Annual Report - Ahli United Bank

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Annual Report - Ahli United Bank

3 ACCOUNTING POLICIES (continued)3.3 Summary of significant accounting policies (continued)(v) Financial guarantees (continued)Financial guarantees are initially recognised in the consolidated financial statements at fair value, being the commissionreceived. Subsequent to initial recognition, the Group’s liability under each guarantee is measured at the higher of theamortised commission and the best estimate of expenditure required to settle any financial obligation arising as a result ofthe guarantee.(w) Islamic bankingThe activities of the Islamic branches are conducted in accordance with Islamic Sharia’a principles, as approved by the Sharia’aSupervisory Board. The Islamic branches’ financial statements are prepared in accordance with the Financial AccountingStandards issued by the Accounting and Auditing Organization for The Islamic Financial Institutions (AAOIFI), IFRS and CentralBank of Bahrain regulations.(x) Islamic financingRevenues on Islamic financing transactions are recognised on an accrual basis using the reducing installment method. Incomeon non performing financing accounts is suspended when it is not certain the branches will receive it.(y) Unrestricted investment accounts’ share of profitThe profit computed after taking into account all income and expenses at the end of financial year is distributed betweenunrestricted investment account holders and shareholders. The share of profit of the unrestricted account holders is calculatedon the basis of their daily deposit balances over the year, after reducing the agreed and declared Mudaraba fee.In the case of expenses, which arise out of issues relating to non compliance with Sharia’a regulations, then such expenses arenot to be borne by the unrestricted investment account holders.4 INTEREST INCOME2009 2008US$’000US$’000Treasury bills and bonds 54,022 45,367Deposits with banks and other financial institutions 17,318 142,688Loans and advances 730,497 910,009Non-trading investments 132,446 142,008934,283 1,240,072During the year, the Bank repurchased a portion of its subordinated liabilities with a nominal value of US$ 25 million (2008 : nil). Theresultant net gain on the repurchase amounting to US$ 8.2 million (2008 : nil) is included as a part of “interest income” above.AUB Annual Report 200963

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