English Version - National Bank of Abu Dhabi

Notes to the consolidated financial statements
Notes to the consolidated financial statements
2 Basis of preparation (continued) 3 Significant accounting policies (continued)
(i)
Determination and presentation of operating segments
As of 1 January 2009 the Group determines and presents
operating segments based on the information that is
internally provided to the Chief Executive, who is the
Group’s chief operating decision maker. This change
in accounting policy is due to the adoption of IFRS 8
Operating Segments. Previously operating segments
were determined and presented in accordance with IAS
14 Segment Reporting. The new accounting policy in
respect of segment operating disclosures is presented as
follows.
An operating segment is a component of the Group
that engages in business activities from which it may
earn revenues and incur expenses, including revenues
and expenses that relate to transactions with any of the
Group’s other components. An operating segment’s
operating results are reviewed regularly by the Chief
Executive to make decisions about resources to be
allocated to the segment and assess its performance, and
for which discrete financial information is available.
Segment results that are reported to the Chief Executive
include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis.
Head office segment is comprised of head office as well
as aggregated individually insignificant segments.
(ii) Presentation of financial statements
The Group applies revised IAS 1 Presentation of
Financial Statements (2007), which became effective as
of 1 January 2009. As a result, the Group presents in the
consolidated statement of changes in equity all owner
changes in equity, whereas all non-owner changes in
equity are presented in the consolidated statement of
comprehensive income. Comparative information has
been re-presented so that it also is in conformity with the
revised standard. Since the change in accounting policy
only impacts presentation aspects, there is no impact on
earnings per share.
(iii) Amendments to IFRS 7
The amendments which became effective as of 1 January
2009 require disclosures of financial instruments
measured at fair value to be based on a three-level fair
value hierarchy that reflects the significance of the inputs
in such fair value measurements. The amendments
also require additional qualitative and quantitative
disclosures of liquidity risk.
3 Significant accounting policies
The accounting policies set out below have been
applied consistently to all periods presented in these
consolidated financial statements and have been applied
consistently by Group entities.
(a) Basis of consolidation
(i)
Subsidiaries
Subsidiaries are entities controlled by the Group.
Control exists when the Group has the power to govern
the financial and operating policies of an entity so as to
obtain benefits from its activities. The financial statements
of subsidiaries are included in the consolidated financial
statements from the date that control commences until
the date that control ceases.
The consolidated financial statements of the Group
comprise the Bank and its fully owned subsidiaries as
listed below:
Country of incorporation
Abu Dhabi International Bank Inc.
Curacao, Netherlands Antilles
Abu Dhabi Financial Services LLC
Abu Dhabi, Services LLC, United Arab Emirates
Abu Dhabi National Leasing LLC
Abu Dhabi, United Arab Emirates
NBAD Trust Company (Jersey) Limited
Jersey, Channel Islands
NBAD Private Bank (Suisse) SA
Geneva, Switzerland
Abu Dhabi National Islamic Finance Company
Abu Dhabi, United Arab Emirates
Ample China Holding Limited Hong Kong, China
(ii) Special purpose entities
Special purpose entities are entities that are created to
accomplish a narrow and well defined objective. The
financial statements of special purpose entities are not
included in the Group’s consolidated financial statements
except when the substance of the relationship is that the
Group controls the special purpose entity. Information
about the Group’s special purpose entities is set out in
note 43.
(iii) Fund management
The Group manages and administers assets held in
trust or in fiduciary capacity on behalf of investors. The
financial statements of these funds are not included in
these consolidated financial statements. Information
about the Group’s fund management and fiduciary
activity is set out in note 42.
(iv) Transactions eliminated on consolidation
The carrying amount of the Bank’s investment in each
subsidiary and the equity of each subsidiary is eliminated
on consolidation. All significant intra-group balances,
and unrealised income and expenses arising from intragroup
transactions are eliminated on consolidation.
(b) Financial assets and liabilities
(i)
Recognition
The Group initially recognises loans and advances,
customers’ deposits, medium term and subordinated
debt on the date that they are originated. All other
financial assets and liabilities are initially recognised
on the statement of financial position when, the Group
becomes a party to the contractual provisions of the
instrument.
All regular way purchases and sales of financial assets
are recognised on the settlement date, i.e. the date the
asset is delivered to or received from the counterparty.
Regular way purchases or sales of financial assets are
those that require delivery of assets within the time
frame generally established by regulation or convention
in the market place.
(ii) Derecognition
The Group derecognises a financial asset when the
contractual rights to the cash flows from the financial
asset expire, or when it transfers the rights to receive
the contractual cash flows on the financial asset in a
transaction in which substantially all the risks and rewards
of ownership of the financial asset are transferred.
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled or
expire.
The Group enters into transactions whereby it transfers
assets recognised on its statement of financial position,
but retains either all or substantially all of the risks and
rewards of the transferred assets or a portion of them.
In such transactions, the transferred assets are not
derecognised from the statement of financial position.
Transfers of assets with retention of all or substantially
all risks and rewards include repurchase transactions
(note 16).
The Group also derecognises certain assets when it
writes off balances pertaining to the assets deemed to be
uncollectible (note 4).
(iii) Designation at fair value through profit or loss
The Group has designated financial assets and liabilities
at fair value through profit or loss when either:
• the assets or liabilities are managed, evaluated and
reported internally on a fair value basis; or
• the designation eliminates or significantly reduces an
accounting mismatch which would otherwise arise.
(iv) Held for trading
Trading assets are those assets that the group acquires
for the purpose of selling in the near term, or holds as
part of a portfolio that is managed together for short-term
profit taking.
Trading assets are initially recognised and subsequently
measured at fair value in the statement of financial
position with transaction costs taken directly to the
consolidated income statement. All changes in fair
value are recognised as part of net trading income in the
consolidated income statement. Trading assets are not
reclassified subsequent to their initial recognition.
(v) Designation as available for sale and held-to maturity
The Group has non-derivative financial assets designated
as available for sale when these are not classified as
loans and receivables, held-to-maturity investments or
financial assets at fair value through profit or loss.
Held-to-maturity investments are non-derivative assets
with fixed or determinable payments and fixed maturity
that the Group has the positive intent and ability to hold
to maturity, and which are not designated as at fair value
through profit or loss or as available for sale.
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