INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2011
AND INDEPENDENT AUDITOR’S REPORT
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2011
AND INDEPENDENT AUDITOR’S REPORT
TABLE OF CONTENTS
Contents
Page
Independent auditor’s report
1-2
Consolidated statement of financial position
3
Consolidated statement of comprehensive income
4
Consolidated statement of changes in shareholders’ equity
5-6
Consolidated statement of cash flows
7-8
Notes to the consolidated financial statements
9 - 45
___________________________________________
KPMGYemen Mejanni & Co.
Public Accountants
150 Zubairy St.
PO Box 35 01
Sana 'a, Republ ic of Yemen
Telephon e +967 (1) 401 667 /8/ 9
Fax
+967 (1 ) 206 130
www.kpmg.com.ye
Internet
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana'a, Republic of Yemen
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financi al statements of International Bank of
Yemen-Yemeni joint stock company (the Bank), and its subsidiary company (together referred to the
"Group) which comprise the consolidated statement of financial position as at December 31 , 2011,
consolidated statement of comprehensive income, consolidated statement of changes in shareholders'
equity and consolidated statement of cash flows for the year then ended, and a summary of significan t
accounting policies and other explanatory information .
Management 's Responsibility f or the consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financ ial
statements in accordance with International Financial Reporting Standards and instructions issu ed by
Central Bank of Yemen , and for such internal control as management determines is necessary to
enabl e the preparation of consolidated financi al statements that are free from material misstatements,
whether du e to fraud or error.
Auditor 's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonabl e assurance wheth er the consolidated financial statements are free from mater ia l
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements, The procedures selected depend on our judgment, includi ng
the assessment of the risks of material misstatement of the consolidated financial statements, wheth er
due to fraud or error. In making those risk assessments, we consider internal control relevant to the
Group's preparation and fair presentation of the consolidated financial statements in order to des ign
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group ' s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements .
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our qu;u{ed audit opinion.
~II!~ '
KPMG Yemen Melanni & Co ., a partnership established under Yemeni law and a
member firm 01 the KPMG network of Independent membe r firm s aHiliated'ymh
KPM G International Cooperative (" KPMG International " ), a SWI SS en tity.
Basis/or Qualified Opinion
The group has not obtained the usufruct or ownership contracts for the land afforded by the Pu blic
Authority for Land, Survey and Urban Planning in Aden city, which have been granted free of charge
to Ocean Breeze for Investment and Development Co. Ltd . - the subsidiary company, and recorded as
usufruct of YR 1,249,928 thousand as at December 31, 20 II . As a result of, the Group has not
started the licensing procedures of implementation the project since the receipt of the land accord in g
to the temporary transmission dated December 22, 20 I 0, which could not be considered as a proof
document for the owners hip. Consequently, we could not satisfy ourselves for the ownership o f the
land and we could not perform other audit procedures to verify such ownership.
Qualified Opinion
In our opinion, except for of the effect of the matter discussed in the Basis for Qualified Opi nion
paragraph, the consolidated financial statement present fairly, in all material respects , the
consolidated financial position of the Group as at December 31, 2011 and of its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards and instructions issued by Central Bank of Yemen.
Report on Other Legal and Regulatory Requirements
We have obtained from management the information and clarifications that we deemed necessary for
our audit. The group keeps proper books of account, and the accompanying consolidated fin anc ial
statements are in agreement with these books.
~/~~ .
M. Zohdi Mejanni
Associated Accountant
Sana'a, June 27, 2012
2
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana'a, Republic oj Yemen
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31, 2011
ASSETS
Cash on hand and reserve balances with
Central Bank of Yemen
Due from banks
Treasury bills (net)
Treasury bil Is with repurchase obligation
Loans and advances (net)
Available for sale investments
Debit balances and other assets (net)
Usufruct
Property and equipment (net)
Note
2011
YR OOO's
20 10
YR OOO's
6
7
8
9
10
13
14
16
17
18,235,287
43 ,081 ,713
91,666,953
13 ,299,946
25,961 ,876
96,803
989,753
1,249,928
1,755,522
24,025,240
31 ,459,323
84,925 ,798
8,028,988
34 , 133 ,238
96,803
2,501,925
1,237,841
1,858,183
126,331181
188,261,3 32
15,701,466
156,280,347
5,829,746
3,097,107
180,908,666
7,295 ,764
161 ,416,796
5,431,601
1,152,809
175,296,970
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES
Due to banks
Customers' deposits
Credit balances and other liabilities
Other provisions
Total Liabilities
18
19
20
21
SHAREHOLDERS ' EQUITY
Paid-up capital
Legal reserve
Other reserves
Retained earnings
Total equity attributable to equity
holders of the Bank
Non -controlling interests
Total shareholders ' equity
22
22/a
22/b
TOTAL LIABILITIES AND SHAREHOLDERS '
EQUITY
Contingent liabilities and commitments (net)
23
8,000,000
1,951 ,058
952)
2,794,637
10,750,000
2,333 ,291
952)
2,139,044
15,221,383
207,732
15,429,115
12,744,743
225,626
12,970,369
J 26,337,18J.
188,261 332
~0,104,Q81
4Q,280,863
(The notes on pages 9 to 45 are an integral part of these consolidated financial statements)
Shaher Abdul Haq
~ct-Chairman _~
L0
Independent auditor's report attached.
~,,0}--; ,
Ahmed Thabet AI Absi
General Manager
M. Zohdi Mejanni ~
(KPMG Yemen Mejanni & Co.) ~
3
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana'a, Republic of Yemen
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
Note
2011
YR OOO's
2010 YR OOO's 25,108,486
(12,457,599)
12,650,887
20,222,443
(10,973,583)
9,248,860
Interest income
Less: interest expense
Net interest income
24
25
Commissions' revenue and bank service charges
Less: commissions' expense and bank service
Charges
Gain of foreign currency transactions
Other operating income
Net operating income
26
1,231,048
27
28
( 180,052)
3,199,346
4,310,021
21,211,250
29
(14,092,146)
( 5,044,888) 30
( 2,717,974)
4,401,130
( 2,731,473) 5,160,379 ( 1,942,384)
2,458,746
( 1,943,874) 3,216,505 Less: provisions
Less : general and administrative expenses and
depreciation
Net profit for the year before income tax
Less: Income tax for the year
Net profit for the year after tax
1,733,710
(
207,291)
270,206
1,891,255
12,936,740 Other comprehensive income
-.1,216,505
Total comprehensive income for the year
2.458,746
Attributable to:
Equity holders of the Bank
Non-control Iing interests
2,476,640
17,894)
Total comprehensive income for the year
2.458,746
3,216,505
YR 22.2
YR 4Q.2
Earnings per share
31
(
3,223,048
6,543)
(The notes on pages 9 to 45 are an integral part of these consolidated financial statements)
Shaher Abdul Haq
Vice Chairman
Independent auditor's report attached.
.r-~tA..~
d/!~~· M, Zohdi Mejanni (KPMG Yemen Mejanni & Co.) Finance
INTERNATI ONAL BANK OF YEMEN
( Yemeni Joint Stock Company)
Sana'a, Republic of Yemen
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2011
Paid -up
Capital
YR OOO's
Reserve for
Foreign Currency
Valuation
YR OOO's
Legal
Reserve
YR OOO's
Retained
Earnings
YR OOO's
Equity
Attributable to
Equity Holders of
the Bank
YROOO's
NonControlling
Interests
YR OOO's
Total
YR OOO's
225.626
12.970.369
Year2011
Balance as at January 1, 2011
8,000.000
1,951,058
952)
Total comprehensive income for the year
Net profit for the year
2.794.637
12.744.743
2.476.640
2.476.640
17,894)
2.458.746
2.476.640
2.476,640
17.894)
2.458.746
Other comprehensive income
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners, which recorded directly in
shareholders' equity
Transfer to lega l reserve (proposed)
Transfer to capital increase
382,233
( 382,233)
( 2,750,000)
2.750.000
382.233
( 3.132,233)
lQ.lli.QQQ
...2, 3J3 ,29~
2,750,000
Change in rese rve for foreign currency valuation
Balance as at December 31, 20 II
5
92.2)
_2, 132.,0.4.4
1U.2.l.lli
~
l5....422.ill
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana'a, Repuhlic of feme"
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
Paid-up
Capital
-----.XR 000's
Reserve for
Foreign Currency
Valuation
YR OOO's
Legal
Reserve
YR OOO's
Retained
Earnings
YR OOO's
Equity
Attributable to
Equity Holders of
the Bank
YR OOO's
NonControlling
Interests
YR OOO's
Total
YR OOO's
225,220
9,747.670
Year 2010
Balance as at Janu ary 1, 2010
7.000.000
197)
1.463.675
Total comprehensive income for the year N et profit for the year 1.058,972
9,522.450
3,223,048
3,223,048
6,543)
3.216.505
3,223 ,048
3,223,048
6,543)
3,216,505
6,949
6,949
6,194
6. 194
_ 22.5.626
12.970.369
Other comprehensive income Total other comprehensive income TOlal comprehensive income for the year
Transactions with owners, recorded directly in shareholders'
equity Transfer to legal reserve Transfer to capi tal inc rease Change in reserve for foreign currency valuation Balance as at December 31 , 20 I 0
487,3 83)
1,000,000)
487,3 83
1,000,000
1,000.000
487.]83
755)
755)
1,487,383)
-tillill.OOQ
1,25..1 ,058
952)
2 124631
755)
755)
1214414]
(The notes on pages 9 to 45 are an integral part of these consolidated financial statements)
Shaher Abdul Haq Vice Chairman
~ \,-,---u.' - \
-­
tW~'4JJ\>
Independent auditor' s report attached.
A hmed Thabet Al Absi
-4
6
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana 'a, Republic of Yemen
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2011
2011
YR OOO's
201 0 YR OOO' s 4,401,130
5,1 60,379
290,863
14,092,146
253 ,571
5,044,88 8
Cash flows from operating activities
Net profit for the year before income tax
Adjustments to reconcile net profit to cash
flows from operating activities
Depreciation of property and equipment
17
Provisions provided during the year
29
Revaluation differences of provision in foreign
currencies
Provisions reversed
28
Provisions used
Revaluation differences of available for sale investments
Revaluation differences of usufruct in foreign currencies
Revaluation differences of foreign currencies
Net (profit) on sale of property and equipment
Operating profit before changes in assets and liabilities used in
operating activities
Net (increase) decrease in assets
Reserve balances with Central Bank of Yemen
Loans and advances
Treasury bills due after 3 months
Debit balances and other assets
Net increase (decrease) in liabilities
Due to banks
Customers ' deposits
Cred it balances and other liabi I ities
Income tax paid
Net cash from operating activities
( 4,216,595)
( 1,041 ,569)
963)
42,884
( 1,788,449)
( 606,429)
661 )
(
36,4 J 6)
(
6,194
2,082)
(
13,525,012
8,073 ,8 79 10,088,767
( 2,934,917)
14,271,827
5,728,767
( 6,572,611) ( 8,994,594) 7,265,143 ( 5,573,752) 8,405,702
( 5,136,449)
( 444,239)
( J, 100,000)
42,404,470
4,3 33 ,970 31 ,8 79,958 1,1 20,532 ( 751.787)
30,780,738
(
(
187,239)
12,087)
2,080,107
(
195 ,978)
(
38,176)
( 1,976,452)
1.88078 t
<-2 .210,606)
Cash flows from investing activities:
Net payments to the acquisition of property and equipment
(Increase) in usufruct
Decrease (increase) in time deposits ­ restricted
7
Net cash from (used in) investing activities
7
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana'a, Republic o/Yemen
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
2011
YR OOO's
Cash flows from financing activities:
Dividend paid to shareholders
2010
YR OOO 's
(
1,050, 000)
1,050,000)
Net cash (used in) financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
44,285,251
87,498,945
111.1 81 ,196
27,520,1 32
59,978 ,8 13
87.4 98,945
Cash and cash equivalents consist of:
Cash on hand and reserve balances with central Bank of
Yemen
Due from banks
Treasury bills (net)
Treasury bills with repurchase obligation maturing
within 3 months
6
7
8
18,235,287
43,081,713
91 ,666,953
24,025 ,240
31 ,459,323
84,92 5,798
9
Less: Reserve balances with Central Bank of Yemen
Less: Treasury bills (net) due after 3 months
Less: Time deposits - restricted
13,299,946
166,283,899
( 11 , 160,947)
( 23,338,756)
7
8,028,988
148,439,3 49
( 21,2 49,714)
( 37,610,583)
( 2,080, I 07)
13 1,784,lli
87.498,945
(The notes on pages 9 to 45 are an integral part of these consolidated financial statements)
Shaher Abdul Haq
Vice Chairman
Independent auditor's report attached.
~~.~,
M. Zohdi Mejanni (KPMG Yemen Mejanni & Cb . '? 8
v
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2011
1.
BACKGROUND INFORMATION
-
The International Bank of Yemen - Yemeni Joint Stock Company was incorporated in the
Republic of Yemen on January 4, 1979 under the Republican Decree No. 4 of 1979. The
Bank operates in the Republic of Yemen, through its head office in Sana'a city and branches
in Sana’a (Zubeiry St., Bal Al Yemen, Haddah, Sheraton, Airport, Al Farasha, Al Steen, Taiz
St., University, and GfT), Hodeidah, Aden (Aden and Al-Mansora), Mukalla, Alquten, Ibb,
Dhamar, Taiz and Seiyun (Seiyun and Seiyun Airport), in addition to the subsidiary company
in Yemen as follow:
Percentage of equity
Subsidiary Name
2011
2010
Ocean Breeze for Investment & Development Co.,
Sana’a, Yemen
-
2.
80%
80%
The Consolidated financial statements were approved by Board of Directors on June 27, 2012
and a Board resolution proposing the approval of the consolidated financial statements by the
General Assembly of the shareholders was issued.
PREPARATION BASIS OF THE CONSOLDIATED FINANCIAL STATEMENTS
2.1
Statement of compliance
a.
The consolidated financial statements are prepared on the historical cost bases,
except available-for-sale investments and financial instruments (financial assets
and liabilities) held at fair value, and in accordance with International Financial
Reporting Standards (IFRS) issued by International Accounting Standards Board
and instructions issued by the Central Bank of Yemen (CBY).
b.
The consolidated financial statements include all balances of assets, liabilities and
results of operation of the subsidiary after eliminating all balances and
transactions and income statement items which result from intra-group
transactions.
c.
Non-controlling interests represent the portion of profit and loss and net assets not
owned, directly or indirectly, by the Group and are presented separately in the
consolidated statement of comprehensive income and under equity in the
consolidated statement of financial position, separately from the Bank
shareholders’ equity.
d.
The subsidiary financial statements are prepared and presented in accordance with
International financial Reporting Standards (IFRS) issued by International
Accounting Standards Board.
In deviation from International Financial Reporting Standards and to apply the
provisions of local laws and regulations, issued by CBY, the following are treated as
follows:
9
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
a.
The adoption of minimum fixed percentages for non-performing loans’ provisions
in accordance with CBY circular No. 6 of 1996 and No. 5 of 1998.
b.
The provision for general risks calculated on performing loans is presented as part
of loans and advances provision and not part of shareholders’ equity.
c.
The provision for contingent liabilities is presented as part of other provisions and
not as part of shareholders’ equity.
The effect of these deviations is immaterial on the consolidated financial statements of
the Group as at December 31, 2011.
2.2
Functional and presentation currency
The consolidated financial statements are presented in Yemen Rials, which is the
functional currency, and all values are rounded to the nearest one thousand Yemeni Rail
except when otherwise is indicated.
2.3
Significant accounting judgments and estimates
The preparation of consolidated financial statements requires management to make
judgments, estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience of the
Group and various other factors that are believed by the Group to be reasonable under
the circumstances, the results of which form the basis of making the judgments about
carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimates are revised and
in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgments in
applying accounting policies that have the most significant effect on the amounts
recognized in the consolidated financial statements are described in notes 3, 11, 15, 17,
20 and 21.
10
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
3.
SIGNIFICANT ACCOUNTING POLICIES
The adopted accounting policies for the preparation of the consolidated financial
statements as at December 31, 2011 are consistent with those policies for the preparation
of the prior year’s financial statements.
3.1
3.2
3.3
Foreign currencies transactions
a.
The Group maintains its records in Yemeni Rial, which is the Group’s functional
currency. Transactions in other currencies are recorded during the financial year at the
prevailing exchange rates at the date of transaction. Balances of monetary assets and
liabilities in other currencies at the end of the financial year are translated at the
prevailing exchange rates at that date. Gains or losses resulting from translation are
recognized in the statement of comprehensive income.
b.
At the end of the financial year, the assets and liabilities of the subsidiary are
translated into Yemeni Rial (presentation currency) at the prevailing exchange rates at
that date. The income and expenses of the subsidiary are translated at the average
exchange rates during the year. Exchange differences arising on translation are
recorded directly to other reserves under shareholders’ equity.
c.
The Group does not deal in forward contracts to cover its needs for foreign currencies
or foreign exchange contracts to cover the risks of settling its future liabilities in
foreign currencies.
Revenue recognition
-
Revenues are recognized on the accrual basis. However, in order to comply with the
requirements of CBY circular No. 6 of 1996 relating to classification of assets and
liabilities, the Group does not accrue interest on non-performing loans and credit
facilities. When an account is treated as non-performing loan, all uncollected interest
relating to the three months prior to categorizing the loan as non-performing is reversed
from income and transferred to other credit balances as suspense interest.
-
Revenue of available for sale investments is recognized when its related dividends are
distributed in cash during the year.
-
In accordance with CBY instruction, the reversed provisions, no longer required, are
recorded in the statement of comprehensive income under “other operating income”.
-
Interest income is recognized on the accrual basis in the statement of comprehensive
income according to the time-proportion and original values using the effective interest
rate method.
-
Commissions’ revenue and the Bank service charges are recognized as the related
services are performed.
Treasury bills
-
Treasury bills are recorded at face value and the balance of unearned discount is
recorded under credit balances and other liabilities.
Treasury bills are presented on the statement of financial position net of balance of
unearned discount outstanding at the consolidated financial statements date.
-
Treasury bills with repurchase obligation are presented in the financial statements at
cost at the financial statements date. The related accrued interest is included in debit
balances and other assets.
11
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
3.4
Valuation of available for sale investments
After initial recognition, available for sale investments are measured at fair value for
each individual investment. Unrealized gains or losses arising from a change in the fair
value are recognized directly in the fair value reserve under equity until the investment
is sold, at which time the cumulative gain or loss previously recognized in equity is
transferred to the statement of comprehensive income.
In cases where objective evidence exists that a specific investment is impaired, the
recoverable amount of that investment is determined and any impairment loss is
recognized in the statement of comprehensive income as a provision for impairment of
investments. Any increase in the fair value of avalibale for sale investment is
recognized as fair value reserve under shareholder’s equity. A significant or prolonged
decline in the value of the financial investment is an objective evidence of impairment.
Reversal of impairment losses on debt instruments, previously impaired, are reversed
through statement of comprehensive income.
In case of, difficulty of obtaining a reliable estimate of the fair values for these
investments as there are no quoted market prices, or the lack of stability concrete of
these investments’ values, or future cash flows could not be determined, such
investments are carried at cost.
3.5
Valuation of assets whose titles have been transferred to the Group as a repayment of
loans
Assets whose titles have been transferred to the Group, are measured at the values
carried by the Group in the statement of financial position under debit balances and
other assets, less any impairment, if any, at the financial statements date. Impairment
losses are charged to the statement of comprehensive income.
3.6
Provision of loans and advances and contingent liabilities
-
In order to comply with CBY circular No. 6 of 1996 and No. 5 of 1998 relating to
classification of assets and liabilities, provision is provided for specific loans,
overdrafts and contingent liabilities, in addition to a percentage for general risks
calculated on the total of other loans, overdrafts and contingent liabilities after
deducting balances secured by deposits and banks’ guarantees issued by foreign
worthy banks. The provision is determined based on periodical comprehensive
reviews of the credit portfolio and contingent liabilities. Accordingly, the
provision is provided in accordance with the following rates:
Performing loans and advance and contingent
liabilities, including watchlist accounts
Non-performing loans and advance and contingent
liabilities:
Substandard debts
Doubtful debts
Bad debts
12
1%
15%
45%
100%
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
3.7
-
Loans are written off if procedures taken towards their collection prove useless, or if
directed by CBY examiners upon review of the portfolio by debiting the provision.
Proceeds from loans previously written off in prior years are credited to the provision.
-
Loans to customers and banks are presented on the statement of financial position net
of specific and general provisions, and suspense interest.
Contingent liabilities and commitments
Contingent liabilities and commitments, in which the Group is a party, are presented off
statement of financial position under “contingent liabilities and commitments”, after
deducting its related deposits as they do not represent actual assets or liabilities at financial
statements date.
3.8
3.9
Recognition /derecognition of financial instruments
-
Financial assets and liabilities are recognized in the statement of financial position
when the Group becomes a party to the contractual provisions of the instrument with
other party.
-
Financial assets are derecognized when the Group’s contractual rights related to the
financial instruments have expired which ordinarily coincide with the sale or transfer
of the contractual right to receive cash flows related to the asset to an independent
parties.
-
Financial liabilities are derecognized when they are extinguished, that is when the
contractual obligation is discharged, canceled or expired.
Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, there is a legally right to offset the recognized
amounts and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously. Income and expense is not offset in the statement of comprehensive income
unless required or permitted by any accounting standard or interpretation.
3.10 Statement of cash flows
The Group uses the indirect method to present cash flows, whereby net profit or loss is
adjusted with net cash flows from operating, investing and financing activities.
3.11 Cash and cash equivalent
For the purpose of preparing the statement of cash flow, cash and cash equivalent consist of
cash on hand, cash balances with CBY other than reserve balances, call time and demand
deposits with other banks and treasury bills and treasury bills with repurchase obligation
which are due within three months from the issuance date.
13
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
3.12 Impairment of assets
-
Impairment of financial assets
The Group assesses at each reporting date whether there is objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are recognized only if there is
objective evidence of impairment as a result of one or more events that occurred after
the initial recognition of the asset (a” loss event”) and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated.
Objective evidence that financial assets are impaired can include default of delinquency
by a borrower, restructuring of a financing arrangement by the Group on terms that the
Group would not otherwise consider, indications that a borrower or issuer will enter
bankruptcy, the disappearance of an active market for a security, or other observable
data relating to adverse changes in payment status of borrowers or issuers.
Impairment is the difference between carrying amount and the present value of the
estimated future cash flows discounted at the original effective profit rate.
Significant financial assets are assessed for impairment on an individual basis. All
significant financial assets found not to be impaired are collectively assessed for any
impairment that has been incurred but not yet identified. All financial assets that are not
individually significant are collectively assessed for impairment by grouping together on
the basis that share similar credit risk characteristics.
An impairment loss is reversed if the reversal can be related objectively to an event
occurring after the impairment loss was recognized, the reversal is recognized in the
statement of comprehensive income.
-
Impairment of non-financial assets
The Group reviews the carrying amounts of the assets, according to their materiality, at
each financial statements date to determine whether there is any indication of
impairment. If such indication exists, the assets’ recoverable amount is estimated and
compared with the carrying amount and any excess in the carrying amount is charged to
the statement of comprehensive income.
Any increase in the value of the assets, previously impaired, is recognized in the
statement of comprehensive income provided that the increase does not exceed the
original recoverable value of the asset before impairment.
3.13 Property and equipment and depreciation
Property and equipment is stated at cost less accumulated depreciation and impairment
losses, if any. Subsequent costs are recognized in the carrying amount of each item or as a
separate item, as appropriate, if it is probable that the future economic benefits embodied
within the item will flow to the Group, and its cost can be measured reliably.
Depreciation is charged to the statement of comprehensive income, except land, on the
straight-line basis over the estimated useful lives of items of property and equipment. The
depreciation method, useful lives and residual value, if any, are reassessed annually by the
Group’s management. The estimated useful lives are as follows:
14
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
Estimated
Useful lives
Buildings and constructions
Furniture and fixtures
Machinery and equipment
Computers
Motor vehicles
5 - 40 years
5 - 10 years
5 - 20 years
5 years
5 - 10 years
3.14 Usufruct
Usufruct is recorded at acquisition cost less accumulated deprecation and impairment
losses, if any, and depreciated over the usufruct contract term.
3.15 Other provisions
A provision is provided for present legal or constructive obligations as a result of past
events and it is probable that an outflow of economic benefits will be required to settle
the obligation based on the study prepared by the Group in order to estimate the amount
of the obligation.
3.16 Leas contracts
Leases are classifeid as finance leases whereby the terms of the contract transfer
substantially all the risks and rewards of ownership to the lessee. All other leases are
classified as operating leases. All the leases entered into by the Group are operating
leases.
Rentals payable under these contracts are charged to the statement of comprehensive
income on a straight-line basis over the contract term.
3.17 Taxation
-
For the Group operation inside Yemen, corporate tax is calculated in accordance with
the prevailing laws and regulations in the Republic of Yemen.
-
Due to the characteristics of the tax accounting in Yemen, application of
International Accounting Standard on Income Taxes does not usually result in
deferred tax liabilities. In the case that deferred tax assets have resulted from the
application of this standard, these assets are not booked unless there is assurance that
these assets will be realized in the near future.
-
Provision for tax liabilities is recognized according to the necessary studies and in
consideration of tax assessments.
3.18 Zakat due on shareholders
The Group remits the Zakat due on the shareholders to the relevant governmental
authority which decides on the allocation of the Zakat.
3.19 End of service benefits
The provisions of Social Insurance Law are applied to all employees of the Group
concerning end of service benefits.
15
INTERNATIONAL BANK OF YEMEN
(YEMENI JOINT STOCK COMPANY)
SANA’A, REPUBLIC OF YEMEN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2011
3.20 Applicable new standards and interpretations issued but not yet adopted
For the avoidance of doubt, the following applicable new standards, amendments to
standards and interpretations, which were issued by IASB before December 31, 2011
and are not yet in effect, have not been early adopted.
-
IFRS 9 Financial Instruments: Classification and Measurement, is the first
standard issued as part of a wider project to replace IAS 39.
IFRS 9 retains but simplifes the mixed measurement model and establishes two
primary measurement categories for financial assets: amortised cost and fair
value. The basis of classification depends on the entity’s business model and the
contractual cash flow characteristices of the financial asset. The standard is
effective for annual periods beginning on or after 1 January 2015.
-
IFRS 10 Consolidated Financial Statements.
IFRS 11 Joint Arrangements.
IFRS 12 Disclosure of Interest in Other Entities.
IFRS 13 Fair Value Measurement.
The above standards are effective for annual periods beginning on or after 1 January
2013. The Group is currently assessing the impact of these standards on future periods.
4.
FINANCIAL INSTRUMENTS AND THEIR RELATED RISKS MANAGEMENT
4.1
Financial instruments
a.
The Group’s financial instruments are represented in financial assets and liabilities.
Financial assets include cash balances, current accounts and deposits with banks,
financial investments, loans to customers, treasury bills and treasury bills with
repurchase obligation. Financial liabilities include customers’ deposits and due to
banks. Also, financial instruments include rights and obligations stated in contingent
liabilities and commitments.
Note (3) to the consolidated financial statements includes significant accounting
policies applied for recording and measuring significant financial instruments and their
related revenues and expenses.
b.
Fair value of financial instruments
The fair value of financial assets are determined by reference to quoted market bid
prices on a regulated exchange at the close of business at the year-end date. For
financial assets where there is no quoted market price, a reasonable estimate of fair
value is determined by reference to the current market value of another instrument
which is substantially the same. Where it is not possible to arrive at a reliable estimate
of the fair value, the financial assets are carried at cost.
16
INTERNATIONAL BANK OF YEMEN
(YEMENI JOINT STOCK COMPANY)
SANA’A, REPUBLIC OF YEMEN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2011
Based on valuation bases of the Group’s assets and liabilities stated in the notes to the
consolidated financial statements, the fair value of financial instruments does not
differ fundamentally from their book value at the financial statements date.
The following table provides a comparison between the carrying amount and fair
values of the Group’s financial instruments which stated in the consolidated financial
statements. The table does not include the fair values of non-financial assets and nonfinancial liabilities.
Financial assets
Cash on hand and reserve
balances with the CBY
Due from banks
Treasury bills (net)
Treasury bills with
repurchase obligation
Loans and advances (net)
Available for sale financial
investments
Financial liabilities
Due to banks
Customers’ deposits
c.
2011
Carrying
Fair
amount
value
YR 000’s
YR 000’s
2010
Carrying
Fair
amount
value
YR 000’s
YR 000’s
18,235,287
43,081,713
91,666,953
18,235,287
43,081,713
91,666,953
24,025,240
31,459,323
84,925,798
24,025,240
31,459,323
84,925,798
13,299,946
25,961,876
13,299,946
25,961,876
8,028,988
34,133,238
8,028,988
34,133,238
96,803
96,803
96,803
96,803
15,701,466
156,280,347
15,701,466
156,280,347
7,295,764
161,416,796
7,295,764
161,416,796
Fair value hierarchy
The Group measures fair values using the following fair value hierarchy that reflects
the significance of the inputs used in making the measurements:
Level 1: Fair values are based on quoted prices (unadjusted) in active markets for
identical assets.
Level 2: Fair values are based on inputs other than quoted prices included within
level 1 that are observable for the assets either directly (i.e. as price) or
indirectly (i.e. derived from prices).
Level 3: Fair values are based on inputs for assets that are not based on observable
market data.
The fair values for available-for-sale investments comprise of YR 96,803 thousand
under the level 3 category. There were no investments qualifying for levels 1 and 2
fair value disclosures.
d.
Financial instruments for which fair value approximates carrying value
For financial assets and financial liabilities that are liquid or having a term maturity of
less than three months, the carrying amounts approximate to their fair value.
17
INTERNATIONAL BANK OF YEMEN
(YEMENI JOINT STOCK COMPANY)
SANA’A, REPUBLIC OF YEMEN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2011
4.2
Risk management of financial instruments
Risk is inherent in the Group’s activities but it is managed through a process of ongoing
identification, measurement and monitoring, subject to risk limits and other controls. This
process of risk management is critical to the Group’s continuing profitability and each
individual within the Group is accountable for the risk exposures relating to his or her
responsibilities.
Monitoring and controlling risks is primarily performed based on limits established by the
Group. These limits reflect the business strategy and market environment of the Group as
well as the level of risk that the Group is willing to accept, with additional emphasis on
selected industries.
Information complied from all businesses is examined and processed in order to analyze,
control and identify early risks. This information is presented and explained to the Board of
Directors (ultimately responsible for identifying and controlling risks), the Risk Committee,
and the head of each business division.
The Group’s is exposed to credit risk, liquidity risk, interest rate risk, exchange rate risk,
operating risk and other risks.
a.
Credit risk
Loans and credit facilities to customers and banks, current accounts and deposits with
banks and rights and obligations from others are considered as financial assets
exposed to credit risk. Credit risk represents the inability of these parties to fully or
partially meet their obligations when they fall due. In order to comply with CBY
circular No. 10 of 1997 regarding to the credit risk exposure, the Group adheres to
certain minimum standards in order to properly manage its credit risk. In addition to
the standards stated in the aforementioned circular, the Group performs a number of
procedures in order to minimize credit risk such as:
-
Preparing credit studies for customers and banks before dealing with them and
determining their related credit risk rates.
-
Obtaining sufficient collaterals to minimize the credit risk exposure which may
result from financial problems facing customers or banks.
-
Following up and performing periodical reviews of customers and banks in
order to evaluate their financial positions, credit rating and the required
provision for non-performing loans.
-
Distributing credit portfolio and balances with banks over diversified
sectors to minimize concentration of credit risk.
The table below shows the maximum exposure to credit risk for the components of the
financial position. The maximum exposure is shown gross, before the effect of
mitigation by the use of collateral agreements:
18
INTERNATIONAL BANK OF YEMEN
(YEMENI JOINT STOCK COMPANY)
SANA’A, REPUBLIC OF YEMEN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2011
2011
YR 000’s
2010
YR 000’s
Contingent liabilities and commitments
11,160,947
43,081,713
91,666,953
13,299,946
25,961,876
96,803
989,753
186,257,991
34,269,252
21,364,837
31,459,323
84,925,798
8,028,988
34,133,238
96,803
2,501,925
182,510,912
44,988,181
Total credit risk exposure
220,527,243
227,499,093
Cash on hand and reserve balances with CBY (excluding
cash on hand and ATM)
Due from banks
Treasury bills (net)
Treasury bills with repurchase obligation
Loans and advances (net)
Available-for-sale investments
Debit balances and other assets (net)
The following is an analysis of the Group’s financial assets and contingent liabilities
by industry sector, before and after taking into account collateral held of other credit
enhancements (risk concentration for maximum exposure to credit risk by industry
sector):
2011
Gross
Net
Maximum
Maximum
Exposure
Exposure
YR 000’s
YR 000’s
Government
Finance
General trade
Industry
Service
Individuals
Others
Contingent liabilities and
commitments
2010
Gross
Net
Maximum
Maximum
Exposure
Exposure
YR 000’s
YR 000’s
122,255,214
37,051,148
10,143,588
5,408,594
5,587,879
4,821,815
989,753
186,257,991
5,557,672
9,240,127
4,926,866
5,090,182
4,392,349
989,753
30,196,949
120,338,781
25,536,968
14,084,941
6,937,538
7,209,401
5,901,358
2,501,925
182,510,912
5,320,661
6,685,049
3,328,043
3,430,549
2,852,087
2,501,925
24,118,314
34,269,252
220,527,243
30,704,087
60,901,036
44,988,181
227,499,093
40,280,863
64,399,177
The Group manages concentration of risk by distributing the portfolio over diversified
economic sectors and geographical locations. Note no. 34 to the consolidated
financial statements, shows the distribution of assets, liabilities, contingent liabilities
and commitments based on economic sectors and Note no. 35 to the consolidated
financial statements, shows the distribution of financial instruments based on
geographical locations at the financial statements date.
b.
Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its obligations when
they fall due and other risks related to the inability of providing sufficient liquidity at
affordable prices on timely basis. To limit these risks, the Group’s management in
addition to its core deposit base, manages assets with liquidity in mind and monitors
future cash flows and liquidity on a daily basis and has arranged diversified funding
sources.
19
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
The table below shows the maturity analysis for financial liabilities that shows the
remaining contractual maturities:
Liabilities
Due to banks
Customers’ deposits
Income tax for the
year
Total liabilities
Liabilities
Due to banks
Customers’ deposits
Income tax for the
year
Total liabilities
Less than 3
months
YR 000’s
From 3 to
6 months
YR 000’s
2011
From 6
months to
1 year
YR 000’s
15,701,466
89,812,190
53,250,620
13,217,537
-
1,942,384
105,513,656
-
Over 1
year
YR 000’s
-
15,701,466
156,280,347
-
1,942,384
173,924,197
Total
YR 000’s
55,193,004
13,217,537
-
Less than 3
months
YR 000’s
From 3 to
6 months
YR 000’s
2010
From 6
months to
1 year
YR 000’s
Over 1
year
YR 000’s
7,295,764
89,943,540
57,503,197
13,970,059
-
7,295,764
161,416,796
-
1,943,874
-
170,656,434
-
1,943,874
97,239,304
59,447,071
13,970,059
Total
YR 000’s
Note no. 32 to the consolidated financial statements, shows the maturity analysis of
assets and liabilities and the net gap between them in comparison to last year at the
financial statements date.
c.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect the
value of some of the financial instruments. The Group performs a number of
procedures to limit the effect of such risk to the minimal level as follows:
-
Correlating interest rates on borrowing with interest rates on lending.
Considering the discount rates for different currencies when determining
interest rates.
Monitoring the matching of maturity dates of financial assets and liabilities.
20
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
The table below shows the Group’s exposure to interest rate risks:
2011
Less than
3 months
YR 000’s
From 3
months to
6 months
YR 000’s
Assets
Cash on hand and reserve balances
with CBY
Due from banks
6,669,281
Treasury bills (net)
68,328,197
Treasury bills with repurchase obligation 13,299,946
Loans and advances (net)
20,471,723
Available-for-sale investments
Debit balances and other assets (net)
Usufruct
Property and equipment (net)
-
5,543,056
9,888,419
205,810
-
13,450,337
5,269,918
-
108,769,147
15,637,285
18,720,255
15,701,466
89,812,190
-
53,250,620
-
13,217,537
-
Total Liabilities and Shareholders’ Equity 105,513,656
53,250,620
13,217,537
5,502,718
Total Assets
Liabilities and Shareholders’ Equity
Due to banks
Customers’ deposits
Credit balances and other liabilities
Other provisions
Shareholders’ equity
Interest rate sensitivity gap
3,255,491
(37,613,335)
Cumulative interest rate sensitivity gap
3,255,491
(34,357,844)
From 6
months to
1 year
YR 000’s
Noninterest
sensitive
YR 000’s
Total
YR 000’s
406,125
-
18,235,287
30,463,251
14,425
96,803
989,753
1,249,928
1,755,522
18,235,287
43,081,713
91,666,953
13,299,946
25,961,876
96,803
989,753
1,249,928
1,755,522
406,125
52,804,969
196,337,781
-
5,829,746
3,097,107
15,429,115
15,701,466
156,280,347
5,829,746
3,097,107
15,429,115
-
24,355,968
196,337,781
28,449,001
-
-
-
Over
1 year
YR 000’
406,125
(28,855,126) (28,449,001)
21
Average interest rates
Local
Foreign
Currency
Currency
%
%
-
-
22.7
22.7
27
0.4
10
22
20
3
2
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
2010
Less than
3 months
YR 000’s
From 3
months to
6 months
YR 000’s
Assets
Cash on hand and reserve balances
with CBY
Due from banks
9,336,144
Treasury bills (net)
47,315,215
Treasury bills with repurchase obligation 8,028,988
Loans and advances (net)
26,892,158
Available-for-sale investments
Debit balances and other assets (net)
Usufruct
Property and equipment (net)
-
958,500
16,434,283
270,357
-
From 6
months to
1 year
YR 000’s
Over
1 year
YR 000’s
Noninterest
sensitive
YR 000’s
Total
YR 000’s
107,420
21,176,300
6,922,693
-
-
24,025,240
21,057,259
48,030
96,803
2,501,925
1,237,841
1,858,183
24,025,240
31,459,323
84,925,798
8,028,988
34,133,238
96,803
2,501,925
1,237,841
1,858,183
Total Assets
91,572,505
17,663,140
28,206,413
-
50,825,281
188,267,339
Liabilities and Shareholders’ Equity
Due to banks
Customers’ deposits
Credit balances and other liabilities
Other provisions
Shareholders’ equity
2,481,764
89,943,540
-
57,503,197
-
13,970,059
-
-
4,814,000
5,431,601
1,152,809
12,970,369
7,295,764
161,416,796
5,431,601
1,152,809
12,970,369
Total Liabilities and Shareholders’ Equity
92,425,304
57,503,197
13,970,059
-
24,368,779
188,267,339
14,236,354
-
26,456,502
-
-
-
Interest rate sensitivity gap
(
852,799) (39,840,057)
Cumulative interest rate sensitivity gap
(
852,799) (40,692,856)
(26,456,502) (26,456,502)
Average interest rates
Local
Foreign
Currency
Currency
%
%
-
-
20.50
18.57
27
0.25
10.00
22.00
20.00
3.00
2.00
Note no. 33 to the consolidated financial statements, shows the average interest rates on assets and liabilities applied during this year compared
with last year.
22
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
d.
Exchange rate risk
Due to the nature of the Group’s activity, the Group deals in different foreign
currencies, hence it is exposed to exchange rate risk. In order to minimize the
exposure to exchange rate risk, the Group is trying to maintain a balanced foreign
currencies position in compliance with the CBY instructions and the requirements
of CBY circular No. 6 of 1998 which specifies that the surplus of individual
foreign currency position should not exceed 15% of the total of capital and
reserves, and that the aggregate surplus position for all foreign currencies should
not exceed 25% of the total of capital and reserves.
In order to comply with the CBY circular No. 6 of 1998, the Group regularly
monitors its foreign currency positions and sells the surplus funds in foreign
currencies at the prevailing rates on the dates of sale.
The table below shows the significant net exposures to foreign currencies:
US
Dollars
YR 000’s
Assets
Liabilities
EURO
YR 000’s
114,526,852 3,451,602
(110,124,935) (3,509,171)
Net currency
position
4,401,917
US
Dollars
YR 000’s
(
57,569)
EURO
YR 000’s
Assets
Liabilities
128,849,899 4,715,456
(130,220,494) (4,853,443)
Net currency
position
(
1,370,595) ( 137,987)
2011
Saudi
Sterling
Rial
Pound
YR 000’s YR 000’s
1,768,078
(2,167,937)
678,402
(739,853)
( 399,859)
( 61,451)
2010
Saudi
Sterling
Rial
Pound
YR 000’s YR 000’s
1,934,627
(1,932,403)
763,267
(777,670)
2,224
( 14,403)
Emirates
Dirhams
YR 000’s
Total
YR 000’s
281,042 120,705,976
(129,876) (116,671,772)
151,166
Emirates
Dirhams
YR 000’s
4,034,204
Total
YR 000’s
109,954 136,373,203
( 82,035) (137,866,045)
27,919 (
1,492,842)
Note 36 to the consolidated financial statements, indicates the significant foreign
currencies’ positions at the financial statement date compared with last year.
e.
Operational risk
Operational risk is the risk of direct or indirect loss due to an event or action
causing failure of technology, process, infrastructure, personnel and other risks
having an operational risk impact. The Group seeks to minimize actual or
potential losses from operational risks failure through a framework of policies and
procedures that identify, assess, control, manage and report those risks. Controls
include effective segregation of duties, access, authorization and reconciliation
procedures, staff education and assessment processes.
23
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
f.
Other risks
Other risks to which the Group is exposed are regulatory risk, legal risk, and
reputational risk. Regulatory risk is controlled through a framework of
compliance policies and procedures. Legal risk is managed through the effective
use of internal and external legal advisers. Reputational risk is controlled through
the regular examination of issues that are considered to have reputational
repercussions for the Group, with guidelines and policies being issued as
appropriate.
5.
CAPITAL MANAGEMENT
The primary objectives of the Group’s capital management are to ensure that the Group
complies with capital requirements issued by CBY, the rules and ratio established by the Basel
Committee on banking supervision and that the Group maintains strong credit ratings and
excellently capital ratios. The capital adequacy are monitored by the management of the
Group employing techniques based on the guidelines as implemented by CBY for supervisory
purposes. The required information is filed with the CBY on a quarterly basis, in order to
comply with the requirement of CBY circular no. (2) of 1997.
The CBY requires each bank in Yemen to maintain a minimum ratio of total capital to the riskweighted assets at or above the internationally agreed minimum of 8%. In addition, the Group
is required to maintain a minimum ratio of total capital to the customer deposits at or above
5%.
The capital adequacy ratio calculated in accordance with the guidelines of CBY compares
between the Group’s core and supplementary capital with risk weighted total assets and
liabilities at the financial statements date, is as follows:
2011
YR 000’s
2010
YR 000’s
Core capital
Supplementary capital
Total capital
15,124,580
391,122
15,515,702
12,647,940
595,367
13,243,307
Risk-weighted assets and contingent liabilities and
commitments:
Total assets
Contingent liabilities and commitments
Total risk-weighted assets and contingent liabilities
and commitments
42,977,115
9,284,275
64,532,297
12,496,083
52,261,390
77,028,380
29.68%
17.20%
Capital adequacy ratio
The core capital consists of paid-up capital, reserves and retained earnings (after deducting
investment in any local bank or financial company) while supplementary capital consists of
general provisions on performing debts with percentage 1% which should not exceed more
than 2% of risk weighted assets.
24
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
6.
CASH ON HAND AND RESERVE BALANCES WITH CENTRAL BANK OF YEMEN
2011
YR 000’s
2010
YR 000’s
Cash on hand and at ATM – local currency
Cash on hand and at ATM – foreign currency
2,359,266
4,715,074
7,074,340
1,625,461
1,034,942
2,660,403
Mandatory reserve at CBY – local currency
Mandatory reserve at CBY – foreign currency
5,874,528
5,286,419
11,160,947
5,233,101
16,016,613
21,249,714
Cheques purchased
18,235,287
115,123
24,025,240
The mandatory reserve balances with CBY represent the minimum reserve requirements
against non-bearing interest customers’ accounts in Yemeni Rial and foreign currencies. These
funds are not available for the Group’s daily business.
7.
DUE FROM BANKS
2011
YR 000’s
Central Bank of Yemen
Current accounts – local currency
Current accounts – foreign currency
Foreign banks
Current accounts
Time deposits
Local banks
Time deposits – foreign currency
2010
YR 000’s
5,333,276
794,092
6,127,368
2,433,717
3,585,441
6,019,158
17,994,924
13,400,621
31,395,545
10,906,726
9,722,939
20,629,665
5,558,800
4,810,500
43,081,713
31,459,323
-
There are no blocked time deposits with foreign banks as at December 31, 2011
(YR 2,080,107 Thousand as at December 31, 2010).
-
Time deposits with foreign and local banks carry variable interest rate while current
accounts with CBY and foreign banks do not carry any interest.
25
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
8.
TREASURY BILLS (NET)
Treasury bills maturing within 90 days
Treasury bills maturing within 180 days
Treasury bills maturing within 360 days
Less: Unearned discount balance
2011
YR 000’s
2010
YR 000’s
70,500,000
9,980,000
15,324,000
95,804,000
( 4,137,047)
49,000,000
15,000,000
25,800,000
89,800,000
( 4,874,202)
91,666,953
84,925,798
The treasury bills carry an interest rate between 22% and 22.9% during the year 2011 (20% to
20.5% during the year 2010). In accordance with the Central Bank of Yemen instructions,
treasury bills which mature within a period not exceeding three months are considered as part
of cash and cash equivalents.
9.
TREASURY BILLS WITH REPURCHASE OBLIGATION
2011
YR 000’s
Treasury bills with repurchase obligation
maturing within 90 days
13,299,946
2010
YR 000’s
8,028,988
The treasury bills with repurchase obligation carry an interest rate between 22% and 22.9%
during the year 2011 (20% to 20.5% during the year 2010). In accordance with the Central
Bank of Yemen instructions, treasury bills with repurchase obligation which mature within a
period not exceeding three months are considered as part of cash and cash equivalents.
10.
LOANS AND ADVANCES (NET)
a.
Loans and advances by type
Note
Overdraft
Loans to customers
L/Cs finance
Staff loans
Less:
Loans and advances provision
Uncollected interest
11
12
26
2011
YR 000’s
2010
YR 000’s
40,467,616
8,911,705
220,741
11,338
49,611,400
34,779,216
11,555,544
270,357
27,831
46,632,948
(22,633,676)
( 1,015,848)
(11,527,397)
( 972,313)
25,961,876
34,133,238
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
Non-performing loans and advances represents the amount of YR 27,627,014 Thousand
as at December 31, 2011 after deducting uncollected interest and balances secured by
cash deposits (YR 12,903,270 Thousand as at December 31, 2010), as follows:
2011
2010
YR 000’s
YR 000’s
Substandard loans and advances
2,148,807
1,041,499
Doubtful loans and advances
5,910,787
1,242,103
Bad loans and advances
19,567,420
10,619,668
27,627,014
12,903,270
b.
Loans and advances by sector
Trade
Industry
Services
Individuals and others
Overdraft
YR 000’s
14,332,340
9,186,386
7,988,069
8,960,821
Loans to
customers
YR 000’s
4,830,633
1,149,073
2,689,992
242,007
2011
L/C
finance
YR 000’s
220,741
-
Staff
loans
YR 000’s
11,338
Total
YR 000’s
19,383,714
10,335,459
10,678,061
9,214,166
Total
40,467,616
8,911,705
220,741
11,338
49,611,400
Trade
Industry
Services
Individuals and others
Overdraft
YR 000’s
12,317,690
7,895,086
6,865,212
7,701,228
Loans to
customers
YR 000’s
6,263,739
1,489,969
3,488,033
313,803
2010
L/C
finance
YR 000’s
270,357
-
Staff
loans
YR 000’s
27,831
Total
YR 000’s
18,851,786
9,385,055
10,353,245
8,042,862
Total
34,779,216
11,555,544
270,357
27,831
46,632,948
The amounts above are shown gross figures before subtracting the provision for loans
and advances and uncollected interest.
11.
PROVISION FOR LOANS AND ADVANCES (PERFORMING AND NON-PERFORMING)
a.
Provision for loans and advances by type
Note
Provision balance as at Jan. 1, 2011
Less: provision used during the year
Add: provision provided during
the year
Transferred to specific provision
Specific
YR 000’s
(
29
Provision balances as at Dec. 31, 2011
11,334,839
304,811)
11,411,090
108,477
22,549,595
27
2011
General
YR 000’s
192,558
( 108,477)
84,081
Total
YR 000’s
(
11,527,397
304,811)
11,411,090
22,633,676
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
Note
Provision balance as at Jan. 1, 2010
Less: provision used during the year
Revaluation differences of provision
in foreign currencies
Transferred to general provision
Less: reversed provision
Provision balances as at Dec. 31, 2010
b.
140,805
-
(
42,884
(
51,753)
( 1,649,166)
11,334,839
51,753
192,558
42,884
( 1,649,166)
11,527,397
13,221,493
87,814)
Provision for loans and advances by sector
2011
Consumer
lending
YR 000’s
Corporate
lending
YR 000’s
Provision balance as at Jan. 1, 2011
Less: provision used during the year
Add: provision provided during
the year
(
Provision balances as at Dec. 31, 2011
8,628,553
237,753)
Provision balance as at Jan. 1, 2010
Less: provision used during the year
Revaluation differences of
provision in foreign currencies
Less: reversed provision
Provision balances as at Dec. 31, 2010
(
(
2,898,844
67,058)
Total
YR 000’s
(
11,527,397
304,811)
8,900,650
2,510,440
11,411,090
17,291,450
5,342,226
22,633,676
2010
Consumer
lending
YR 000’s
Corporate
lending
YR 000’s
12.
Total
YR 000’s
13,080,688
87,814)
(
28
2010
General
YR 000’s
Specific
YR 000’s
10,312,764
68,495)
(
33,450
( 1,649,166)
8,628,553
Total
YR 000’s
2,908,729
19,319)
(
13,221,493
87,814)
9,434
2,898,844
42,884
( 1,649,166)
11,527,397
UNCOLLECTED INTEREST
2011
YR 000s
Balance at first of January
Increase during the year
Revaluation differences of uncollected interest in
foreign currencies
Balance at end of December
972,313
43,535
2010
YR 000s
950,442
-
-
21,871
1,015,848
972,313
Uncollected interest is interest on non-performing loans and advances, which is recognized as
revenue only when collected in accordance with CBY instructions.
28
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
13.
AVAILABLE FOR SALE INVESTMENTS
2011
YR 000’s
Yemeni Co. for Financial Services
Yemeni Qatari Insurance Co.
2010
YR 000’s
21,803
75,000
21,803
75,000
96,803
96,803
All available for sale investments are local investments (unquoted). Due to the difficulty of
obtaining a reliable estimate of fair value for these investments as there are no quoted market
prices and future cash flows are not determinable, these investments were carried at cost.
14.
DEBIT BALANCES AND OTHER ASSETS (NET)
Note
Accrued interest
Cash margin
Prepaid expenses
Assets whose titles have been transferred
as a repayment of loans
Other debit balances
2011
YR 000’s
2010
YR 000’s
372,287
58,292
108,515
3.5
Less: provision for doubtful debts
15
244,676
5,913,096
241,867
853,561
630,608
2,023,263
( 1,033,510)
704,088
648,303
7,752,030
( 5,250,105)
989,753
15.
PROVISION FOR DOUBTFUL DEBTS
Note
2011
YR 000’s
29
28
5,250,105
( 4,216,595)
573,832
4,676,273
-
1,033,510
5,250,105
Balance at first of January
Add: Provision provided during the year
Reversed provision
Balance at end of December
16.
2,501,925
2010
YR 000’s
USUFRUCT
2011
YR 000’s
Lands – Aden city
Costs of studies and consulting
Differences of re-evaluation of assets in foreign
currencies
2010
YR 000’s
1,085,517
127,995
1,085,517
115,908
36,416
36,416
1,249,928
-
1,237,841
2
Usufruct is represented in the right to benefit from the land of 26,181 m relinquished by
Sheikh Mohammed Bin Naji Al-Shaif, afforded by the Public Authority for Lands and
Survey and Urban Planning in Aden city, free of charge, and under the record of
temporary transmission in December 22, 2010, to identify the streets and the building for
the investment project number (264/2010).
29
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
According to the handing over conditions by the Public Authority for Lands and Survey
and Urban Planning of Aden, the Group has been granted a lease contract for 99 years if
the investment cost of the project will not exceed US$ 10 million, or awarded free of
charge ownership contract if the investment cost of the project will exceed US$ 10
million.
-
Based on the local authority in Aden instructions, the Group has been granted a time
period of 24 months from the date of receipt of the licenses for the implementation of
the project, otherwise, the Land and Survey and Urban Planning has the right to retrieve
the land and its constructed buildings.
-
At December 31, 2011, the fair value of the land amounted to YR 1,570,860 thousand.
30
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
17.
PROPERTY AND EQUIPMENT (NET)
Land
YR 000’s
Buildings and
Constructions
YR 000’s
Furniture
and Fixtures
YR 000’s
2011
Equipment &
Machinery
YR 000’s
Motor
Vehicles
YR 000’s
Computers
YR 000’s
Total
YR 000’s
Cost
Balance at beginning of the year
Additions during the year
Disposals during the year
Balance at the end of the year
66,914
21,100
88,014
1,220,760
4,514
1,225,274
337,428
3,431
(
1,525)
339,334
937,396
91,235
(
5,813)
1,022,818
146,172
17,141
(
4,515)
158,798
780,885
59,680
840,565
3,489,555
197,101
( 11,853)
3,674,803
-
295,380
36,995
332,375
185,993
35,089
(
1,525)
219,557
513,686
110,203
(
1,137)
622,752
116,182
18,992
(
292)
134,882
520,131
89,584
609,715
1,631,372
290,863
(
2,954)
1,919,281
88,014
892,899
230,850
1,755,522
Accumulated depreciation
Balance at beginning of the year
Depreciation
Disposals
Balance at the end of the year
Net book value
December 31, 2011
119,777
31
400,066
23,916
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
Land
YR 000’s
Buildings and
Constructions
YR 000’s
Furniture
and Fixtures
YR 000’s
2010
Equipment &
Machinery
YR 000’s
Motor
Vehicles
YR 000’s
Computers
YR 000’s
Total
YR 000’s
743,250
114,737
( 77,102)
780,885
3,297,153
460,384
( 267,982)
3,489,555
Cost
Balance at beginning of the year
Additions during the year
Disposals during the year
Balance at the end of the year
66,914
66,914
1,263,692
27,820
( 70,752)
1,220,760
310,018
63,423
( 36,013)
337,428
772,589
242,838
( 78,031)
937,396
140,690
11,566
(
6,084)
146,172
149,823
37,223
(
1,053)
185,993
436,758
78,983
(
2,055)
513,686
97,772
20,960
(
2,550)
116,182
Accumulated depreciation
Balance at beginning of the year
Depreciation
Disposals
Balance at the end of the year
-
255,380
40,000
295,380
66,914
925,380
443,726
76,405
520,131
1,383,459
253,571
(
5,658)
1,631,372
260,754
1,858,183
Net book value
December 31, 2010
151,435
32
423,710
29,990
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
18.
DUE TO BANKS
2011
YR 000’s
Current account – foreign currency
Current account – local currency
Time deposits – local currency
Loans without interest – local currency
2010
YR 000’s
3,264,348
518,118
5,821,000
6,098,000
1,481,764
1,000,000
4,814,000
15,701,466
7,295,764
Current account and time deposits which are due to banks carry variable interest rate.
19.
CUSTOMERS’ DEPOSITS
a.
Customers’ deposits by type
Current accounts
Time and demand deposits
Saving accounts
Margins of LCs, LGs and other
Other deposits
b.
2010
YR 000’s
73,787,349
68,415,100
9,257,730
3,903,567
916,601
69,266,850
74,710,880
10,077,423
6,211,753
1,149,890
156,280,347
161,416,796
2011
YR 000’s
2010
YR 000’s
7,577,476
10,869,732
137,833,139
5,155,240
53,932,663
102,328,893
156,280,347
161,416,796
Customers’ deposits by sector
Public and mixed sectors
Individual
Corporation
20.
2011
YR 000’s
CREDIT BALANCES AND OTHER LIABILITIES
2011
YR 000’s
Corporate tax for the year
Accrued interest payable
Accrued expenses
Income received in advance
Other credit balances
33
2010
YR 000’s
1,942,384
1,275,268
282,669
39,998
2,289,427
1,943,874
1,268,245
237,488
58,667
1,923,327
5,829,746
5,431,601
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
21.
OTHER PROVISIONS
Description
Balance at first of Jan. 2011
Provided during the year
Less: Provision used during the year
Reversed provision
Note
Provision for
contingent
liabilities
YR 000’s
402,809
1,844,298
-
29
28
Balance at the end of Dec. 2011
Description
Balance at first of Jan. 2010
Provided during the year
Less: provision used during the year
Reversed provision
(
2,247,107
Note
Provision for
contingent
liabilities
YR 000’s
29
28
Balance at the end of Dec. 2010
22.
2011
Provision for
contingent
claims
YR 000’s
(
542,092
139,283)
402,809
750,000
836,758
736,758)
-
1,152,809
2,681,056
( 736,758)
-
850,000
3,097,107
2010
Provision for
contingent
claims
YR 000’s
(
Total
YR 000’s
Total
YR 000’s
900,000
368,615
518,615)
-
1,442,092
368,615
( 518,615)
( 139,283)
750,000
1,152,809
SHAREHOLDERS’ EQUITY
a.
Paid up-capital
According to the Bank Extraordinary General Assembly resolution on August 13, 2011,
the paid-up capital is YR 10.750 billion as at December 31, 2011 ( YR 8 billion as at
December 31,2010 ) divided into 107.5 million shares with nominal value of YR 100 per
share.
Currently, the Bank is taking the necessary procedures to record the capital increase in
the commercial register and Articles of Association.
b.
Statutory reserves
According to provisions of the Bank Law No 38 of 1998, 15% of the annual net profit,
based on the approved annual financial statements, is transferred to the statutory reserve
until it equals twice the paid-up capital and such reserve cannot be used without the
prior approval of CBY.
34
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
23.
CONTINGENT LIABILITIES AND COMMITMENTS (NET)
2011
Margin
held
YR 000’s
Gross
commitment
YR 000’s
Letters of credit
Letters of guarantee
Letters of credit
Letters of guarantee
Others
24.
Net
commitments
YR 000’s
3,769,461
30,499,791
( 990,320) 2,779,141
( 2,574,845) 27,924,946
34,269,252
( 3,565,165) 30,704,087
Gross
commitment
YR 000’s
2010
Margin
held
YR 000’s
Net
commitments
YR 000’s
8,232,113
36,751,333
4,735
( 1,179,854) 7,052,259
( 3,527,464) 33,223,869
4,735
44,988,181
( 4,707,318) 40,280,863
INTEREST INCOME
2011
YR 000’s
Interest on loans and advances to customers
Interest earned on overdrafts
Interest earned on loans
Interest on due from banks
Interest from foreign banks
Interest from local banks
Interest on treasury bills
35
2010
YR 000’s
3,997,003
1,276,453
5,273,456
3,870,726
1,180,103
5,050,829
53,683
2,365
56,048
72,471
46,949
119,420
19,778,982
15,052,194
25,108,486
20,222,443
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
25.
INTEREST EXPENSE
2011
YR 000’s
Interest on customers’ deposits
Interest on time deposits
Interest on saving accounts
Other interest
2010
YR 000’s
11,118,326
1,304,469
34,804
12,457,599
Interest on balances due to banks
Interest paid to foreign banks
9,671,386
1,172,481
56,516
10,900,383
-
73,200
12,457,599
26.
]
10,973,583
COMMISSIONS’ REVENUE AND BANK SERVICE CHARGES
}
2011
YR 000’s
Commissions on letters of credit
Commissions on letters of guarantee
Commissions on transfer of funds
Commissions on visa card
Brokerage fees
Other banking commissions
27.
70,547
289,729
338,642
321,827
134,220
76,083
131,778
419,975
354,263
219,954
404,023
203,717
1,231,048
1,733,710
GAIN OF FOREIGN CURRENCY TRANSACTIONS
2011
YR 000’s
Gain from dealing in foreign currencies
(Loss) from retranslation of foreign currencies
(
3,510,143
310,797)
3,199,346
28.
2010
YR 000’s
2010
YR 000’s
(
651,758
381,552)
270,206
OTHER OPERATING INCOME
Note
Reversed provisions
Rental
Others
11,15,21
36
2011
YR 000’s
2010
YR 000’s
4,216,595
85,806
7,620
1,788,449
93,340
9,466
4,310,021
1,891,255
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
29.
PROVISIONS PROVIDED DURING THE YEAR
Provision for loans and advances
(performing and non-performing)
Provision for doubtful debts
(debit balances and other assets)
Other provisions
30.
2011
YR 000’s
2010
YR 000’s
11
11,411,090
15
21
2,681,056
4,676,273
368,615
14,092,146
5,044,888
-
GENERAL AND ADMINISTRATIVE EXPENSES AND DEPRECIATION
2011
2010
Note
YR 000’s
YR 000’s
Wages and salaries
Depreciation of property and equipment
Contract services
Rent
Subscriptions
Maintenance
Marketing
Stationary and printing supplies
Communications
Board of Directors’ allowances
Water and electricity
Advertisement and publication
Transportation
Insurance
Training expenses
Donation
Consultancy and professional fees
Loss of damage of property and equipment
Other expenses
31.
Note
17
1,130,045
290,863
185,356
142,519
130,871
128,589
80,882
72,115
69,030
50,142
48,019
46,518
36,616
28,930
23,096
20,094
12,288
1,716
220,285
1,039,842
253,571
172,208
121,703
76,011
65,299
193,033
56,270
72,126
35,280
59,487
73,821
15,398
12,318
28,095
13,168
9,743
228,940
205,160
2,717,974
2,731,473
EARNINGS PER SHARE
Net profit for the year ( Equity holders share thousand YR)
Number of shares by thousand
Earnings per share (YR)
37
2011
2010
2,458,746
3,216,505
107,500
80,000
22.9
40.2
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
32.
MATURITIES OF ASSETS AND LIABILITIES
Description
a. Assets
Cash on hand & reserve balances
with CBY
Due from banks
Treasury bills (net)
Treasury bills with repurchase obligation
Loans and advances (net)
Available-for sale investments
b. Liabilities
Due to banks
Customers’ deposits
Net gap
Description
a. Assets
Cash on hand & reserve balances
with CBY
Due from banks
Treasury bills (net)
Treasury bills with repurchase obligation
Loans and advances (net)
Available-for sale investments
b. Liabilities
Due to banks
Customers’ deposits
Net gap
Due
within 3
months
YR Million
Due
from 3 to
6 months
YR Million
18,235
37,132
68,328
13,300
20,472
157,467
Due over
one year
YR Million
Total
YR Million
-
220
15,653
13,450
5,270
18,720
15,701
89,812
53,250
13,218
-
15,701
156,280
105,513
53,250
13,218
-
171,981
37,597)
5,502
503
20,362
Due
from 3 to
6 months
YR Million
2010
Due from
6 months
to one year
YR Million
Due over
one year
YR Million
Total
YR Million
51,954
Due
within 3
months
YR Million
-
2011
Due from
6 months
to one year
YR Million
5,544
9,889
-
(
406
97
503
24,025
30,393
47,316
8,029
26,940
-
-
-
959
16,434
270
-
107
21,176
6,923
-
136,703
17,663
28,206
7,296
89,944
57,503
13,970
-
7,296
161,417
97,240
57,503
13,970
-
168,713
39,840)
14,236
39,463
38
(
-
18,235
43,082
91,667
13,300
25,962
97
192,343
97
24,025
31,459
84,926
8,029
34,133
97
97
182,669
97
13,956
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
33.
APPLIED AVERAGE INTEREST RATES DURING THE YEAR
Average interest rates on assets and liabilities during the year compared with the last year were
as follows:
Yemeni
Rial
%
Description
Assets
Due to banks – time deposits
Loans to customers
Overdrafts
Treasury bills
Treasury bills with repurchase
obligation
Liabilities
Customers’ - time deposits
Saving accounts
Banks - time deposits
2011
US
Dollar
EURO
%
%
Saudi
Rial
%
27.00
27.00
22.70
0. 40
10.00
10.00
-
0.70
-
0.35
-
22.70
-
-
-
20.00
20.00
22.00
2.00
2.00
3.00
2.00
-
-
2010
Description
Assets
Due to banks – time deposits
Loans to customers
Overdrafts
Treasury bills
Treasury bills with repurchase
obligation
Liabilities
Customers’ - time deposits
Saving accounts
Banks - time deposits
39
Yemeni
Rial
%
US
Dollar
%
EURO
%
Saudi
Rial
%
27.00
27.00
20.51
0.25
10.00
10.00
-
0.50
-
0.40
-
18.57
-
-
-
20.00
20.00
22.00
2.00
2.00
3.00
2.00
-
-
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
34.
DISTRIBUTION OF ASSETS, LIABILITIES, CONTINGENT LIABILITIES AND
COMMITMENTS BASED ON ECONOMIC SECTORS
Financial
YR Million
2011
Manufac
Individuals
-turing
Services
& Others
Total
Trade
YR Million YR Million YR Million YR Million YR Million
ASSETS
Cash on hand and reserve balances with CBY
Due from banks
Treasury bills (net)
Treasury bills with repurchase obligation
Loans and advances (net)
Available-for-sale Investments
18,235
43,082
91,667
13,300
97
10,144
-
5,409
-
5,588
-
4,821
-
18,235
43,082
91,667
13,300
25,962
97
LIABILITIES
Due to banks
Customers deposits
15,701
-
53,458
56,987
34,965
10,870
15,701
156,280
465
3,941
CONTINGENT LIABILITIES AND
COMMITMENTS (NET)
Letters of credit
Letters of guarantee
-
2,314
23,984
Financial
YR Million
ASSETS
Cash on hand and reserve balances with CBY
Due from banks
Treasury bills (net)
Treasury bills with repurchase obligation
Loans and advances (net)
Available-for-sale Investments
LIABILITIES
Due to banks
Customers deposits
CONTINGENT LIABILITIES AND
COMMITMENTS (NET)
Letters of credit
Letters of guarantee
Other
-
-
2,779
27,925
2010
Manufac
Individuals
-turing
Services
& Others
Total
Trade
YR Million YR Million YR Million YR Million YR Million
24,025
31,459
84,926
8,029
97
14,085
-
6,938
-
7,209
-
5,901
-
24,025
31,459
84,926
8,029
34,133
97
7,296
-
55,216
58,860
36,114
11,227
7,296
161,417
-
5,873
28,535
-
1,179
-
4,689
-
5
40
-
7,052
33,224
5
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
35.
DISTRIBUTION OF ASSETS, LIABILITIES, CONTINGENT LIABILITIES AND
COMMITMENTS BASED ON GEOGRAPHICAL LOCATIONS
2011
Republic of
Yemen
YR Million
ASSETS
Cash on hand and reserve
balances with CBY
Due from banks
Treasury bills (net)
Treasury bills with repurchase
obligation
Loans and advances (net)
Available-for-sale investments
LIABILITIES
Due to banks
Customers’ deposits
CONTINGENT LIABILITIES
AND COMMITMENTS (NET)
Letters of credit
Letters of guarantee
America
YR Million
Europe
YR Million
18,235
18,457
91,667
-
-
13,300
25,962
97
-
-
12,540
156,280
-
4,273
-
235
443
297
Total
YR Million
-
18,235
43,082
91,667
-
-
13,300
25,962
97
-
-
15,701
156,280
12,749
-
Africa
YR Million
-
7,603
2,926
215
25,325
Asia
YR Million
1,146
1,793
954
510
21
2,779
27,925
Africa
YR Million
Total
YR Million
-
2010
Republic of
Yemen
YR Million
ASSETS
Cash on hand and reserve
balances with CBY
Due from banks
Treasury bills (net)
Treasury bills with repurchase
obligation
Loans and advances (net)
Available-for-sale investments
LIABILITIES
Due to banks
Customers’ deposits
CONTINGENT LIABILITIES
AND COMMITMENTS (NET)
Letters of credit
Letters of guarantee
Other
America
YR Million
Europe
YR Million
-
Asia
YR Million
24,025
10,830
84,926
-
-
-
-
24,025
31,459
84,926
8,029
34,133
97
-
-
-
-
8,029
34,133
97
5,827
161,417
-
-
-
7,296
161,417
7,597
1,360
545
30,131
5
109
-
1,123
353
-
41
7,582
2,909
2,133
-
5,155
2,422
607
-
295
53
-
7,052
33,224
5
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
36.
SIGNIFICANT FOREIGN CURRENCIES’ POSITIONS
To comply with CBY circular No. 6 of 1998, the Group establishes limits for positions in
individual foreign currencies as well as an aggregate limitation for all currencies. These limits
for individual foreign currency positions should not exceed 15% of the Bank’s capital and
reserves, and that the aggregate open position for all foreign currencies should not exceed 25%
of the Bank’s capital and reserves. The following schedule shows the significant foreign
currency positions at the financial statements date:
2011
Surplus
(deficit)
YR 000’s
US Dollar
Euro
Saudi Rial
Sterling Pound
UAE Dirham
Net Surplus (deficit)
37.
2010
% of capital
& reserves
Surplus
(deficit)
YR 000’s
% of capital
& reserves
4,401,917
(
57,569)
( 399,859)
(
61,451)
151,166
34.67%
( 0.50%)
( 3.2%)
( 0.5%)
1.2%
(1,370,595)
( 137,987)
2,224
( 14,403)
27,919
( 13.8%)
( 1.4%)
( 0.1%)
0.3%
4,034,204
31.7%
(1,492,842)
( 15.0%)
TRANSACTIONS WITH RELATED PARTIES
Parties are considered to be related if the party has the ability to control or exercise significant
influence over the Group operating and financial decisions.
The Group deals with related parties on the same basis applied to third parties in accordance
with the Banks Law as implemented by CBY circular No. 4 of 1999, which limits credit
transactions with related parties and requires that the Bank should apply the same terms and
conditions that are applied with unrelated parties.
The nature of the Group’s activities requires dealing with some of its shareholders, members of
the Board of Directors and companies owned by them. These transactions consist of obtaining
loans and advances, issuing letters of credit and letters of guarantee and other various
transactions conducted as part of the normal Group activities.
The following are the balances of these transactions at the financial statements date:
Loans and advances (net)
Current accounts and time deposits
Indirect facilities (net)
Executive management salaries
Board of Directors’ allowances
Commissions and interest received
Interest paid
42
2011
YR Million
2010
YR Million
15,782
3,629
1,509
64
50
1,042
730
6,763
8,322
3,380
35
35
446
169
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED DECEMBER 31, 2011
38.
39.
TAX STATUS
-
Difference between accounting profit (according to the separate financial statements)
and tax profit for the year 2011 represents an additional amount of YR 5,221,318
thousand as a result of adjusting accounting profit with provided provisions during the
year which charged to statement of comprehensive income and subject to tax, and also
reversed provisions, previously subject to tax, on the basis of tax rate of 20% for the
year 2011.
-
Corporate and salary tax has been cleared up to the year 2006.
-
The Group has submitted the tax declaration for the year 2007 and paid due amount
within the legal deadline according to the declaration. The Group was notified during
the year 2011 of differences in the corporate and salary tax for the year 2007 amounting
to YR 312,975 thousand (after deducting the tax paid) according to form No. 5,which
was rejected and appealed by the Group for the difference in the application of the
exemption of the interest earned from loans granted to companies established according
to the investment law amounting to YR 118,623 thousand.
-
The tax has been cleared for the year 2008 and paid due amount according to the forms
which received from the Tax Authority .
-
The Group has submitted the tax declaration for the year 2009 and paid the due amount
within the legal deadline, the tax inspection by the Tax Authourity has not started yet,
and no assessment has been received for the year 2009 yet.
-
The group has submitted the tax declaration for the year 2010 in legal deadline, the tax
inspection by the Tax Authority has not started yet.
ZAKAT
-
The Bank submits its Zakat declaration annually and remits the amount due based on the
declaration.
-
The Bank has paid the Zakat up to the end of 2010 according to the Zakat declaration.
No assessment notification was issued by the Zakat Department.
43
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
Sana’a, Republic of Yemen
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
THE SEPARATE FINANCIAL STATEMENTS FOR INTERNATIONAL BANK OF
YEMEN – SANA’A, REPUBLIC OF YEMEN
The statement of financial position and statement of comprehensive income of the Parent
Company are presented below:
1.
STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31, 2011
ASSETS
2011
YR 000’s
2010
YR 000’s
Cash on hand and reserve balances with
Central Bank of Yemen
Due from banks
Treasury bills (net)
Treasury bills with repurchase obligation
Loans and advances (net)
Available - for - sale investments
Investments in subsidiaries
Debit balances and other assets (net)
Property and equipment (net)
18,235,287
43,081,713
91,666,953
13,299,946
25,981,888
96,803
940,720
967,103
1,749,727
24,025,240
31,459,323
84,925,798
8,028,988
34,133,238
96,803
940,720
2,494,756
1,851,907
196,020,140
187,956,773
15,701,466
156,280,347
5,610,043
3,097,107
180,688,963
7,295,764
161,503,271
5,221,970
1,152,809
175,173,814
10,750,000
2,333,291
2,247,886
15,331,177
8,000,000
1,951,058
2,831,901
12,782,959
196,020,140
187,956,773
30,704,087
40,280,863
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’
EQUITY
LIABILITIES
Due to banks
Customers’ deposits
Credit balances and other liabilities
Other provisions
Total Liabilities
SHAREHOLDERS’ EQUITY
Paid-up capital
Legal reserve
Retained earnings
Total shareholder’s equity
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
Contingent liabilities and commitments (net)
44
INTERNATIONAL BANK OF YEMEN
(Yemeni Joint Stock Company)
SANA’A, REPUBLIC OF YEMEN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
THE SEPARATE FINANCIAL STATEMENTS FOR INTERNATIONAL BANK OF
YEMEN – SANA’A, REPUBLIC OF YEMEN (continued)
2.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
Interest income
Less: interest expense
Net interest income
Commissions’ revenue and bank service charges
Less: commissions’ expense and bank service
Charges
Gain of foreign currency transactions
Other operating income
Net operating income
Less: provisions
Less: general and administrative expenses and
depreciation
Net profit of the year before income tax
Less: Income tax for the year
Net profit for the year after tax
Other comprehensive income
Total comprehensive income for the year
Earnings per share
2011
YR 000’s
2010
YR 000’s
25,108,486
(12,457,599)
12,650,887
20,222,443
(10,973,583)
9,248,860
1,231,048
1,733,710
(
180,052)
3,199,041
4,312,663
21,213,587
(14,092,146)
(
( 2,630,839)
4,490,602
( 2,698,756)
5,193,096
( 1,942,384)
2,548,218
( 1,943,874)
3,249,222
-
-
2,548,218
3,249,222
YR 23.7
YR 40.6
_______________________________________________
45
207,291)
270,206
1,891,255
12,936,740
( 5,044,888)