed consolidated interim financial information and the significant transactions with related parties are as follows:

 

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Loans and advances, net	5,339,392	1,634,507
Letters of credit, guarantee and acceptances	227,728	213,565
Total	5,567,120	1,848,072
Cash deposits	(7,699,313)	(7,262,848)
Net exposure	(2,132,193)	(5,414,776)
Investment in securities	4,808,150	7,174,847

 

 

	Nine-month period ended 30 September
	2025	2024
	AED'000	AED'000
Transactions during the reporting period	(unaudited)	(unaudited)
Interest income	428,668	371,885
Interest expense	420,237	407,093
Rent expense	6,375	6,375

                                                                                                     

 

 

 

 

 

18.    Related party balances (continued)

 

Compensation of Directors and key management personnel:

	Nine-month period ended           30 September
	2025	2024
	AED'000	AED'000
	(unaudited)	(unaudited)
Short term benefits	4,634	3,704
End of service benefits	141	197
Total compensation	4,775	3,901

 

19.    Profit per share

 

Profit per share are computed by dividing the profit for the period by the average number of shares outstanding during the period as follows:

 

	Three-month period ended 30 September		Nine-month period ended 30 September
	2025	2024	2025	2024
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Basic earnings per share
Profit attributable to owners of the Bank for the period (AED'000)	166,450	124,895	435,428	296,433
	---------------------	---------------------	--------------------	--------------------
Weighted average number of ordinary shares:
Ordinary shares at the beginning of the period (in thousands shares)	3,000,000	3,000,000	3,000,000	3,000,000
Weighted average number of shares outstanding during the period (in thousands shares)	3,000,000	3,000,000	3,000,000	3,000,000
	============	============	============	============
Basic and diluted profit per share (AED)	0.055	0.042	0.145	0.099
	============	============	============	============

 

As at the reporting date, the diluted profit per share is equal to the basic profit per share as the Group has not issued any financial instruments that should be taken into consideration when the diluted profit per share is calculated.

 

20.    Segmental information

 

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. Information reported to the Group's chief operating decision maker for the purposes of resource allocation and assessment of segment performance is specifically focused on the type of business activities undertaken as a Group. For operating purposes, the Group is organised into two major business segments:

 

(i)      Commercial, which principally provides loans and other credit facilities, deposits and current accounts for corporate, government, institutional and individual customers; and

(ii)     Investment and treasury, which involves the management of the Group's investment portfolio.

 

 

 

 

 

 

 

 

 

20.    Segmental information (continued)

 

The following table presents information regarding the Group's operating segments:

 

	Commercial	Investment
	Banking	and treasury	Unallocated	Total
	AED'000	AED'000	AED'000	AED'000
30 September 2025 (unaudited):
Segment assets	35,207,963	12,549,114	1,831,934	49,589,011
	=============	=============	=============	=============
Segment liabilities	40,597,718	3,625,223	1,047,763	45,270,704
	=============	=============	=============	=============
31 December 2024 (audited):
Segment assets	29,887,713	12,103,812	1,591,447	43,582,972
	=============	=============	=============	=============
Segment liabilities	35,297,446	3,563,070	895,634	39,756,150
	=============	=============	=============	=============

 

 

The following table presents information regarding the Group's operating segments for the nine-month period ended 30 September 2025 (unaudited):

	Commercial	Investment
	Banking	and treasury		Unallocated*	Total
	AED'000		AED'000	AED'000	AED'000
Operating income
- Net interest income	295,500		218,659	-	514,159
- Net fee and commission income	126,997		-	-	126,997
- Exchange profit	25,111		-	-	25,111
- Income on investments	-		46,181	-	46,181
-   - Net loss on properties	-		(583)	-	(583)
- Other income	882		-	-	882
Total operating income	448,490		264,257	-	712,747
Other material non-cash items
- Net impairment loss on financial  assets	(19,897)		800	-	(19,097)
- Depreciation	-		-	(16,188)	(16,188)
- General and administrative expenses	(167,567)		(29,571)	-	(197,138)
- Income tax expense	-		-	(45,687)	(45,687)
Net profit for the period	261,026		235,486	(61,875)	434,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20.    Segmental information (continued)

 

The following table presents information regarding the Group's operating segments for the nine-month period ended 30 September 2024 (unaudited):

	Commercial	Investment
	Banking	and treasury	Unallocated*	Total
	AED'000	AED'000	AED'000	AED'000
Operating income
- Net interest income	138,948	182,349	-	321,297
- Net fee and commission income	121,199	-	-	121,199
- Exchange profit	18,387	-	-	18,387
- Income on investments	-	23,240	-	23,240
-   - Net income on properties	-	2,806	-	2,806
- Other income	1,447	-	-	1,447
Total operating income	279,981	208,395	-	488,376
Other material non-cash items
- Net impairment reversal on financial assets	12,948	(3,449)	-	9,499
- Depreciation	-	-	(18,416)	(18,416)
- General and administrative expenses	(135,278)	(23,873)	-	(159,151)
- Income tax expense	-	-	(24,690)	(24,690)
Net profit for the period	157,651	181,073	(43,106)	295,618

 

* Unallocated items comprise mainly head office expenses and tax assets

 

Revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the period. Transactions between segments, inter-segment cost of funds and allocation of expenses are not determined by management for the purpose of resource allocation. The accounting policies of the reportable segments are the same as the Group's accounting policies as disclosed in the consolidated financial statements for the year ended 31 December 2024. For the purposes of monitoring segment performance and allocating resources between segments:

 

•     All assets are allocated to reportable segments except for property and equipment and certain amounts included in other assets; and

 

•     All liabilities are allocated to reportable segments except for certain amounts included in other liabilities.

 

21.    Fair value of financial instruments

 

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. As such, differences can arise between book values and the fair value estimates.  Underlying the definition of fair value is the presumption that the Group is a going concern without any intention or requirement to materially curtail the scale of its operation or to undertake a transaction on adverse terms.

 

Investments held at fair value through profit and loss - Investments held for trading or designated at fair value through profit and loss represent investment securities that present the Group with opportunity for returns through dividend income, trading gains and capital appreciation. Including in these investments listed equity securities for which the fair values are based on quoted prices at close of business as of 30 September 2025, and unlisted bonds for which the fair values are derived from internal valuation performed based on generally accepted pricing models, all inputs used for the valuation are supposed by observable market prices or rates.

 

Unquoted investments held at fair value through other comprehensive income - The condensed consolidated interim financial information includes holdings in unquoted securities amounting to AED 81 million (31 December 2024: AED 76 million) which are measured at fair value. Fair values are determined in accordance with generally accepted pricing models based on comparable ratios backed by discounted cash flow analysis depending on the investment and industry. The valuation model includes some assumptions that are not supported by observable market prices or rates.

21.    Fair value of financial instruments (continued)

 

For investments valued using comparable ratios, share prices of comparable companies represent significant inputs to the valuation model. If the share prices of the comparable companies were 5% higher/lower while all other variables were held constant, then the fair value of the securities would increase/decrease by AED 4 million (31 December 2024: AED 4 million). The impact of the change in fair valuation from previously existing carrying amounts have been recognised as a part of cumulative changes in fair value in equity.

 

Fair value of financial instruments carried at amortised cost - Except as detailed in the following table, the management considers that the carrying amounts of financial assets and financial liabilities measured at amortised cost in the condensed consolidated interim financial information approximates their fair values.

 

30 September 2025 (unaudited)
	Carrying amount					Fair value
	Level 1	Level 2	Level 3	Total		Total
	AED'000	AED'000	AED'000	AED'000		AED'000
Financial assets
- Investments measured at   amortised cost	3,287,319	4,501,262	-	7,788,581		7,700,310
- Loans and advances	-	-	30,682,294	30,682,294		30,682,294
Financial liabilities
- Customers' deposits	-	-	33,114,672	33,114,672		33,114,672
- Issued Bonds	3,625,223	-	-	3,625,223		3,778,158

 

 

31 December 2024 (audited)
	Carrying amount					Fair value
	Level 1	Level 2	Level 3	Total		Total
	AED'000	AED'000	AED'000	AED'000		AED'000
Financial assets
- Investments measured at amortised cost	880,528	7,001,400	-	7,881,928		7,873,959
- Loans and advances	-	-	24,302,758	24,302,758		24,302,758
Financial liabilities
- Customers' deposits	-	-	29,704,942	29,704,942		29,704,942
- Issued Bonds	3,563,070	-	-	3,563,070		3,686,719

 

 

 

 

 

 

 

 

 

 

 

 

 

21.        Fair value of financial instruments (continued)

 

The fair value for other financial assets measured at amortized cost is based on market prices.

 

Fair value measurements recognised in the condensed consolidated interim statement of financial position

 

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value. They are ranked into levels 1 to 3 based on the degree to which the fair value is observable.

 

•    Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

•    Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices, including over-the-counter quoted prices).

•    Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

	Level 1	Level 2	Level 3	Total
	AED'000	AED'000	AED'000	AED'000
At 30 September 2025 (unaudited) Investments measured at fair value
Investment measured at FVTPL Quoted debt securities	337,598	-	-	337,598
Investments carried at FVTOCI
Quoted equity securities	871,424	-	-	871,424
Unquoted equity securities	-	-	81,324	81,324
Quoted debt securities	1,467,944	-	-	1,467,944
Total	2,676,966	-	81,324	2,758,290
Other assets
Positive fair value of derivatives	-	23	-	23
Negative fair value of derivatives	-	(4,335)	-	(4,335)
At 31 December 2024 (audited) Investments measured at fair value
Investment measured at FVTPL Quoted debt securities	423,181	-	-	423,181
Investments carried at FVTOCI
Quoted equity securities	400,844	-	-	400,844
Unquoted equity securities	-	-	76,173	76,173
Quoted debt securities	1,319,444	-	-	1,319,444
Total	2,143,469	-	76,173	2,219,642
Other assets
Positive fair value of derivatives	-	1,144	-	1,144
Negative fair value of derivatives	-	(1,432)	-	(1,432)

 

 

 

 

 

 

 

 

 

 

21.        Fair value of financial instruments (continued)

 

There were no transfers between Level 1 and Level 2 during the current period.

 

Reconciliation of Level 3 fair value measurements of other financial assets measured at fair value:

 

	30 September	31 December
	2025	2024
	AED'000	AED'000
	(unaudited)	(audited)
Opening balance	76,173	120,222
Profit/ (loss) recognised in other comprehensive income	5,151	(44,049)
Closing balance	81,324	76,173

 

22.        Capital adequacy

 

Basel III

 

 

	30 September  2025	31 December 2024
	AED'000	AED'000
	(unaudited)	(audited)
Capital base
Common Equity Tier 1	4,224,939	3,865,227
Additional Tier 1 capital	-	-
Tier 1 capital	4,224,939	3,865,227
Tier 2 capital	174,953	320,821
Total capital base	4,399,892	4,186,048
Risk-weighted assets:
Credit risk	30,069,825	25,665,669
Market risk	303,326	587,802
Operational risk	1,217,558	1,185,911
Total risk-weighted assets	31,590,709	27,439,382
Capital ratios
Common equity Tier 1 capital ratio	13.37%	14.09%
Tier 1 capital ratio	13.37%	14.09%
Total capital ratio	13.93%	15.26%