Annual Report 2011 Ahli Q.S.C. Suhaim Bin Hamad Street, Al Sadd Area PO Box 2309 Doha, Qatar Tel: +974 4423 2222 Fax: +94 4444 4652 www.ahlibank.com.qa In the name of Allah, the Most Gracious and the Most Merciful

His Highness His Highness Sheikh Tamim bin Hamad Al-Thani Sheikh Hamad bin Khalifa Al-Thani Heir Apparent Emir of the State of Qatar The golden ratio has fascinated intellectuals have spent endless hours over this simple other number sequence in the history of of diverse interests for at least 2,400 years. ratio and its properties. But the fascination mathematics. The golden ratio and Fibonacci Some of the greatest mathematical minds with the golden ratio is not confined to sequence are used in the financial markets of of all ages, from Pythagoras and Euclid in mathematicians. Biologists; artists; musicians; today, in trading algorithms, applications and Ancient Greece, through the medieval Italian historians; architects; psychologists and strategies. mathematician Leonardo of Pisa, creator even mystics have pondered and debated Just as the theory of mathematics is of the Fibonacci numerical sequence, and the basis of its ubiquity and appeal. In fact, based on logic and reason, the growth the Renaissance astronomer Johannes it is probably fair to say that the golden ratio and success of Ahli Bank is based on our Kepler, to present-day scientific figures, has inspired thinkers of all disciplines like no fundamental principles. 2

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A h li B li

a Knowledge grows nk Q.S.C.nk Annu al R ep o rt 2011 3 |

Fundamentals continue 2011 R ep o rt al

Ahli Bank has witnessed exceptional growth of our Annu

business, guiding our clients through changing financial nk Q.S.C. a li B h

conditions and pioneering the frontiers of Qatari banking A service. We remain committed to the core attributes that make Ahli Bank a truly unique organisation: Our business principles, our belief in client service, our commitment to our culture and our understanding that we have a responsibility to society. Ahli Bank recognises that service and professionalism in the banking industry are fundamental and dedicates itself to continued customer service ability, staff development and stakeholder return. Adapting to change drives us forward. Holding to our fundamental principals makes us who we are today. Financial highlights 4

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A h li B li a nk Q.S.C.nk Annu al R ep o rt 2011 Financial Highlights 5 Auditors Report 30 Board of Directors’ Report 6 Consolidated Statement of Financial Position 32 Board of Directors 8 Consolidated Income Statement 33 Chief Executive Officer’s Report 10 Consolidated Statement of Comprehensive Income 34 Review of Operations 12 Consolidated Statement of Cash Flows 35 Risk Management 19 Consolidated Statement of Changes In Equity 36 Corporate Governance 23 Notes to the Consolidated Financial Statement 37 5 |

2011 2010 2009 2008 2007 2011 QR ‘000 QR ‘000 QR ‘000 QR ‘000 QR ‘000 R ep o rt

Net Profit 442,245 412,329 300,515 425,781 302,652 al

Total Assets 17,734,145 17,965,718 18,449,561 17,799,276 15,576,381 Annu Total Loans 12,154,725 11,338,854 12,407,056 11,547,061 10,105,785 nk Q.S.C.

Total Liabilities 15,221,099 15,901,448 16,496,986 16,158,893 14,052,534 a li B

Shareholders’ Equity 2,513,046 2,064,270 1,952,575 1,640,383 1,523,847 h A Return on Average Assets 2.6% 2.3% 1.7% 2.6% 2.7% Return on Average Equity 19.2% 21% 17.5% 26.0% 24.6% Cost to Income Ratio 28.7% 26.9% 31.4% 25.3% 30.0% Financial Leverage 6.1 7.7 8.4 9.9 9.2 Risk Asset Ratio 22.1% 14.9% 15.2% 12.0% 12.9% Earnings per Share (QR) 6.4 6.5 4.9 7.3 5.2

442,245 425,781 18,449,561 12,407,056 2,513,046 412,329 17,965,718 17,799,276 12,154,725 11,547,061 17,734,145 11,338,854 15,576,381 2,064,270 10,105,785 1,952,575 300,515 302,652 1,640,383 1,523,847

2011 2010 2009 2008 2007 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007 Net Pro t Total Assets Total Loans Shareholders’ Equity QR ‘000 QR ‘000 QR ‘000 QR ‘000

Credit Ratings Shareholding Structure Fitch Ratings September 2011 Long term issuer Default Rating (IDR) A- Short Term Issuer Default Rating F2 33.33% Individual Rating C Ahli United Support Rating 1 Bank BSC Outlook Stable 50% Bank Viability Rating BBB- Public & Institutions Capital Intelligence November 2011 16.67% Long Term Foreign Currency rating A- Qatar Holding Outlook Stable Financial Strength Rating BBB+ Board of Directors’ report 6

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A In the Name of Allah, the Most Beneficent, a new savings product called Ultra Savings Account; h li B li the Most Merciful introduced an online banking system for corporates a nk Q.S.C.nk and an online balance enquiry system for MyGlobal Dear Shareholders, On behalf of the board of directors accounts; and signed a number of agreements with of Ahli Bank I have the pleasure of presenting to you our Annu renowned organisations in Qatar to offer value-added annual report for the financial year that ended on facilities to our credit card customers. al 31 December 2011. This report will give you a brief insight R ep o rt into the financial results of the bank, the operational We continued to reap excellent rewards in various

2011 achievements it reaped as well as the bank's plans for operational areas as a result of our close collaboration 2012 and beyond. with Ahli United Bank, our strategic partner. The bank's long term credit ratings were reaffirmed by During 2011 the bank achieved remarkable results in all its both Fitch and Capital Intelligence at A- with a Stable key areas of operations. Net Profit reached QR 442 million, outlook; its financial strength rating was upgraded increasing by QR 30 million or 7.3% compared to the from BBB to BBB+ by Capital Intelligence; and the previous year; Return on Average Equity (ROAE) reached bank achieved the ISO 9001:2008 quality certification 19.2%; Earnings per Share stood at QR 6.39; Return on for its Central Operations. Average Assets (ROAA) improved to 2.6% compared to 2.3% last year; NPL coverage increased to 99%; Loans and Ahli Bank continued to attract, nurture, train and Advances increased by 7.2% and reached QR 12,155 million develop Qatari talent. The board of directors have compared to QR 11,339 million registered in the previous allocated a fund for implementing a 6-month year; and customer deposits increased by 10.73% to administrative development programme for Qatari QR 12,690 million compared to QR 11,461 million in 2010. graduates. The programme will provide them with intensive training and will upgrade their professional The outstanding results and phenomenal profits achieved skills and prepare them for holding key positions in by the bank were the direct outcome of the concerted the bank. With a view towards further motivating our efforts of the board of directors and its various committees, Qatari employees and in response to the generous as well as all employees of the bank in implementing gesture of HH the Emir to increase the salaries of the strategic vision of the bank as well as many policies Qatari nationals we raised the basic salary and and procedures and adopting a professional and rational allowances of all Qatari employees by 60%. approach to risk management and cost control. It is a matter of immense pride to know that the During the last year we reviewed many of our policies and country is achieving phenomenal progress in all its procedures with a view towards upgrading them in line socio-economic sectors. It is also the responsibility of with the changing local and international requirements. all Qatari to react positively to the economic The bank’s Anti-Money Laundering and Combating and social indicators of the nation. Keeping this in Financing Terrorism Policy and Procedures as well as mind as well as the aspirations of our shareholders its Information Policy and Framework were updated in and customers, Ahli Bank is taking all the necessary accordance with the current international trends. We have steps to enhance its capabilities and extend wider also developed controls and procedures for Administrative credit facilities and innovative banking and insurance Affairs and Services. services. Hence the board of directors have decided During 2011 we opened a new branch in Doha's Industrial to increase the capital of the bank in order to Area; expanded our ATM network to 45 units and bolster its financial competence and upgrade its redistributed them in densely populated areas; launched competitiveness. During the extraordinary session of Ahli Bank is taking steps to enhance its capabilities through wider credit facilities and innovative banking and insurance services. The capital of the bank will be increased in order to bolster its financial competence and upgrade its competitiveness. 7 | the general assembly we will be presenting our plan in this respect and we are, as always, confident of your 2011 valuable support in this regard. R ep o rt

In the light of the excellent results we reaped during al 2011, I would like to recommend the following for the approval of general assembly: Annu nk Q.S.C.

1. The financial statements and profit and loss a

accounts for the financial year that ended on li B h 31 December 2011. A 2. The distribution of 60% bonus shares. Sh. Faisal Bin Abdul-Aziz Bin Jassem AI Thani, Chairman In conclusion, I would like to extend our profound thanks and appreciation to Mr. Salah Jassim Murad who admirably served the bank in the capacity of Our thanks and appreciation are also extended to Chief Executive Officer for the last three years, during HE Sheikh Abdullah Bin Saud AI Thani, Governor of which the bank witnessed remarkable progress in Qatar Central Bank, HE Sheikh Fahad Bin Faisal AI all its areas of operations and achieved outstanding Thani, Deputy Governor of Qatar Central Bank and financial results. I would like to take this opportunity all the employees of QCB for their continued support to wish him success in his ongoing professional of the banking institutions in Qatar. career. The support and guidance that we continue to At the same time I would like to extend our warm receive from our strategic partner, Ahli United welcome to his successor, Mr. Moataz El Rafie who Bank, contributed immensely towards the results was deputised by our strategic partner to the bank we achieved and the development witnessed by as Chief Executive Officer. We are confident that the the bank. They deserve our most profound thanks bank will benefit from his qualifications and vast and appreciation. Thanks are also extended to the experience and we are hopeful of achieving further executive management and all our employees progress and growth during his tenure. for their diligence and efforts, to our esteemed customers for their valuable trust, and to our I would like to extend our most profound gratitude respected shareholders for their unwavering support. to HH Sheikh Hamad Bin Khalifa AI Thani, Emir of the State of Qatar and HH Sheikh Tamim Bin Hamad May Almighty Allah continue to bless us with the Bin Khalifa AI Thani, the Heir Apparent for their ability to satisfy our shareholders and customers. continued patronage as well as for their farsighted policies that continue to guide the country towards unprecedented economic and social prosperity. I would also like to express our sincere gratitude to HE Sheikh Hamad Bin Jassim Bin Jabor AI Thani, Prime Minister and Foreign Minister; HE Yousef Sh. Faisal Bin Abdul-Aziz Hussain Kamal, Minister of Economy and Finance; and Bin Jassem AI Thani HE Sheikh Jassim Bin Abdulaziz AI Thani, Chairman Minister of Business and Trade. Board of Directors 8

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A h li B li a nk Q.S.C.nk Annu al R ep o rt 2011

Standing (from left to right): Mr. Bassel Gamal Aly; Mr. Ahmed Abdulrahman Nasser Fakhro; Sheikh Mohamed Bin Falah Bin Jassem Bin Jabr Al-Thani; Sheikh Nasser Bin Ali Bin Saud Al-Thani; Mr. Victor Nazim Reddah Agha; Mr. Adel A. El-Labban Seated (from left to right): Mr Hamad Al Marzouq; Sheikh Faisal Bin Abdul-Aziz Bin Jassem Al-Thani; Dr. Ahmed Mohammed Yousif Obidan; Mr. Abdulla Al-Raeesi 9

Sheikh Faisal Bin Abdul-Aziz Bin Jassem Al-Thani Mr. Adel A. El-Labban | Chairman of Board of Directors Director Chairman of the Policies, Development and Member of the Executive Committee 2011 Remuneration Committee Member of the Policies, Development and Remuneration Committee R ep o rt Mr. Hamad A. Al Marzouq al Deputy Chairman Director since 30 July 2000, holds a Masters in Economics from

Member of the Executive Committee the American University, Cairo, 1980, Bachelors in Economics from Annu Deputy Chairman, Ahli United Bank, ; Deputy Chairman, American University, Cairo, 1977 and a General Certificate of Education

from London University, 1973. Group Chief Executive Officer and nk Q.S.C.

Ahli United Bank (UK) plc; Chairman and Managing Director, Ahli a Managing Director, Ahli United Bank BSC, Bahrain; Director, Ahli United Bank KSC, ; Deputy Chairman, Ahli United Bank () li B h S.A.E; Deputy Chairman, Ahli Bank SAOG, ; Deputy Chairman, United Bank (UK) PLC; Director, Ahli United Bank KSC, Kuwait; Director, A Commercial Bank Of , Iraq. Ahli Bank QSC, Qatar; Director, Ahli United Bank (Egypt) SAE, Egypt; Director, Ahli Bank SAOG, Oman; Director, Commercial Bank of Iraq Sheikh Nasser Bin Ali Bin Saud Al-Thani P.S.C: Director Middle East Financial Investment Co., Saudi Arabia; Director Director, United Bank for Commerce & Investment S.A.C., ; Board Chairman of the Executive Committee of Trustees, Bahrain Association of Banks, Bahrain; Formerly: Chief Chairman and Managing Director of Qatar General Insurance and Executive Officer and Director of the United Bank of Kuwait PLC, UK; Re-Insurance Company; Chairman of World Trade Centre - Doha; Board Managing Director, Commercial International Bank of Egypt, (Egypt); Member of Trust Bank - Algeria; Board Member of Trust Insurance Chairman, Commercial International Investment Company, Egypt; Company - Algeria; Partner and Member of BOD General Contracting Vice President, Corporate Finance, Morgan Stanley, USA; Assistant Vice Company, Doha. President, , Bahrain. Sheikh Mohamed Bin Falah Bin Jassem Bin Jabr Al-Thani Mr. Abdulla Al-Raeesi Director Director Member of the Audit, Compliance and Risk Committee Member of the Audit, Compliance and Risk Committee Educated in the United Kingdom at University of Durham and Member of the Policies, Development and Remuneration graduated with Business and Finance degree. He joined the Qatari Committee Army for five years in Finance Directorate Department. Then he joined Deputy Group CEO – Ahli United Bank, BSC; Director, Goldman Sachs at the beginning of his career path and currently he Ahli United Bank SAE, Egypt; Director, International Chamber Of is working in Qatar Investment Authority “QIA” & a board member of Commerce, Bahrain; former Director, Benefit Company, Bahrain; former National Leasing Company. acting CEO, Ahli Bank, Qatar; Deputy CEO, Retail Banking, Ahli United Dr. Ahmed Mohammed Yousif Obidan Bank, Bahrain; AGM and Head of Delivery Channels, Commercial Bank Director of Qatar; AGM, Support Group, Doha Bank, Qatar; Head of Business Chairman of the Audit, Compliance and Risk Committee and Technology Consulting Group, Arthur Andersen. General manager of trans orient establishments; member of the shura Mr. Bassel Gamal Aly council; head of the culture and media committee, shura council. Director Mr. Ahmed Abdulrahman Nasser Fakhro Member of the Policies, Development and Director Remuneration Committee Member of the Executive Committee Senior Deputy Group CEO in AUB; Director, Ahli United Bank Member of the Policies, Development and Remuneration (Egypt) SAE, Egypt; Board Member – Ahli United Bank Finance Committee Company, Egypt; Board Member – United Bank for Commerce and Director of Qatar Cinema and Film Distribution Company, Doha; Investment SAL-Libya; Member, Executive Committee – United Bank Former Minister Plenipotentiary in the Ministry of Foreign Affairs, for Commerce and Investment Sal-Libya; Member, Compensation Doha. Committee - United Bank for Commerce and Investment SAL- Libya; Member, Credit and Investment Committee – United Bank Mr. Victor Nazim Reddah Agha for Commerce and Investment SAL-Libya; Member, Premises and Director Information Technology – United Bank for Commerce and Investment Member of the Executive Committee SAL-Libya; Formerly CEO, Ahli Bank QSC, Qatar. General Director of Al-Sadd Travel Agency; General Director of Al-Sadd Exchange Company, Doha; Board Member of Doha Insurance Company; former Board Member, Al-Sadd Sports Club, Doha. Chief Executive Officer’s Statement 10

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The global economic environment continued to pose The Bank’s capital position remains strong with the capital A h li B li severe challenges during 2011, including the Arab adequacy ratio at 22.1% and Tier I Capital at 19.3% at 31 a

nk Q.S.C.nk Spring and associated regional instability, the natural December 2011 compared with 14.9% and 12.3% as at the disaster in Japan, the US debt ceiling issues and the end of 2010.

Annu European financial crisis. While the Qatar economy has In 2011, the Bank received the third and final subscription proved relatively resilient to this regional and global al of QR 321 million from Qatar Investment Authority which

R ep o rt turmoil, strength in the oil sector and improvements in was used to issue new ordinary shares in the Bank. the traditional trade, logistics and tourism sectors were

2011 encouraging. Ahli Bank continued to exploit domestic growth opportunities through the build-up of its Against this challenging economic backdrop, I am pleased and SME capabilities and an increase in the branch to see Ahli Bank’s stable and robust performance during network across the state of Qatar. 2011 with net profits of QR 442 million for the year ended 31 December 2011, 7.3% higher than 2010. One of the challenging initiatives for the Bank in 2011 was that, in line with Qatar Central Bank’s instructions, we Ahli Bank has delivered a record performance in 2011 have discontinued our Islamic Banking offering and have reflecting commendable efforts and focus during the year consolidated the remaining business. towards realising the Bank’s strategic visions, based on a disciplined cost and risk culture. Furthermore, synergies Corporate Banking responded well to the increase achieved through our close collaboration with our strategic in Public and Private Sector activity during the year, shareholder, Ahli United Bank B.S.C., contributed to this successfully identifying and capturing opportunities across milestone net profit achievement. all segments. The Bank will continue to take a customer centric approach with dedicated and experienced Net Operating Income increased 7.8% to QR 644 million in relationship managers. 2011 (2010: QR 597 million) contributed by a reduction in loan loss provisions by 36% over previous year reflecting Private Banking and portfolio of a successful risk management and a healthy local market clients increased by 25% in 2011, offering personalised and environment. high quality service to its clients. Fees and commissions and other income was 10.5% Ahli Bank continues to focus on providing quality products higher in 2011 mainly from lending activity and also from and customer service to all its clients through a variety of dividends and gains delivered from the bank’s investment channels. A new branch was added to the Bank’s branch portfolio. network in 2011 at Industrial Area, bringing the total number of branches in Qatar to eighteen. The Bank is Total assets were marginally lower by 1.3% to QR 17,734 investing in the latest technology to ensure that customers million as at December 2011, but ROAA at 2.6%, registered are served with the most diverse, convenient and cost- significant improvement against 2.3% in 2010. Provisions effective ways of banking through electronic channels. cover for NPLs stood at 99%, including the provisions for collective impairment. The Bank’s customers’ deposits grew In May, the Bank received a license from Qatar Financial 10.73% to QR 12,690 million in spite of the tightening of Market Authority granting a 100% ownership in Ahli liquidity and the outflow of Islamic deposits as a result of Brokerage as the investment arm of the Bank. This is a the closure of the Bank’s Islamic Banking business. strategic move by Ahli Bank to provide its clients a high quality service and access to local equity market. In September, the Bank’s long term credit ratings were 11 | affirmed by Fitch and Capital Intelligence at A- with a Stable outlook. The affirmation of ratings reflects the Bank’s 2011 solid profitability, adequate liquidity, sound capitalisation R ep o rt and its close association with Ahli United Bank, Ahli Bank’s al

strategic partner. Capital Intelligence has upgraded the Annu Bank’s own Financial Strength rating from BBB to BBB+. nk Q.S.C.

In November, the Bank launched a new Q-Pay facility for a li B its customers, providing a highly secure, convenient and h cost effective way of managing online fees and payment A collection services for its customers in Qatar. Mr. Salah Murad, Chief Executive Officer In December, the bank received the International Organization for Standardization (ISO) 9001:2008 Certification for its Central Operations ensuring operational control, standardisation of policies, practices and procedure and a better use of pooled expertise. Ahli Bank achieved a stable and Ahli Bank’s employees constitute one of the organisation’s robust performance during 2011 with most important assets and the dedication of each member net profits of QR 442 million for the of the Bank has contributed to its continued success in year ended 31 December 2011, 7.3% 2011. In embracing the Qatarisation initiative, The Bank has improved its focus on the development of Qatari staff higher than 2010. The Bank’s capital members into leadership roles as well as continuing to position remains strong with the capital attract and develop young Qatari talent through its training programmes. adequacy ratio at 22.1% and Tier I Looking towards 2012, I am optimistic that our Bank Capital at 19.3% at 31 December 2011 will continue to deliver on its promises to shareholders, compared with 14.9% and 12.3% as at customers, staff and the community. the end of 2010. I would like to take this opportunity to thank the executive management and all staff for their contribution and inspiring improvement in 2011 and record my appreciation for the continued support and encouragement of the Board of Directors and our shareholders. I look forward to another successful year.

Salah Murad Chief Executive Officer Review of Operations 12

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Retail Banking Branches & ATM Network Once again witnessed A h li B li significant growth with the bank expanding its reach In maintaining sustainable growth throughout its retail a

nk Q.S.C.nk through additional branches, ATMs and e-banking banking franchise, Retail Banking continued to focus on channels. During the year, ABQ established a robust developing new market opportunities and improving

Annu retail presence through its 18 branches across various penetration levels across product and market segments geographical areas in Qatar, supported by a commanding al with focus on the higher income segments and clients

R ep o rt 45 ATM network. with regional banking requirements. During the year, Merqab & Wakra branches moved to 2011 The introduction of innovative product offerings, a new state-of-the-art building. A new branch in the supported by the highest levels of customer service, Industrial Area was added to our existing network, bringing resulted in attracting and retaining new high value the total branch network to 18 in 2011. customers to ABQ during the year. In addition, ABQ has a well distributed network of 45 ATMs Products & Services In meeting the objective of spread across major shopping malls and prime areas with increasing low cost liability to improve overall retail the option of dispensing Qatari Riyals as well as other profitability, ABQ consolidated the continued success foreign currencies. We are committed to further expand of liability growth mainly through the marketing of its our ATM network in 2012. flagship product, MyHassad savings. In 2011 the scheme that supports the largest prize pool in the region witnessed E-Banking Channels Ongoing technology enhancements significant growth as well as enabling ABQ to improve included the launch of an improved e-banking platform, household penetration and initiate further opportunities to SMS banking services and advancements in the bank’s cross sell other products. contact centre. ABQ customers can now access the full range of banking services from the convenience of their During 2011, Ahli Bank introduced a new product – Ultra home or office. Savings account – offering a high interest rate to suit individual levels of saving. Islamic Banking During the year, the Bank has dealt sensitively with the needs of both its customers and its The Credit Cards Pearl Rewards programme has been dedicated Islamic staff and has, in compliance with the well received by its members who can redeem a range announcement from the Qatar Central Bank in February of collections of the world’s most luxurious brands from 2011, discontinued its Islamic banking services at the end selected partners. of December 2011. The Islamic loan portfolio has been ring MyGlobal, the Bank’s leading cross-border product, now fenced and will be managed appropriately until maturity. enables clients to access AUB network and services from Leveraging AUB’s Group presence and strength will play any location, with dedicated Relationship Managers a key role in achieving our growth agenda for 2012, providing strong local knowledge to support their banking enabling us to expand market share through cost efficient requirements. With the recently launched online viewing acquisitions, offer competitive products that are aligned to of the MyGlobal consolidated statement customers are changes in the market environment and the emergence now able to view their statement across the AUB network of new market opportunities. Enhanced and extended through ABQ’s internet banking platform. delivery channels, customer feedback and service In addition, a range of new Bancassurance products were improvements are targeted to provide all our various introduced in Egypt, Bahrain, Oman and Kuwait through customer segments with a superior banking experience. a joint venture with the UK, further complementing the With competition in the retail banking market expected to products and services offering through the UA B network. intensify, our growth prospects remain equally strong. By relocating ATMs from costly and competitive locations to high usage areas such as exchange money houses, the bank has seen a jump in transactions of over 40%, with considerably lower rental and running costs, together with an increase in use by other bank customers.

Corporate Banking Despite this, Private Banking managed to achieve its target 13 | and remains well placed to continue to grow over the

Ahli Bank Corporate achieved another year of solid 2011 coming months. performance in 2011, with growth across all sectors.

The overall customer base was expanded, along with an Domestically, competition for private banking clients R ep o rt al increase in emphasis of our approach of total relationship has increased considerably in Qatar over the last few banking with existing clients. years, with many banks now establishing Private Banking Annu divisions. However, we believe Ahli Bank has several distinct

For Corporate Banking the key attributes of geographic nk Q.S.C. advantages over competitors and are confident in our a reach, product innovation, and service excellence enabled li B

ability to remain a leader in the field. h us to grow our loan portfolio while maintaining high asset A quality. Our success in introducing state of the art B2B Ahli Bank Private Banking offers a number of unique facilities for corporate clients was notable in providing advantages to clients. Having started Qatar operations greater flexibility and reliability for clients within a secure in 2005, the bank has more market knowledge than environment, while also enabling us to improve transaction many new competitors. Our regional and international volumes. partnership with Ahli United Bank gives us the ability to offer more products, services, and opportunities than many Our agility and adaptability combined with quick decisions others in the market. We offer both onshore and offshore and better service has given us an edge with our clients. services and have a number of unique products in the The business unit maintained focus on relationship market such as residential mortgage loans and offshore banking with selective loan growth and cross-selling in investments in the UK. cooperation with other divisions, mainly treasury. Another key part of our advantage is allowing clients to One of our considerable advantages is our ongoing have a single bank statement for accounts across multiple strategic partnership with Ahli United Bank, Bahrain and countries. This service was further expanded and enhanced the wider regional group, giving us a strength and reach over 2011 to allow clients to customise the service to suit that few local competitors can match. This partnership their individual needs. During 2011, Private Banking saw facilitated structuring of large ticket multi-currency an increase in cross-border business with Egypt, Bahrain, financing solutions for our select clients and improved Oman and Kuwait, proving that our regional links are cross border deal flow. recognised as a considerable advantage by many. The year ahead - Corporate banking expects many new Our ‘Total Relationship Approach’ with our clients, large projects such as Doha Metro, the new Doha Port, providing a one-stop shop for all their needs including Lusail City, new roads and other infrastructure projects everyday banking, brokerage and investments has been from both government and private sector. Financing very effective over the years. We put significant emphasis of such mega projects requires considerable expertise on personal client servicing and tailor make their individual – one of our core strengths. We are strongly positioned financial requirements. Our relationship managers are to effectively participate in the project finance business continuously trained to offer new products and services to bilaterally in cooperation with our strategic partner, Ahli provide the best possible service. Several trips were made United Bank, and with other local and international banks. to the UK in 2011 to undergo such training. Private Banking The year ahead – A number of goals have been set out for 2011 was a challenging year in many ways for Private Private Banking in 2012, starting with focusing strongly on Banking due to issues with the Euro, the Arab Spring, a deposits and funding. weak American economy and growing local competition. Review of Operations Continued 14

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To remain competitive in the market, we will continue to currencies. We also upgraded our Reuters platform to A h li B li develop new investment products and to capture new ‘Eikon’, further improving our information resources to the a

nk Q.S.C.nk opportunities. Plans are in place to introduce an exclusive benefit of both clients and the department. “Private Banking” lounge in Ahli Bank main branch. While The year ahead - Looking ahead, 2012 should be a time for

Annu much of our business has historically been done on major global economies to further develop their economic location for the convenience of our clients, we wish to al recovery, reversing the sense of gloom of recent years.

R ep o rt establish a sophisticated, elegant lounge environment for those who wish to visit the bank. Two new members In Qatar we will be closely supporting the corporate sector

2011 of staff will also be recruited during 2012 to provide even as they assist the Government of Qatar in their continued better service to our growing list of clients. development of the country. Treasury will also continue to focus on providing clients with solutions to meet their Despite challenging global conditions, Ahli Bank Private changing needs, and we look forward to the challenges remains in a good position with a strong client base in ahead with optimism and enthusiasm. Qatar. The local market is healthy and well positioned to grow further, with considerable investment opportunities, Information Technology (IT) upcoming mega projects plus the 2022 World Cup creating The Ahli Bank IT department undertook a number of critical many new opportunities. Against this backdrop of activity, projects during 2011, assisting and enabling the bank in Ahli Bank Private remains confident of achieving continued many key areas. success in 2012. From April to July 2011, a new Tier 2 data centre and IT Treasury infrastructure for the Brokerage division was established, During 2011, the global focus was largely on Europe and including an ‘end-to-end’ brokerage solution, trader the Euro, with growing fears of a Greek meltdown. Even by workstations for brokers and back office, internet web year end, Greece was still hitting the headlines and there trading and SPEEDEX trading for retail and institutional were heightened fears of contagion through the southern clients, plus a cutting edge interface to the Qatar Stock European countries. Volatility remains in the currency Exchange; Reuters; Equation; IVR; SMS; email and fax. The markets, and G7 Central Banks’ continued to maintain majority of the project was completed in a record time official interest rates at record low levels during the year. of three months, with the e-channels going live in early October 2011. Domestically, customers are continuing to benefit from a highly competitive banking environment. Regulatory During the year a new ‘myTrade’ e-business portal solution changes introduced during 2011 reduced the maximum for corporate customers to complete their international customer interest rate, and there were challenges to trade transactions and simultaneously access a wide range maintain a good return on our balance sheet. Overall, of features to view, track and follow-up with these activities Treasury results were ahead of target with increased was implemented. A new QPAY payment gateway also earnings from both Net Interest Income and the went live with Amex and Doha Modern Indian School, with Investment Book. more partners to follow in 2012. 2011 was a challenging year for Treasury in many respects, Between August and October 2011, existing Disaster not least with the departure of key staff early in the year. Recovery systems were relocated to a newly established However, a new Head of Treasury and Investments joined Tier 2 Disaster Recovery Centre in Wakra, with new in June, bringing with him over 30 years experience in the infrastructure and systems. The project was completed by Gulf region and reinvigorating the team. the in-house team on time and on-buget and a full round of disaster recovery and facility testing was completed by During the year, Treasury further enhanced its technology the end of the year. resources by acquiring a new FX e-trading platform which has improved our service to clients with respect to G7 The Fibonacci sequence is named after Leonardo of money-changing, and other applications. In finance, Pisa, who was known as Fibonacci. He is best known to Fibonacci retracements is a method of technical analysis the modern world for the spreading of the Hindu- for determining support and resistance levels. They numeral system in Europe. He advocated numeration are named after their use of the Fibonacci sequence. with the digits 0–9 and place value and showed the Fibonacci retracement is based on the idea that markets practical importance of the new numeral system, by will retrace a predictable portion of a move, after which applying it to commercial book-keeping, conversion they will continue to move in the original direction. of weights and measures, the calculation of interest, 15 |

2011 R ep o rt al Annu nk Q.S.C. a li B h A In mathematics, the ‘Fibonacci numbers’ or ‘Fibonacci is the sum of the previous two. Fibonacci sequences sequence’ are the numbers in the following integer appear in biological settings, in two consecutive sequence: 0,1,1,2,3,5,8,13,21,34,55,89,144... By Fibonacci numbers, such as branching in trees, definition, the first two numbers in the Fibonacci arrangement of leaves on a stem, an uncurling fern sequence are 0 and 1, and each subsequent number and the arrangement of a pine cone. 16

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A h li B li a nk Q.S.C.nk Annu al R ep o rt 2011 Review of Operations Continued

With three new branches in Industrial Area, Wakra and In addition to these projects, IT is always working hard to 17 | Merqab established during the year, plus five new ATM make improvements to workflow and business process machines, the IT department completed all necessary management systems, to realise better efficiencies across 2011 infrastructure and systems for these, ready for their launch. the bank. Security continues to be a priority for the bank R ep o rt

as well, with on-going reviews and enhancements to our al New Qatar Central Bank regulations put in place in 2011

safeguards and security systems. Annu required implementation of extensive changes and additions to existing systems to adhere to new credit Human Resources nk Q.S.C. bureau, credit risk management and other standards a During 2011 the Human Resources department focused li B required. The in-house IT development team put in an h on adopting a more customer-centric and sales-culture A impressive programming effort to meet stringent QCB approach to its operations. This involved enhancing initial timelines. staff selection processes and developing better support A number of new in-house projects were developed or training for all existing staff throughout a well-structured initiated by the IT team during the year, including a new training plan. automated Pearl Points redemption workflow to provide All new recruits and existing employees can now a better and faster service for customers; SWIFT interface undertake additional and beneficial training in banking; to Anti-Money Laundering system; enhancements for managing change; customer service; selling techniques; bulk payments and salary processing; enterprise data relationship building and leadership to enhance their warehousing and more. The team also developed an knowledge, skills, competency and efficiency. This in turn internet website for corporate clients which has proved consistently enhances the overall competency level and to be a great success. performance of the bank. Ahli Bank Qatar is currently working towards full The programme involves structured courses conducted certification on global standards ISO 27001, PCI DSS. by professional experienced trainers, as well as on-the-job As a critical requirement to achieving this, the IT team training programmes to give staff a chance to put their implemented new systems and tools for Information knowledge and skills into actions. Security Management throughout the bank. Certification is currently underway and is expected to be complete in To recognise and reward the loyalty and excellence Q2 2012. of long-term staff members, the Human Resources department established the ABQ Long Service Award to The year ahead - While much was achieved in 2011, there honour the employees who have been working with the is always room for improvement. During 2012, IT will bank for five years or more. To date, 65 employees have finalise a number of important projects and initiate new received this award, demonstrating their commitment and ones to continue to support the growing needs of the dedication to the bank’s continued success. bank. Human Resources worked in 2011 continuing the Bank’s Some of the key projects for IT in 2012 include deep commitment to Qatari employment and developing implementing online remittances to Indian banks through the professional skills and talents of employees. Complying retail internet banking; putting the systems in place to with the government’s Qatarisation requirements, the bank allow myGlobal cross-border remittances through IVR currently stands at a 22% Qatari employment level. and internet banking; development of a replacement system for local payments through QATCH system, plus implementing a new automated straight-through payment / salaries system for corporate customers. We will also be undertaking a major upgrade of our systems to support the international SWIFT Alliance 7.0 standard. Review of Operations Continued 18

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In line with the bank’s policy to regularly take part in social Corporate Social Responsibility A h li B li and humanitarian causes in the State of Qatar, Ahli Bank Ahli Bank reinforced its position as a lead contributor to the a

nk Q.S.C.nk Human Resources continues to work closely with the development of Qatar society through its commitment to Qatar Foundation, Virginia Commonwealth University corporate social responsibility. This commitment became

Annu and many other governmental organisations to provide evident in the numerous cultural, community and social support and give something back to the communities in al activities and charities the bank supported throughout

R ep o rt which we operate. 2011. The year ahead - Human Resources has a busy year 2011 In 2011 the bank extended its support to Qatar Society ahead, with many new plans and initiatives to undertake. for Rehabilitation of Special Needs. In addition, the bank Our overall goal remains the same though – to continue utilised the hand drawings of special needs children in its to develop the relationship between HR and the various calendar for the year 2012, conveying their creative spirit business units to allow the bank to become more cohesive, and highlighting this worthy cause. customer focused and capable. The bank actively participates in the ‘No… Drugs’ campaign In 2012, a manpower plan will be put in place to attract in co-ordination with the Ministry of Interior by displaying and provide new high quality recruits to the business units an awareness message over its ATM network to support of the bank. HR will continue to work on establishing close this important cause. relationships with local universities to attract talented undergraduate and graduate students to the bank, and a Firmly believing in the future of Qatari youth to develop goal has been put in place to increase employment levels and build their country, the bank participated in the annual of Qatari to 25% by the end of 2012. Qatar Career Fair 2011 and participated in the 6th Gulf Day for Consumer Protection conference, which was organised Further implementation of the 2012 training and by the Ministry of Business & Trade. development plan will be put in place, to ensure all our staff are well versed in the skills required of them. We will The bank also sponsored the 2nd Qatari International continue to increase employee engagement through Business Women Forum as gold sponsor in line with its annual gatherings and the Long Service Award event. continuing support of initiatives that sustain community development and empower women in society One of the most important goals for HR in 2012 is implementing international quality standards (ISO) In addition to events and sponsorships, Ahli Bank ties throughout the bank’s operations, to obtain ISO up with the Qatar Charity Association to make it easy for certification. Part of this process includes developing customers to donate surplus Riyals and Dirham’s to the and managing a comprehensive succession plan for charity’s projects. the leadership and critical positions within the bank. By The year ahead - In 2012, the bank will continue to implementing this plus a number of other standards support worthy causes, attend important events and and procedures, we will be working hard during 2012 to sponsor appropriate programmes to help others. gain recognition of our high quality standards. Ahli Bank firmly believes that one of the key drivers of any organisation is in the delivery of high quality, client focused service. In order to achieve this objective, HR will work hard during 2012 to continue to attract and retain the best people and nurture them as a vital asset. Risk Management

Risk management involves the identification, analysis, The risk management control process at ABQ is based 19 | evaluation, acceptance, measurement, control and on detailed policies and procedures that encompass: management of all financial and non-financial risks 2011 • Business line accountability for all risks taken, that could have a negative impact on the bank’s whereby, each business line is responsible for R ep o rt performance and reputation. The major risks associated al developing a plan that includes adequate risk/return

with ABQ’s business are credit risk, market risk which Annu parameters, as well as risk acceptance criteria. includes foreign exchange, interest rate and equity price

risk, liquidity risk, operational risk and reputational risk. • ABQ credit function entails risk identification, nk Q.S.C. measurement, monitoring and controlling each a li B

ABQ’s risk management policies have been developed h credit relationship to ensure that the appropriate A to: approval authorities are obtained and a uniform risk • Identify and analyse these risks; management standard exists, including risk ratings, • Set appropriate risk limits and controls; have been correctly assigned to each and every • Monitor the risks and adherence to limits. credit relationship; product and in line with business policies, which are clearly understood, monitored and The risk management function is not responsible for are in agreement with the overall credit policy and eliminating risks that are embedded in any banking the Board approved risk framework. business, but aims to effectively manage these risks with the objective of minimising risk impact & earning • The ongoing assessment of portfolio credit risk competitive returns over the degree of assumed risk. and approval parameters of new products leads to Risk is financially evaluated as the potential impact an integrated proper limits structure that permits on income and asset value, taking into consideration management to control exposures and monitor the changes in political, economic and market conditions, assumption of risk against predetermined approved and the bank’s assets. tolerances. The Board of Directors establishes global limits for each major type of risk which are sub The risk management function relies on the allocated to individual lines of business and units. competence, experience and dedication of its professional staff; sound risk management best Major risk areas: The highlights of the developments practices; policies and procedures, and ongoing in the major risk areas with respect to the business – investment in technology and training. namely credit, market, operational and liquidity risks – are as follows: The Board of Directors and senior management are involved in the establishment of all risk processes Credit Risk Credit risk is the risk of potential financial and the periodic oversight and guidance of the risk loss due to the failure of a counter party to perform management function. The Board of Directors reviews according to agreed terms. It arises principally from and approves at least annually the bank’s key risk corporate, retail & private banking lending, trade finance management policies. The risk management processes and treasury and investment activities. The credit are subject to additional scrutiny by independent process is consistent for all forms of credit risk to a single internal and external auditors and the bank’s regulators, obligor. Overall exposure is evaluated on an ongoing which help further strengthen the risk management basis to ensure a broad diversification and mitigation best practices. of credit risk whereby, potential risk concentrations by country, product, industry, and risk grade are regularly reviewed to avoid excessive exposure and ensure a broad diversification. Risk Management Continued 20

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A h li B li Credit risk is actively managed by a rigorous process • Determines appropriate pricing and security a nk Q.S.C.nk from initiation to approval and disbursement with guidelines for all risk asset and products. all day-to-day management activities conducted in • Reviews the ongoing risk profile of the bank as a Annu accordance with well-defined Credit Policies and Credit whole and by individual products, business sectors al Procedures Manual (CP&CPM) that detail all credit and countries. R ep o rt approval requirements and are designed to identify at • Ensures the adequacy of impaired assets Provisions an early stage exposures which require more detailed 2011 and makes appropriate recommendations to the review and closer monitoring. Specific impairment executive committee. provisions are made against credit exposures where whole or a portion of the credit is considered doubtful ABQ risk management implemented initiatives to of recovery. If an asset is considered unrecoverable, embed a comprehensive credit risk management culture a mandatory write-off takes place. This is conducted within the bank’s various lines of businesses & units. by a risk management process, which is completely This has contributed significantly to the quality of both independent in reporting terms from the asset & profit the loans & investment portfolios as well as the quality generating business facing departments. of the corporate banking & retail banking products, improved turnaround times & service quality provided to The department took further steps to ensure the customers. scientific measurement & quantification of risk ratings that are applied to credit exposures, instead of relying Basel II & Basel III workshops helped to enhance and solely on qualitative or subjective evaluations. raise the awareness among the business development teams and this consequently resulted in superior quality This has efficiently eased the proper quantification of the service provided to existing customers. risk-return parameters, as significant contributor to profit generation capacities during the year. The efforts devoted to the overall evaluation of the bank’s credit portfolio throughout the year contributed The CP&CPM includes a robust risk rating system to effective control over the assets quality. The portfolio that stratifies the credit portfolio by degree of risk to is comprehensively analysed in terms of country, monitor the credit quality and to be able to assess industry, product and single obligor bank to detect the commensurate pricing and aid in the prompt concentration trends and enhance diversification. identification of problem exposures. Management of material problem exposures is vested with Special assets The bank’s exposure is also closely monitored with a unit and all exposures are subject to monthly exposure view to detect early warning signals of delinquency reports & reviews. which would enable the management to take proper early corrective actions and maintain a sound credit In addition, the C&IC is vested with the overall day to day portfolio credit risk management and its responsibilities include the following: The enhanced relationship between risk management and various business unit teams has led to the • Formulation and implementation of credit policies adoption of prescribed best practice risk management and monitoring compliance to policies. methodologies in both booking as well as maintenance • Acts as a credit approval body for credits & and development of the business. Investments within its delegated authority. • Recommends to the Executive Committee all policy issues & changes related to credit risk as well as credits falling outside its discretion. 21 |

Market Risk: Market risk is the risk that adverse A stringent limit structure based on conservative 2011 movements in market risk factors including foreign grounds but reflecting business needs as well as market exchange rates, interest rates, credit spreads, commodity dictates has been prescribed. The robust control and R ep o rt al prices and equity prices will negatively impact & reduce monitoring processes and the effective follow-up the bank’s income or the value of its portfolios. mechanisms that have been adopted help to effectively Annu manage market risk.

Given ABQ’s ongoing low risk strategy, aggregate market nk Q.S.C. risk levels are low relative to the size of the bank’s Operational Risk: Operational risk refers to losses a li B h balance sheet. The bank utilises daily Value-at-Risk (VaR) resulting from the inadequacy or failure of internal A models to estimate potential losses that may arise processes and systems or the materialisation of adverse from adverse market movements in addition to other external events. The bank maintains an efficient quantitative and non-quantitative risk management operational risk management framework to quantify and techniques. mitigate operational risks. The bank calculates VaR using a one-day holding period The bank utilises an ‘Operational Risk Self Assessment’ at a confidence level of 95%, which takes into account (ORSA) process to assess, document and report the the actual correlations observed historically between operational risks encountered in the course of business. different markets and rates. This is in line with the implementation of Basel II regulations. There is also a mandatory VaR which is generated daily based upon a 10 day holding period at a confidence The Operational Risk Committee (ORC) approves the level of 99%. For regulatory purposes that is utilised by ORSA annually and reviews the operational risks faced Qatar Central Bank upon their review. by various functions in the bank on a periodic basis, introducing appropriate controls wherever necessary. Given the bank’s conservative strategy in terms of Furthermore, the internal audit and compliance investments and trading, aggregate market risk levels functions conduct independent periodic reviews to are considered low. The bank utilises quantitative assess the adequacy of checks and controls. risk management techniques to assist in estimating potential losses that may arise from adverse market The bank’s Business Continuity Plan (BCP) was movements. These are considered adequate from a need comprehensively and periodically tested after perspective and the existing scope of activities. establishing the requisite infrastructure and the successful completion of system-specific trial runs. The periodic monitoring of liquidity as well as interest The developed BCP comprises extensive plans that are rate mismatches and adherence to foreign exchange designed to minimise and mitigate operational risks limits with respect to laid down guidelines help manage arising from potential failure of the communications possible scenarios in a proactive manner. The continued networks and IT systems breakdown. application of OPICS has significantly enhanced the capabilities of the treasury front and back office This plan covers bank-wide operations and envisages functions. scenarios of varying levels of contingency and measures to contend with the same. Additional investments in The Sunguard based PANORAMA system has facilitated information technology to serve this purpose were advanced reporting and monitoring mechanisms. implemented through the procurement of upgraded This has supplemented existing capabilities and has hardware. Departmental plans were also put in place contributed towards adopting quantitative analysis during the year, providing detailed procedures for techniques that are in line with the global best practices, individual bank functions to be operative in case of the local market and the regulatory requirements. need. Risk Management Continued 22

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The bank has also put in place a Disaster Recovery Plan The bank’s liquidity management policies and A h li B li (DRP) prescribing the recovery process and restoration procedures are designed to ensure that funds are a

nk Q.S.C.nk of critical computer systems, including the local area available under all circumstances to meet the funding network, database servers, internet, intranet and requirements of the bank not only under adverse

Annu e-mail in the event of an interruption arising from an conditions but at sufficient levels to capitalise on unplanned and unexpected disaster with a view to opportunities for business expansion. al

R ep o rt minimise potential loss of revenue. Prudent liquidity controls ensure access to liquidity In 2011, both the Disaster Recovery Plan (DRP) and without unexpected cost effects. Liquidity projections 2011 Business Continuity Plan (BCP) were audited by an based on both normal and stressed scenarios are independent external auditor (KPMG) and QCB and was performed regularly. The control framework also found to be substantially compliant with Qatar Central provides for the maintenance of a prudential buffer of Bank’s requirements. BCP/DR tests were conducted in liquid, marketable assets and an adequately diversified 2011 and plans are in place to ensure that the tests are deposit base in terms of maturity profile and number of conducted on an annual or semi-annual basis, going counter parties. forward. The bank risk management function continuously Basic fire fighting training was also provided to selected monitors liquidity risk and actively manages the balance staff with the assistance of Civil Defence Authority and sheet to control liquidity. Treasury function manages an evacuation drill was conducted as part of the safety this risk with monitoring by the risk management and security procedures. department and under the jurisdiction of its Assets and Liabilities Committee (ALCO). The bank conducted BCP and DRP Tests successfully, covering essential functions, to establish adequate levels The bank’s Assets & Liabilities Committee (ALCO), which of preparation to face a contingency scenario, thereby convened on a regular basis during the year, was vested complying with the regulatory as well as auditing with the responsibility of ensuring adherence to the requirements. duly approved liquidity policy. The information required to make key decisions was provided in the required Moreover, both the years 2010 and 2011 witnessed the formats to provide an objective assessment of the data. continued application of a comprehensive succession The presence of the risk management team members plan – developed by the bank’s HR Department and along with the senior management ensured that proper approved by the Board of Directors – to ensure proper risk perspectives were taken into consideration in the management of adversities that could arise from staffing decision making process. exigencies. The plan provides guidelines for staff responsibilities, delegated authorities, and training and recruitment guidelines. The comprehensive range of initiatives has ensured minimal incidence of material losses as a result of the identified operational risks during the year Liquidity Risk: Liquidity risk is the risk of being unable to meet the bank’s cash commitments without having to raise funds at unreasonable prices or sell assets on a forced basis. It is measured by estimating the bank’s potential liquidity and funding requirements under different stress testing scenarios. Corporate Governance

Introduction: The principles of Corporate Governance have Board of Directors: BOD consists of 10 members with 23 | gained international importance, in particular reference to membership extended to three years, six of them have been international organisations viz., the Organisation of Economic appointed through election and they are representing the 2011 Cooperation and Development (OECD) and the Basel Qatari shareholders, AUB as a strategic partner will appoint R ep o rt

Committee. Applying the principles of Corporate Governance the other four members, the table on the next page gives the al has become a measure of performance of any financial or non- details of the Board members. financial institution. In this context Qatar Financial Markets Annu BOD conducts its activities as per its charter which contains Authority (QFMA) has issued on January 27, 2009 “Corporate the bank’s Memorandum and Articles of Association, Personal nk Q.S.C.

Governance Code for Companies Listed in Markets Regulated a Account Dealing Policy, Banking Integrity Policy and its roles by the Qatar Financial Markets Authority”. During March 2008, li B h

and responsibilities as per QCB instructions on ‘Corporate A Qatar Central Bank (QCB) has issued “Corporate Governance Governance’. The below points highlight the important Guidelines for Banks and Financial Institutions” in addition responsibilities of the Board of Directors: to their instructions, which aims to manage the Banking Managerial Risks under “Corporate Governance”. 1. Provide business strategies, objectives and policies, occasionally review and develop such strategies and It is desirous in the interests of the Board of Directors (BOD) policies. Adoption of internal control systems, supervision of Ahli Bank QSC (ABQ) to apply the rules and standards of and review on an annual basis. Corporate Governance and consider it as part of the utmost importance of the bank’s culture in order to improve the 2. Adoption of the organisational structure of the bank. confidence of investors and depositors, reduce business Evaluate, develop and identify the tasks and powers, duties risk, to maintain acceptable ratio of capital adequacy and responsibilities. and strengthening transparency & disclosure. The bank 3. Formation of committees, establish their work programs, has adopted the principle of segregation between the determine the powers, duties and responsibilities and roles and responsibilities of the BOD and the roles and delegation of decision-making powers, defining the responsibilities of the Executive Management. The BOD authority level to sign on behalf of the bank and for supervises the development of business strategies, goals moving funds. and policies, set-up the organisational structure, formation 4. Evaluation of current and future risks that bank might be of committees & delegation of authority. BOD also monitors exposed to, adoption of risk and compliance policies and the implementation of strategies, goals and policies, procedures. evaluation of performance and risk assessment, appointment 5. Supervise the implementation, evaluation of work and supervision of the internal audit in the bank and the programs, procedures and development, verify the nomination of external auditor. The Executive Management adequacy and appropriateness. implements the processes, applying the policies, reporting to BOD, preparing the financial statements & final accounts and 6. Appoint the internal audit, supervise and ensure its attends to other day-to-day affairs of the bank. impartiality and independence. 7. nomination of external auditor, who is a specialist and Background: ABQ has been established in State of Qatar as highly-qualified, contracting with them and determine Qatari Shareholding Company according to the Decree No. their fees. (40) of the year 1983 for practicing banking financial activities in the consumer and commercial sector. As per the Decree 8. Review reports of the executive management, internal of Council of Ministers, authenticated on 28/08/2004, it has audit and external audit, and approving the final financial been agreed with Ahli United Bank BSC, Bahrain (AUB) on statement of the bank. 30/08/2004 to enter as strategic partner by owning 40% of the 9. To verify the accuracy and credibility of financial statement share capital. On 02/09/2004 a “Management and Technical of the bank and its business results, to safeguard the rights Services” agreement has been signed. In terms of this of the depositors and shareholders. agreement AUB is to handle the responsibility of managing 10. Transparency in the disclosure of all significant matters that the bank and extend the technical services for a period of 10 affect the performance of the bank and its business results, years on renewable basis and support the bank with human obligations and transactions of related parties and conflicts resources and banking experiences. of interests. Corporate Governance Continued 24

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A Name Title Current Expiry of current Status h li B li appointment appointment a nk Q.S.C.nk Sh. Faisal Bin Abdulaziz Bin Jassim Al-Thani Chairman 2011 2014 Independent

Annu Mr. Hamad Abdulmohsen

al Al-Marzooq Deputy Chairman 2008 AUB representative non-Executive R ep o rt Sh. Nasser Bin Ali Bin Saud Al-Thani Member 2011 2014 Non-Executive 2011 Sh. Mohamed Bin Falah Bin Jasim Al-Thani Member 2011 2014 Independent Dr. Ahmed Mohamed Yousef Obidan Member 2011 2014 Independent Mr. Ahmed Abdulrahman Nasser Fakhro Member 2011 2014 Non-Executive Mr. Victor Nazeem Agha Member 2011 2014 Non-Executive Mr. Adel Mohammad Abdel-Shafi El-Labban Member 2008 AUB representative non-Executive Mr. Abdulla Ahmed Al-Raeesi Member 2008 AUB representative Independent Mr. Bassel Gamal Aly Member 2008 AUB representative non-Executive

11. To support and clarify the values of corporate governance two members to each member in his/her address registered and code of ethics and business conduct through the in the company›s records at least 15 days prior to the date of adoption of corporate governance policies. the proposed meeting, stating the date, time and the place 12. Organising the nomination process for BOD members with of the meeting, the notice must contain a summary of the transparency and disclosure of information concerning the proposed agenda of the meeting, and if possible copies of nomination procedures to the shareholders. any documents relating to the agenda of the meeting shall be distributed to the members, sufficient time before the date of In addition to the above, the BOD will carry out any functions the meeting. In this context, BOD met seven times in 2011. or responsibilities, which it considers are necessary to achieve the objectives of the bank. BOD is primarily responsible BOD has appointed a Board Secretary, whose functions towards shareholders, other parties, Qatar Central Bank (QCB), includes recording the minutes of all the BOD meetings Qatar Financial Market Authority (QFMA), Qatar Exchange (QE) and safekeeping of records, books and reports submitted and other official bodies in the State of Qatar. by or to the BOD. Under the direction of the Chairman, the Board Secretary is also in-charge of ensuring timely access It should be noted that there is a separation of responsibilities to information and coordination among the BOD members between the positions of the Chairman and the Chief as well as between the BOD and the other stakeholders in Executive Officer (CEO) of the bank, as these positions are the company including shareholders, management, and handled by two different individuals. employees. BOD to hold at least six meetings in the financial year, in Committees of the Board of Directors and its Subsidiary accordance with Article 36 of the bank’s Memorandum and Bodies: BOD has three committees viz., the Executive Articles of Association, and as per Article 37, all the Board Committee, the Audit, Compliance and Risk Committee, the meetings shall be convened (even for which a provisional date Policies, Developments and Remunerations Committee, in is decided as stipulated in above (Article 36)) upon a call made addition to Sharia Committee designated by the BOD. Profiles by the Chairman or the Vice Chairman in the absence of the of these committees are as follows: first, or if requested by two members, through notice of the The Executive Committee: The Executive Committee 5. Review the contents of the regular reports prepared by the 25 | consists of the following five members: regulators and the bank’s responses. 2011 Name Title 6. Test the method adopted by the management to ensure monitoring the appropriateness of the nature, extent Sh. Nasser Bin Ali Bin Saud Al-Thani Head R ep o rt and effectiveness of internal control systems and risk al Mr. Hamad Abdulmohsen Al-Marzooq Member management. Annu Mr. Ahmed Abdulrahman Nasser Fakhro Member 7. on an annual basis, review the nature and scope of Mr. Adel Mohammad Abdel-Shafi El-Labban Member internal audit program and compliance, and the adequacy nk Q.S.C. of their human resources to carry out their responsibilities. a

Mr. Victor Nazeem Agha Member li B h

8. Discuss the results of the audit and compliance reports, A The Executive Committee has the task of managing and and follow up the implementation of the agreed points running the bank according to the annual budget, business within the time limits set forth. plan, instructions relating to financial, administrative, operational and credit policies approved by the BOD. The 9. Ensure that there are strategies, policies and action plans Committee tasks also includes the approval of systems, various available, evaluated and are implemented to manage the banking products, plans and budgets within the approved risks facing the bank. policy of the BOD, and exercise the powers delegated by 10. Receive and review reports from risk management and the BOD in granting, renewal and follow-up of credit, and in also review the steps taken by the management in investment and capital investment, which is in excess of the assessing, monitoring and control. powers of the executive management, in addition, any other 11. Approval of the appointment or dismissal of the Head responsibilities delegated to the Committee by the BOD in of Audit and Head of Compliance and their staff. Assess order to reach the objectives of the bank. the performance of the Head of Audit and Head of The Committee meets three times a year. Head of the Compliance. Committee or his representative may convene a non- The Committee shall normally meet at least four times scheduled meeting of the Committee, if necessary. In this during the year and additional meetings may be convened context, the Committee met three times in 2011. at the request of any member of the Audit, Compliance Audit, Compliance and Risk Committee: The Audit, and Risk Committee, or the internal or external auditors, or Compliance and Risk Committee consist of the following three management. In this context, the Committee met four times members: in 2011. Name Title It should be noted that all members of the Audit, Compliance and Risk Committee are independent. Dr. Ahmed Mohamed Yousef Obidan Head Sh. Mohamed Bin Falah Bin Jasim Al-Thani Member Policies, Development and Remuneration Committee: The Policies, Development and Remuneration Committee consists Mr. Abdulla Ahmed Al-Raeesi Member of five members: The following points highlight the important functions and Name Title responsibilities of this Committee: Sh. Faisal Bin Abdulaziz Bin Jassim Al-Thani Head 1. Submit recommendations to the BOD on the appointment of external auditors, and audit fees. Mr. Ahmed Abdulrahman Nasser Fakhro Member 2. Discussions with the external auditors, prior to start of Mr. Adel Mohammad Abdel-Shafi El-Labban Member the audit process the nature and scope of the audit and Mr. Abdulla Ahmed Al-Raeesi Member evaluate the effectiveness of external audit. Mr. Bassel Gamal Aly Member 3. Review and monitor the accuracy of the annual accounts The Committee shall study, prepare and develop strategies & before submission to the BOD. objectives, policies, systems, plans and budgets based on the 4. Review Management Report of the external auditor directives of the BOD and its Terms of Reference, in addition, and regular reports. Consider the responses proposed/ attend to any other tasks assigned by the BOD to achieve the suggested by the management. objectives of the bank. Corporate Governance Continued 26

| The Committee meets three times during the year. Chairman Sharia Committee: Sharia Committee consists of three

A h of the Committee or his representative may invite the members: li B li

a Committee for an unscheduled meeting if necessary. In this nk Q.S.C.nk Name Title context, the Committee met three times in 2011. Dr. Ali Muhi-Eldin Ali Al-Qura Daghi Head

Annu It should be noted that the BOD have adopted a policy of Dr. Abdul-Aziz Khalifa Hamad Al-Qassar Member granting bonuses and allowances to members of the Board al Dr. Farid Mohamed Hadi Member

R ep o rt and senior management, according to the following: 1. The BOD awards are divided into: The Committee supervises the activities of the Islamic 2011 branches of the bank and approves them from Sharia A) 50% attendance expenses related to the meetings perspective. The Committee also appoints the staff for Sharia attended by the Member (in accordance with the Internal Audit, who will submit the audit reports to the Sharia regulations and limits set out in this regard under the Committee. Commercial Companies Law No. 5 of 2002). B) 50% representation expenses, and calculated as a Nomination Committee: The BOD is supervising the process suitable and effective representation for the period of of nomination for membership to the BOD, and ensures the membership of the BOD during the financial year of process to be fully transparent. As per the instructions of the bank. Qatar Central Bank, disclosure of information related to the procedures for nomination is made to the shareholders. 2. All the bonus amounts to be determined for the BOD members will be linked to the financial year of the bank. Bank’s Policy on Related Parties and Conflicts of Interest: 3. All payments will be in consistent and compatible with The bank has issued various policies and procedures in this the limits and principles stipulated by the Commercial regard, which are approved by the BOD, are as follows: Companies Law and the bank’s Article of Association. 1. Personal Account Dealing Policy: Which explain the Also, BOD have approved the formulation of the Policies, definition of ‘disclosure’ and ‘undertaking’ in the dealing of Development and Remuneration Committee and assigned the investment activities (through a prescribed form), in its Terms of Reference. The tasks and responsibilities of this addition to the rules and procedures for practicing these Committee is as follows: activities. The Policy also covers “dos and don’ts” in the banking activities, ‘closed periods’ and the ‘insider register’ 1. Approval of the general structure of the system of rewards, which is under the responsibility of Head of Compliance. incentives and benefits, in accordance with bank’s Article of Association, instructions of Qatar Central Bank, the 2. Banking Integrity Policy and Procedures: This includes code of corporate governance and the Management and the standards to be complied by the staff with regard to Technical Services agreement and planning guidance of corporate governance, ethics, integrity and credibility, the Ahli United Bank (BSC) Group. while practicing the banking activities. It also covers the prohibited, illegal and non-occupational practices 2. Recommend systems, procedures and controls of which lead to misconduct and misbehaviour, including granting bonuses and allowances, update them whenever the practices which lead to conflict of interest between necessary. the employee and the bank, or the client, or any other 3. Recommend the total amount of allowances and bonuses parties. The principle of “whistle blowing” in the event of based on the annual performance appraisal approach. any prohibited, illegal and non-occupational practices is 4. Identify the allowances and bonuses to be paid to the covered in this policy and procedures and the employees Chief Executive Officer and his deputies, according to the who report such practices/ activities are fully protected by annual performance appraisal system and those to be paid the bank. Based on this policy and procedures, the bank to the Head of Audit, Head of Compliance and Head of Risk constitutes an independent committee to investigate Management. such reports, and recommend the disciplinary action up 5. To recommend to the BOD regarding the remuneration to dismissal of the employee indulging in such prohibited, and allowances of its members and its committees. illegal and non-occupational practices. 3. Commercial Companies Law: The bank is committed 2. Human Resources Policy. 27 |

to the Commercial Companies Law no. 5/2002, and in 3. Accounting Policy. particular the contents of Article 108 of the Law, which 2011 4. Capital and Revenue Expenditure Policy. describes what needs to be followed in the event of any

5. Administration and Services Policy and Procedures. R ep o rt

interests occurred, directly or indirectly, to the Chairman, al BOD members or senior managements in any contracts or 6. updating the AML & CFT Policy and Procedures Manual. projects where the bank has interest. 7. updating Information Security Framework and Policy. Annu 4. QCB Instructions: The details of facilities granted to the 8. updating the Credit and Investment policy. nk Q.S.C.

Chairman, BOD members, their families and relatives are a

The Internal Audit Department of the bank is an independent li B submitted to BOD in each meeting, to ensure that these h facilities are in accordance with the limits and controls set department, reporting to the Audit, Compliance and Risk A by Qatar Central Bank. Committee of BOD. The roles and responsibilities of the Internal Audit Department have been approved by the Audit, 5. Code of Ethics and Business Conduct: All employees Compliance and Risk Committee, in addition to its annual have signed this charter confirming having understood plan which is based on risk and covers all the activities of the and complying with its contents, which also makes it branches, departments and divisions of the bank. The Audit, obligatory for them not to use any insider information for Compliance and Risk Committee identifies the bonuses and personal benefit in order to prevent conflicts of interest. allowances of the Internal Audit Department. 6. Staff Bye-Law: As included in Article 109 of Chapter 9 of this by-Law prohibits practice by employees, within the External Auditor: Prior approval is obtained from Qatar bank or with any parties outside the bank, which could Central Bank for the nomination of the external auditor. The lead to a conflict of interest. Chapter 10 of this by-Law, names of the nominated external auditors will be placed to describes the disciplinary procedures and punishments the General Assembly with the recommendation of BOD for imposed in this regard. their agreement to appoint. The period of appointment should not exceed five years as per Qatar Central Bank instructions, Internal Control: The bank follows internal control procedures and will not be considered for reappointment until approved by the BOD, the policies and procedures for risk completion of two years from the end of the last assignment. management is reviewed in line with the guidance and Chapter 6 of the Memorandum & Articles of Association of the control systems, economic factors and market conditions, bank determine the mechanism for appointing the external which would reduce the bank’s exposure to different risks such auditor, their duties, and the right to access at any time the as credit risk, market risk, liquidity risk and operational risk. The bank’s books, records and documents, also the right to attend Credit & Investment Committee analyse and follow up the meetings of the General Assembly, to give their opinion on various risks on a regular basis. Other specialised committees the audit of the bank. M/s. KPMG is the external auditor of such as Operational Risk Committee, Assets & Liabilities the bank for the financial year ended December 31, 2011. The Committee also analyse and follow-up all risks on periodical Audit, Compliance and Risk Committee discuss the external basis, according to the policies, procedures and specific plans auditor’s report and submit their recommendations in this approved by the BOD such as the policies and procedures on regard to the BOD. following-up of market risk, liquidity risk and operational risk self-assessment, business continuity plan and disaster recovery The external auditor is independent and attends the meetings plan. These committees report periodically to the BOD of the General Assembly of the bank. The bank as per the through its respective committees, Risk Department submit instructions of Qatar Central Bank does not enter into any reports to the Audit Compliance and Risk Committee of BOD. financial transactions with the external auditor or provide any facilities to him, his employees or their family members in The following are the important control issues that have been order to avoid any conflicts of interest. approved by the BOD in 2011 in order to strengthen the internal controls in the bank: Transparency and Disclosure: The BOD provides for a policy of transparency and disclosure. This policy ensures timely 1. Ahli Brokerage Policy. (Ahli Brokerage Co. has been and accurate disclosure of information on all material matters established as a subsidiary company of Ahli Bank with regard to the bank or financial institution, including its QSC, approved by QCB, licensed by QFMA and under financial position, performance, ownership, and corporate membership of QE. Ahli Brokerage Co. commenced its governance. The policy has to be in writing and must be business on 24/07/2011 and trade in securities). disclosed to the public. Corporate Governance Continued 28

| The BOD provides an annual report to the shareholders. The The bank or financial institution has to confirm to the

A h annual report contains at least the following elements : shareholders annually that: li B li a nk Q.S.C.nk 1. the financial statement of the bank or financial institution 1. the bank or financial institution has taken effective and for financial year. appropriate measures to prevent money laundering, financing of terrorism, insider trading and abusive self- Annu 2. the description of the applied accounting standards, the trading. standards must guarantee a true and fair view of the bank al

R ep o rt or financial institution. 2. there are no provisions in effect that protect the BOD or executive management from accountability. 3. the compliance and risk policy, including the foreseeable 2011 risk factors. Penalties, fines or punishments imposed on the bank by 4. the organisational structure of the bank or financial regulatory authorities: Fines aggregating QR. 10,000 (2010: institution including the committees set up within the QR. 162,250) were imposed on the bank in 2011 by Qatar BOD, the mandate assigned to them, their members and Central Bank in respect of breaching its regulations. their working procedures. Compliance: The compliance function in Ahli Bank QSC is 5. a full list of the members of the BOD, providing information an independent one reporting directly to BOD through their on their education, experience and information about their Audit, Compliance and Risk Committee; the department has membership in any other banks, financial institutions or effective and comprehensive “Compliance Framework and companies, also stating their status, eg, independent, Manual” and “Compliance Monitoring Framework” approved non-executive member etc. by BOD and these are based on risk including the assessment 6. a full list of the members of executive management, of all policies and procedures related to the bank’s operations providing information on their education, experience and to ensure strict compliance with applicable laws, regulations affiliations. and standards. 7. a report on the total remuneration for each of the Anti Money Laundering & Combating Financing Terrorism members of the BOD and the members of executive (AML & CFT): Ahli Bank QSC has adopted effective and management and policy on promotions. comprehensive AML & CFT Policy, Procedures and Internal 8. the policy concerning the corporate governance of the controls. bank or financial institution. Shareholders Rights: As per Article 13 of the bank’s 9. the ownership structure of the bank or the financial Memorandum & Articles of Association the shareholders have institution, including major shareholders. the right to inspect the shareholders’ register of the bank for 10. plans, objectives and strategies of the bank or the financial free during the official working hours and obtain a copy of the institution. same. Also they can get a copy of the bank’s Memorandum & Articles of Association. As the bank is listed in Qatar 11. the annual report of the external auditor on financial data, Exchange, the bank is complied with the internal regulations the present and future risks, the effectiveness of internal of Qatar Exchange and the rules, regulations and instructions auditing and the performance of the BOD and executive governing the trading of securities in the State, by disclosing management. and providing the required information and documents to all 12. any penalty, due or punishment imposed on the bank shareholders. or the financial institution by the QCB or any other supervisory, organisational or legal authority. Also, Chapter 5 of the bank’s Memorandum and Articles of Association, every shareholder has the right to attend the 13. material issues regarding employees and stakeholders. General Assembly, treated fairly, to exercise the right to vote 14. a report on the social and environmental policies and and to elect the BOD members from the Qatari Side. Chapter those related to professional health and other issues. 7 includes the shareholders’ rights on the distribution of Shareholders, investors and participants in the market must profits through dividends proposed by the BOD in the General be granted access to the information in accordance with laws Assembly meeting. and regulations. The annual report must be made available to anyone interested. Organisation Structure 29 | Board of Directors 2011

Policies, Development Audit, Risk R ep o rt & Remuneration CEO Executive Committee Sharia Board & Compliance al Committee Committee Annu

DCEO Executive Manager

DCEO Corporate DCEO Retail & Executive Head of nk Q.S.C.

Finance, Risk, Head of HR a Board Secretary Banking & Treasury Private Banking Manager Legal Gov. Relation Internal Audit IT & Operations & Corp. Affairs li B h A

Head of Head of Corporate Head of Branches Head of Finance Banking & SME’s Support Senior Management Compliance Salah Jassim Murad Head of Private Chief Executive Officer Head of Treasury Banking & Wealth Head of Operations Management Mahmoud Yahya Malkawi Deputy CEO, Corporate Banking and Sharia Auditor Treasury Head of Head of Information Yehia Gamaledin El Batrawi Marketing Products Deputy CEO, Retail, Private Banking & Channels Technology and Wealth Management Shafi Mubarak AlShafi Head of Risk Executive Manager, Government Head of Branches Management Relations & Corporate Affairs Abdulla Mohd. Salman Almahmeid Executive Manager - Administration Head of Head of Sales Adminstartion & Mohamed Ouf Support Property Executive Manager of Legal Saad Al-Kaabi Head of Human Resources Quality Assurance Mahmoud Eid Head of Risk Management Graeme Coulson Head of Treasury & Investments Shekhar Agarwal Head of Corporate Banking Mahalingam Shankar Head of Finance D S Moham Head of IT Maha Ragab Head of Private Banking and Wealth Management Mohamed Khalil Ahmed Head of Branches - Support Amr Shourbagy Head of Branches Viswalingam Nagarajan Head of Central Operations Zakaria Abedraboh Head of Compliance Bashar Ahmad Al-Agha Head of Internal Audit Independent Auditors’ report Report to the Shareholders of Ahli Bank Q.S.C. on the Consolidated Financial Statements 2011 30

|

We have audited the accompanying consolidated made by management, as well as evaluating the overall A h li B li financial statements of Ahli Bank Q.S.C. (“the Bank”) and presentation of the consolidated financial statements. a

nk Q.S.C.nk its subsidiary (together referred to as “Group”), which We believe that the audit evidence we have obtained is comprise the consolidated statement of financial sufficient and appropriate to provide a basis for our audit

Annu position as at 31 December 2011, and the consolidated opinion. statements of income, comprehensive income, cash al Opinion

R ep o rt flows and changes in equity for the year then ended, and notes, comprising a summary of significant In our opinion, the consolidated financial statements

2011 accounting policies and other explanatory information. present fairly, in all material respects, the consolidated financial position of the Group as of 31 December Directors’ Responsibility for the Consolidated 2011, and of its consolidated financial performance Financial Statements and its consolidated cash flows for the year then ended Directors are responsible for the preparation and in accordance with International Financial Reporting fair presentation of these consolidated financial Standards and applicable provisions of Qatar Central statements in accordance with International Financial Bank regulations. Reporting Standards and applicable Qatar Central Bank Report on Other Legal and Regulatory Requirements regulations and for such internal control as management determines is necessary to enable the preparation of We have obtained all the information and explanation consolidated financial statements that are free from which we consider necessary for the purpose of our material misstatement, whether due to fraud or error. audit. The Group has maintained proper accounting records and financial statements are in agreement Auditor’s Responsibility therewith. We have reviewed the accompanying report Our responsibility is to express an opinion on these of the board of directors and confirm that the financial consolidated financial statements based on our information contained therein is in agreement with the audit. We conducted our audit in accordance with books and records of the Group. We are not aware of any International Standards on Auditing. Those standards violations of the provisions of Qatar Central Bank Law No. require that we comply with ethical requirements 33 of 2006, Qatar Commercial Law No. 5 of 2002 or the and plan and perform the audit to obtain reasonable terms of the Articles of Association which might have assurance whether the consolidated financial statements had a material effect on the business of the Group or its are free from material misstatement. financial position at 31 December 2011. 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, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due Gopal Balasubramaniam to fraud or error. In making those risk assessments, we Partner, KPMG considered internal controls relevant to the Group’s Auditor’s Registration No. 251 preparation and fair presentation of the consolidated Date: January 2012 financial statements in order to design audit procedures Doha 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 Financial Statements 2011 - 2010 QR’000 (6,242) 562,362 182,897 351,478 182,000 364,135 642,383 775,929 218,684 321,192 112,324 2,874,447 2,600,437 1,293,533 2,064,270 11,338,854 17,965,718 11,461,343 14,607,915 15,901,448 17,965,718 - - 11,346 780,883 181,736 211,295 182,000 266,367 700,781 218,684 420,469 123,044 1,768,899 2,636,607 2,655,680 2,082,531 1,038,722 2,513,046 12,154,725 17,734,145 12,690,201 15,221,099 15,221,099 17,734,145 fficer 2011

4 5 6 7 8 9 10 11 12 13 14 15 15c 15e 15e 15d 15b QR’000Notes Salah Murad O Chief Executive Hamad Al MarzouqHamad Al Deputy Chairman ther assets ther liabilities roperty, furniture and equipment furniture roperty, bonus shares roposed roposed dividend roposed he attached notes 1 to 34 form an integral part an integral financial statements. 34 form of these consolidated 1 to he attached notes activities advances and financing to customers oans, ASSETS Bank Central and balances with Qatar Cash

Consolidated Statement of Financial Position of Financial Statement Consolidated 2011 31 December At

Due from banks and other financial institutions banks and other financial Due from L investments Financial P O TOTAL ASSETS TOTAL LIABILITIES other financial institutions Bank and Qatar Central banks, Due to LIABILITIES AND EQUITY Customers’ deposits Customers’ Subordinated debt Subordinated O

nrestricted investment accounts Unrestricted investment Liabilities Total EQUITY capital Share Statutory reserve Risk reserve Fair value reserve Fair P P Retained earnings Total Equity Total TOTAL LIABILITIES AND EQUITY TOTAL T Chairman Sh.Faisal Bin Abdul-Aziz Bin Bin Abdul-Aziz Sh.Faisal Jassem Thani Al

32 | Ahli Bank Q.S.C. Annual Report 2011 General andadministrativeGeneral expenses NET OPERATINGNET INCOME P TOTAL OPERATING INCOME NET FEEANDCOMMISSIONNET INCOME

Fee andcommissionexpense O T Fee andcommissionincome Net gainonfinancialinvestments andderivatives Basic anddiluted –(QR) EARNINGS PERSHARE NET INTERESTINCOMENET OPERATIONS ANDPROFITFROMISLAMIC Net gainfrom dealinginforeign currencies PROFIT FOR THE YEARFOR PROFIT Interest expensefrom Conventional andShare ofP Dividend income OPERATING EXPENSES Depreciation 8 Interest incomefrom Conventional andP For the Year Ended31December 2011 Consolidated Income Statement he attachednotes 1to oftheseconsolidated 34form financial statements. anintegral part rovisions for credit lossesonloansandadvances ther operatingincome

rofit from IslamicOperations rofit onIslamicOperations Notes QR’000 23 22 18 21 24 20 17 19 16 6

2011 (179,552) (201,736) (244,831) (57,841) (22,184) 643,981 701,822 100,793 572,351 442,245 817,182 (1,900) 30,578 20,161 98,893 3,515 2,340 4,562 6.39 1,044,203 (164,539) (477,776) (185,042) (90,628) (20,503) 597,371 687,999 566,427 412,329 31,617 90,927 22,366 89,955 QR’000 2,084 2,919 4,248 (972) 2010 6.48

Ahli Bank Q.S.C. Annual Report 2011 | 33 2010 (144) 8,985 6,837 2,343 9,180 QR’000 (2,004) 412,329 421,509 78 (6) 9,562 9,634 7,954 17,588 442,245 459,833 rofit for the year for the rofit he attached notes 1 to 34 form an integral part an integral financial statements. 34 form of these consolidated 1 to he attached notes P QR’000 2011 Consolidated Statement of Comprehensive Income of Comprehensive Statement Consolidated 2011 Ended 31 December Year the For Other comprehensive income Other comprehensive investments for-sale Available- value (losses)/ gains during the year Fair Reclassification adjustments for gains/(losses) included in the income Reclassification adjustments on derecognition the year for statement Amortised during the year on reclassification to loans and receivables Amortisedto loans and during on reclassification the year

Cash flow hedges flow Cash value gains during the year Fair year the gain for Other comprehensive the year for income comprehensive Total T

34 | Ahli Bank Q.S.C. Annual Report 2011 Cash (outflow) inflow from operatingactivities Net cashoutflowactivities from financing Dividend paid Social and Development L andDevelopment Social operating assetsandliabilities Cash flows from operatingbefore activities changesin Dividend waived ew sharesNew issued FLOWSCASH FROMFINANCINGACTIVITIES Net cashoutflow from investing activities T P Dividend received P Net cash(outflow) inflow from operatingactivities Interest paid P CASH AND CASH EQUIVALENTS ANDCASH CASH AT 31DECEMBER Adjustments for: NET DECREASE IN CASH AND CASH EQUIVALENTS ANDCASH DECREASEINCASH NET Interest received Operational cashflows from interest anddividend P FLOWSCASH FROMINVESTINGACTIVITIES Cash andcashequivalentsat1January P FLOWSCASH FROMOPERATING ACTIVITIES Year Ended31December 2011 Consolidated Statement ofCash Flows he attachednotes 1to oftheseconsolidated 34form financial statements. anintegral part roceeds from disposalofproperty, furniture andequipment roceeds from sale/redemption offinancialinvestments andderivatives rofit for the year urchase ofproperty, furniture andequipment urchase offinancialinvestments O Customers’ investment depositsandunrestricted accounts Due to banks, QatarCentral Bankandotherfinancialinstitutions Net changeinliabilities O L Due from banksandotherfinancialinstitutions Net changeinassets Net gainonfinancialinvestments andderivatives P L Recoveries ofprovisions for credit losses P Depreciation P oans, to customers advancesandfinancingactivities oss/(profit) ondisposalofproperty, furniture andequipment ayment of staffindemnity rovision for staffindemnity rovision for credit losses/generalprovisions onloans&advances ther liabilities ther assets evy

31

Notes QR’000 13a 13a 15 33 15 21 15 8 8

2011 (1,309,719) 3,319,410 2,009,691 (100,953) (517,906) (867,166) (321,192) (499,555) (525,292) (810,164) (808,255) (64,675) (32,074) (21,115) 141,369 523,767 321,192 251,995 724,698 442,245 (2,340) (1,909) 77,309 89,915 46,852 22,184 3,908 4,562 (71) - - - - (1,126,729) (1,658,755) (1,854,572) (1,136,922) 4,456,332 3,319,410 (306,592) (299,506) (77,919) (17,999) (41,182) 483,213 982,135 524,360 108,627 235,710 445,053 846,016 412,329 821,339 822,757 (7,513) (2,919) (1,418) 35,699 14,599 20,503 QR’000 1,998 3,391 1,289 4,248 2010 428 -

Ahli Bank Q.S.C. Annual Report 2011 | 35 otal Total 14,599 (7,513) 459,833 421,509 321,191 (11,056) (10,308) (321,192) (306,592) 1,952,575 2,064,270 2,064,270 2,513,046 24,409 14,599 (7,513) earnings t 112,324 442,245 412,329 112,324 Retained (11,056) (10,308) earnings Retained 123,044 (420,469) - (321,192) - - - - roposed 306,592 321,192 321,192 321,192 dividend dividend (321,192) - (306,592) - Proposed - - - 9,180 - bonus shares (6,242) 420,469 - (15,422) Fair value Fair p 420,469 Proposed - - Risk 17,588 - - (6,242) 11,346 218,684 218,684 value Fair - - Risk 644,532 218,684 131,397 - - - - - 775,929 Statutory 218,684 - - - share capital reserve reservereserve against 160,596 775,929 - - - 262,793 - - Statutory (160,596) 1,038,722 Advance

------Share Share capital QR’000QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 reserve reserve capital reserve 58,398 29,199 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 613,184 642,383 642,383 700,781 ote 15e) (Note shares bonus roposed 15e) (Note dividend roposed 15e) (Note dividend roposed he attached notes 1 to 34 form an integral part an integral financial statements. 34 form of these consolidated 1 to he attached notes ransfer to Social & Sports Fund Social & Sports to ransfer Fund ransfer to Social & Sports Fund Social & Sports to ransfer Fund ransfer to Social & Sports Fund Social & Sports to ransfer Fund otal comprehensive income otal comprehensive otal comprehensive income otal comprehensive

Balance at 1 January 2010

Balance at 1 January 2011

Consolidated Statement of Changes In of Changes Equity Statement Consolidated 2011 Ended 31 December Year

year the T for 15e) year (Note the paid T for Dividend 15e) (Note paid Dividend P P ote 15a) (Note issued shares P New ote 15f) (Note waived Dividends ote 33) 2011 (Note the year for T ote 15a) (Note issued shares New for the year 2009 year the for T Balance at 31 December 2011 31 December at Balance 33) 2010 (Note the year for T Balance at 31 December 2010 T

36 | Ahli Bank Q.S.C. Annual Report 2011 t 2.2 t t t 2.1 2 t t 1 31 December 2011 Notes to theConsolidated Financial Statement financial statements continue to beprepared basis. onthegoingconcern thatmay castsignificant doubtupontheGroup’suncertainties to continueasagoingconcern. ability Group hastheresources to continue inbusinessfor the foreseeable future. Furthermore, themanagement isnotaware ofany material Going concern amounts recognised intheconsolidated financialstatements. theprocess ofapplyingtheGroup’sIn accountingpolicies, managementhasuseditsjudgments andmadeestimates the indetermining Significant accounting judgments andestimates ispresentedconsolidated statement offinancialpositiondate inNote (“non-current”) 3.2.7. theconsolidatedsettlement within12monthsafter statement offinancialpositiondate (“current”) andmore than12monthsofthe regulations. withtheQatarCommercial(IFRS) andinconformity Companies’ Law andtheapplicableprovisions ofQatarCentral Bankrulesand Statement ofcompliance are includedintheconsolidated statement ofincomefromsubsidiary thedate ofcommencementitscommercial operations. power tosoas governto obtainbenefitsactivities. thefinancialandoperatingpoliciesofanentity from its isfullyconsolidated from thedate onwhichcontrolSubsidiary istransferred to theGroup. Control isachieved where theGroup hasthe eliminated onconsolidation. balances, intra-group All material transactions,incomeandexpensesprofits andlosses areresulting from transactions intra-group year astheGroupreporting usingconsistent accountingpolicies. the Group inconsolidatingthefinancialstatements ofitssubsidiary. IAS 27Consolidated Financial Statements. Lineby lineconsolidationofelementsconsolidated financialstatements was followed by accordingly theGroup consolidated thefinancialsofAhliBrokerage Company S.P theyear,During theBank’s whollyowned subsidiary, AhliBrokerageCompany S.P the Group, andallvaluesare rounded indicated. to thenearest QRthousandexcept otherwise hedged. cost,are adjusted to record atamortised thatare to carried therisks changesinfairvalueattributable being value hedges, andotherwise derivatives andavailable for salefinancialinvestments. ofpreparation,Basis measurement andpresentation ACCOUNTING POLICIES 2011,whichhasbeencompliedwithby theGroup.Islamic businessthrough theirIslamicwindows from 31January theyear,During theQatarCentral Bankvidecircular no315/275/2011hasdirected allconventional any new banksto ceasebooking 2012. the Board ofDirectors on 18January commenced itsbrokerageoperations. theyear,During theGroup’s whollyowned subsidiary, Ahli BrokerageCompany S.P Qatar. at SuhaimBinHamadStreet, AlSaddArea (P inDoha No. 40of1983. intheState wasincorporated ofQatar in1983asapublicshareholdingAhli BankQ.S.C. company Decree undertheEmiri Bank”) (“the CORPORATE INFORMATION he Group’s managementhasmadeanassessmentoftheGroup’s andissatisfiedthatthe to continueasagoingconcern ability he Group presents itsconsolidated statement offinancialpositionbroadly intheorder ofliquidity. Ananalysis regarding or recovery he consolidated financialstatements oftheGroup have beenprepared Standards International inaccordance with Reporting Financial he consolidated financialstatements have beenprepared costconvention, underthehistorical except for measurement atfairvalueof he consolidated financialstatements for the December 2011 year ended31 were authorized for issueinaccordance witha resolution of withAhliUnitedhe Banksigned Bank(B.S.C.) amanagementcontract inSeptember 2004for often years aperiod onarenewable basis. T he consolidated financialstatements areof Riyals presented(QR), whichisthepresentation currency andfunctional inQatari T he Bank is engaged in commercial and retail banking services andoperates through itsregisteredhe Bankisengagedincommercialservices andretail banking HeadO T he Bank and its subsidiary are together referredhe Bankanditssubsidiary to as Group”.“the .O . Box 2309, Doha, State. Box 2309,Doha, ofQatar)andeighteen branchesestablishedintheState of T he carrying valuesofrecognized assetsandliabilitiesthatarehe carrying hedgeditems in fair T he mostsignificant useofjudgments andestimates are as follows: T he financial statements of the subsidiary are preparedhe financialstatements ofthesubsidiary for thesame .C inaccordance withIFRS3BusinessCombinations/ .C. commenceditscommercial operationsand .C, Qatar(Commercial Registration No47943) T herefore, theconsolidated T he financial results ofthe ffice located

Ahli Bank Q.S.C. Annual Report 2011 | 37 he adoption of the T he collective assessment T arties. he amended standard clarified the definition of he amended standard T (continued) ransactions. T he determination of what is ‘significant’ or ‘prolonged’ requires judgment. judgment. requires ‘prolonged’ or ‘significant’ he determination is of what arty T he standard is effective for annual periods beginning on or afterfor annual periods 1 January beginning is effective he standard T he Group treats ‘significant’ generally as 20% or more and ‘prolonged’ as greater than 9 greater as ‘prolonged’ and generally as 20% or more ‘significant’ treats he Group T he judgments include considerations of liquidity and model inputs, such as volatility, such as volatility, include considerations of liquidityhe judgments and model inputs, T he adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial Group’s of the on the classification and measurement an effect he adoption of the first phase of IFRS 9 will have T hese estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes resulting in future differ, based on assumptions about a number of factors and actual may are results hese estimates T he Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture. a comprehensive to present issued, in conjunction when will quantify the effect with the other phases, he Group he Group treats available-for-sale investments as impaired when there has been a significant or prolonged decline in the fair value below decline in the fair value below or prolonged a significant has been when there as impaired investments available-for-sale treats he Group he input to these models are taken observable these models are from observablehe input to but where market possible, market data where not available, data are he Group reviews its individually significant loans, advances and financing activities to customers at each consolidated statement of statement consolidated at each advances and financing to customers loans, activities its individually significant reviews he Group oans and advances that have been assessed individually and found not to be impaired and all individually insignificant loans and all individually insignificant and be impaired not to been assessed individually and found oans and advances that have 2015. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and of financial liabilities, classification and measurement 2015. In the IASB will address subsequent phases, derecognition. assets. per QCB instructions, earlyAs adoption of IFRS 9 is not permitted. amendment did not have any impact financial position of the Group. any on the consolidated amendment did not have issued but not adopted and interpretations standards New year ended for the effective not yet been issued but are have and interpretations standards amendments to A number of new standards, financial statements: these consolidated not been applied in preparing 31 December 2011, and have to classification Instruments) replacement of IAS 39 and applies work as issued reflects the first phase of the IASBs on the -IFRS 9, (Financial of financial assets as defined in IAS 39. and measurement related party and laid down additional requirements for disclosure of outstanding commitments of Related P of outstanding commitments of Related disclosure party for related additional requirements and laid down In making this judgment, the Group evaluates, among other factors, historical share price movements and duration and extent which price to movements historical share In among other factors, making evaluates, the Group this judgment, is less than its cost. the fair value of an investment months. January 1 from effective 2011 and interpretations amendments standards, New P IAS 24, Related revised has adopted the Group During the year, takes account of data from the loan portfolio (such as credit quality, levels of arrears, credit utilisation, loan to collateral ratios etc.), ratios etc.), collateral utilisation, loan to credit of arrears, levels quality, takes the loan portfolio account of data from (such as credit country prices estate indices, real concentrations of risks of unemployment, and economic data (including levels risk and the performance groups). individual of different investments Impairment of available-for-sale other objective evidence of impairmentits cost or where exists. ACCOUNTING POLICIES (continued) ACCOUNTING (continued) and estimates judgments accounting Significant of financial instruments value Fair position cannot be of financial statement on the consolidated recorded liabilities the fair values of financial assets and financial Where active markets, determined using a variety derived from they are that include the use of mathematical models. of valuation techniques T establish fair values. to is required judgment discount rates etc. discount rates and financing activitiesto customers advances Impairment losses on loans, income statement. in the consolidated In particular, recorded to assess whether an impairment be loss should financial position date when determining the impairment cash flows the estimation of the amount and timing of future in management is required by judgment realisable value of financial situation and the net makes about the borrower’s judgments the Group Inloss. estimating these cash flows, collateral. allowance. the to should be of assets with similar risk determine whether provision characteristics, to in groups then assessed collectively, advances are yet evident. not is objective evidence are but whose effects which there for loss events incurred made due to t 2.4 2.3 t 2 2.2 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December t l

38 | Ahli Bank Q.S.C. Annual Report 2011 31 December 2011 t t 2.5 t 2.4 2 Notes to theConsolidated Financial Statement items thatare measured costinaforeign ofhistorical interms non-monetary are translated currency usingtheexchange rates atthe t a) Significant accounting policies ontheconsolidated financialpositionoftheGroup.impact - IFRS13Fair Value Measurement - IFRS12Disclosure ofInterests inO Arrangements - IFRS11Joint - IFRS10Consolidated Financial Statements adopted: and notearly theyear,During thefollowing Standards have Accounting Standards beenissuedby International Board (IASB) butare notyet effective New standards and interpretations issuedbutnotadopted (continued) ACCOUNTING POLICIES(continued) c) b) he significant accountingpoliciesadopted inthepreparation oftheconsolidated financialstatements are setoutbelow: standardshese new are 2013.T effective beginningJanuary 1 for annualperiods onorafter adjusted against the carrying amountofthehedgeditem andrecognizedadjusted intheconsolidated againstthecarrying incomestatement. instrument to fairvalueisrecognized immediately intheconsolidated income statement. relation toIn fairvaluehedgeswhichmeettheconditionsfor hedgeaccounting, thehedging any gainorlossfrom re-measuring transaction. risk associated witha recognized orahighlyprobable cash flowsto aparticular assetorliability thatiseitherattributable forecasted exposure to changeinthefair valueofarecognized assetorliability. Cash flow in hedgeshedgetheexposure to thevariability For ofhedgeaccounting, thepurpose hedgesare classifiedaseitherfairvalueorcashflow hedges. Fairvaluehedgeshedgethe resulting gainsor losses from derivativesheldfor are tradingpurposes includedintheconsolidated incomestatement. with positive fairvalueare includedintheotherassetsandderivativeswithnegative fairvalueare includedintheotherliabilities. subsequently measured atfairvalue. Fair modelsasappropriate. value represents pricing orinternal price Derivatives quoted market After initialrecognition prices,offairvalueuponinitialrecognition, beingthebestevidence attransaction derivatives are ofaneffectivethe fairvalueadjustmentofrespective assets, hedging are unlessthey strategy. part rates atthe date andthedifferences whenthefairvaluewasdetermined are of includedintheothercomprehensive incomeaspart items measured atfairvalueina foreigndate ofthe initialtransactions.Non-monetary are translated currency usingtheexchange from dealinginforeign currencies”. of financialpositiondate. assetsandliabilitiesinforeign currenciesMonetary are retranslated attherates rulingattheconsolidated Riyals intostatement Qatari 2011,whichhasbeencompliedwithby theGroup.Islamic businessthrough theirIslamicwindows from 31January theyear,During theQatarCentral Bankvidecircular no315/275/2011hasdirected allconventional any new banksto ceasebooking accordance Control by asdetermined theShari’a withtheIslamicShari’a, Board. Islamic banking Derivatives Foreign transactions currency ransactions inforeignransactions currencies are attheexchange translated Riyals rates into prevailing Qatari atthedate ofthetransaction. he Group carries out Islamic banking services through Islamicmodesoffinancing. various services outIslamicbanking he Group carries T he resulting exchange gainsandlosses areto theconsolidated taken incomestatement under “net gain ther Entities (continued) hese Standards areto have notlikely an T he related ofthehedgeditem is aspect T he Islamic activities are in he Islamicactivities conducted T he

Ahli Bank Q.S.C. Annual Report 2011 | 39 he T oan syndication fees oan syndication fees hese fees include commission hese fees T oan commitment fees for loans that are loans that are for oan commitment fees (continued) hese fees include underwriting fees, corporate finance fees, and brokerage fees. L fees. and brokerage fees, include underwriting corporate finance hese fees fees, T he calculation takes into account all contractual terms of the financial instrument (for example, prepayment prepayment he calculation takes example, account all contractual into terms financial instrument (for of the T he following specific recognition criteria must also be met before revenue is recognised: is revenue criteria must also be met before recognition specific he following T ffective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the receipts through or cash payments that exactly future is the rate discounts estimated rate interest ffective he Group earns fee and commission income from a diverse range of services it provides to its customers. Fee income can be Fee range of services a diverse its customers. to and commission income from earns it provides fee he Group Interest and similar income Interest taking method, account of the principal interest outstanding and the rate using the effective income is recognised Interest E applicable. to the net carrying of the financial instrument or a shorter appropriate, expected life amount of the financial asset where period, or financial liability. options) and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part an integral directly attributable the instrument and are of the to costs that are or incremental fees options) and includes any losses. credit but not future rate, interest effective loans and on impaired is recognised Notional interest income. from is excluded overdue or more that is 90 days Interest present values. to their net flows cash to discount future used advances and other financial assets based on the rate Fee and commission income and commission Fee two categories: the following divided into a certain over period of time. services provided earned from that are income Fee of services that period. accrued over the provision a period earned of time are over for Fees income and asset management, custody and other management and advisory and other L income and asset management, custody fees. as an costs) and recognised incremental with any (together deferred are fees related and other credit down likely be drawn to When it is unlikely the loan commitment down, that a loan will be drawn on the loan. rate interest the effective adjustment to the commitment period on a straight line basis. over recognised are fees services transaction providing from income Fee negotiating or participating arising from party, the arrangement such as a third in the negotiation of a transaction for Fee on completion of the recognised are or sale of businesses, or other securities or the purchase of acquisition of shares linked a certain to that are after or components of fees fulfilling the performanceunderlying recognised transaction. are Fees criteria.corresponding are recognised in the income statement when the syndication has been completed and the Group retains no part retains and the Group of the loans when the syndication has been completed in the income statement recognised are for the other participants. part as itself or retains rate for at the same effective Revenue recognition Revenue (continued) Derivatives gains or losses on cash flow hedges initially recognized in the consolidated statement of comprehensive income are transferred to transferred income are of comprehensive statement consolidated in the recognized hedges initially gains or losses on cash flow in the period income statement transaction in which the hedged the consolidated impacts income statement. the consolidated gains or losses that had initially been the associated of an asset or a liability, in the recognition the hedged transactionWhere results cost of the of the included in the initial measurement are income, comprehensive of statement in the consolidated recognized asset or liability. related instrument are gains or losses arising in the fair value of the hedging any hedge accounting, do not qualify for hedges which For the period. for income statement taken consolidated the directly to for or no longer qualifies or exercised, is terminated instrument expires, hedging Hedge accounting is discontinued when the from hedge any adjustment arising fixed maturities, financial instruments with fair value hedges of effective For hedge accounting. gain or loss on the any cumulative hedges, cash flow effective For maturity. accounting is amortised term to the remaining over forecasted until the reserve income is held therein hedge as cash flow in other comprehensive instrument recognized hedging as cash flow gain or loss recognized net cumulative the transaction If occurs. the hedged transaction occur, is no longer expected to statement. income the consolidated to income is transferred hedge reserve in other comprehensive can be revenue Group and the to the that the economic benefits will flow the extent to that it is probable Revenue is recognised measured. reliably (i) In relation to cash flow hedges which meet the conditions for hedge accounting, any gain or loss on the hedging instrument that instrument gain or loss on the hedging any for hedge accounting, which meet the conditions hedges cash flow In to relation reserve income. hedge initially as cash flow in other comprehensive recognized hedge is be an effective is determined to (ii) d) ACCOUNTING POLICIES (continued) ACCOUNTING policies (continued) accounting Significant c)

2 2.5 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

t

40 | Ahli Bank Q.S.C. Annual Report 2011 31 December 2011 l (iv) (iii) 2.5 2 Notes to theConsolidated Financial Statement t e) d) Significant accounting policies(continued) ACCOUNTING POLICIES(continued) g) f) rate method, lessany allowance for impairment. investmentsSubsequent to costusingtheeffective theinitialmeasurement, are interest held-to-maturity measured atamortised the consolidated incomestatement. at whichtimethecumulative gainandlosspreviously recognised inothercomprehensive asfairvaluereserve incomeisincluded in fromarising achangeinthefairvalueisrecognised inothercomprehensive asfairvaluereserve income, untiltheinvestment issold, Subsequent to theinitialmeasurement, available-for-sale financialinvestments are measured atfairvalue. Unrealised gainsorlosses A financialinvestment ismeasuredcoststhatare to itsacquisitionor issue. initiallyattransaction directlyattributable All financialassetsare recognised usingthesettlementdate. detailsas to how are they measuredAn analysisoffairvaluesfinancialinstrumentsandfurther are provided inNote 29. payable ondemand. Fair modelsasappropriate. valuesofderivatives represent pricing orinternal prices quoted market which issubstantiallythesameordiscounted cashflow analysis. areasonable estimate by offairvalueisdetermined market, referencein anactive value ofanotherinstrument to thecurrent market regulated exchange atthecloseofbusinessonconsolidated statement offinancialpositiondate. For financialassetsnottraded losswasrecognised. theimpairment after an event occurring debt instrumentsare reversed through theconsolidated incomestatement suchincreases to theextent related canbeobjectively to through othercomprehensive incomeintheconsolidated statement ofcomprehensive income. losseson ofimpairment Reversal instrumentsclassifiedas investmentsavailable-for-sale lossesonequity ofimpairment Reversal are treated asanincrease infairvalue financial investments. investment andany isdetermined lossisrecognised impairment intheconsolidated losson incomestatement asimpairment caseswhere existthataspecificfinancial evidence objective investmentIn isimpaired, the recoverable amountofthatfinancial and includescostsfees oftheeffective thatare interest anintegral part rate. costiscalculated usingtheeffective interestAmortized into account any rate premium method by taking ordiscountonacquisition impaired, process. aswell asthrough theamortization andlossesareGains recognized intheconsolidated incomestatement whentheloansandreceivables are derecognized or costusingtheeffective interest atamortized Suchfinancialassetsare rate carried method,market. less any allowance for impairment. Financial investments Revenue recognition Date ofrecognition offinancialinstruments Fair value oans andreceivables financialassetswithfixed are ordeterminable payments that non-derivative activeare notquoted inan he fair value of financial assets traded in organized financial markets isdeterminedhe fairvalueoffinancialassetstradedinorganized by reference financialmarkets prices on bid toquoted market on non performing financing accounts is suspended when it is not certain thattheGroup will receive financingaccountsissuspendedwhenitnotcertain it. on nonperforming are onIslamicfinancingtransactions Revenues recognised onanaccrualbasisusingthe Income reducing installmentmethod. Islamic financing Dividend incomeisrecognised whentheGroup’s to receive right thedividendisestablished. Dividend income T he fairvalueofliabilitieswithademandfeature istheamount (continued)

Ahli Bank Q.S.C. Annual Report 2011 | 41 impairment in value. impairment in value. (continued) 20 years 20 5 years years 6-7 years 5 easehold improvements are depreciated over the lesser of their estimated useful life or lease term. or lease useful life of their estimated the lesser over depreciated are easehold improvements the rights to receive cash flows from the asset have expired; the asset have from cash flows the rights receive to the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash received the to pay the asset or has assumed an obligation from cash flows its rightsreceive to has transferred the Group arrangement; or ‘pass-through’ partyto a third in full without material delay flows under a the Group has transferred its rights to receive cash flows from the asset and either (i) has transferred substantially all the risks the asset and either (i) has transferred from cash flows its rightsreceive to has transferred the Group of the asset, but has substantially all the risks and rewards nor retained of the asset, or (ii) has neither transferred and rewards of the asset. control transferred and accumulated depreciation at cost less accumulated and equipment is stated furniture roperty, easehold improvements Property, furniture and equipment furniture Property, Due from banks, loans, advances and financing activities and financing to customers advances loans, banks, Due from After initial measurement, due from banks, loans, advances and financing activities to customers are stated at amortised stated are advances and financing activitiesto customers cost less any loans, banks, due from initial measurement, After impairment. for allowance up, and mark which is the Ijara, upon profit Islamic financing activities such as of goods with an agreed Murabaha, which is a sale principal amounts less at their gross stated upon consideration, are of services of ownership an agreed transfer or leased assets for in suspense and unearned profit. profit losses, credit for provision received, amount any circumstances provisions only in specific against advances and financing activities written off and charged loans, are banks, Due from written off financing previously Recoveries from restructuring and collection all reasonable been exhausted. activitieswhere have the specific provision. activities written to back are L land is not depreciated. Freehold as useful lives their estimated basis over on a straight-line and equipment is calculated furniture on all other property, Depreciation follows: Furniture and equipment Furniture expected economic benefits are future upon disposal or when no and equipment is derecognised furniture of property, An item as the and equipment (calculated furniture property, of the gain or loss arising on derecognition Any its use or disposal. from and the carrying between the net disposal proceeds income in the consolidated recognised difference amount of the asset) is the asset is derecognised. in the year statement of financial assets and financial liabilities Derecognition a part applicable where where: derecognised of a financial asset or partgroup of similar financial assets) is of a (or, A financial asset - - - When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all nor an asset and has neither transferred from cash flows its rights receive to has transferred When the Group continuing the extent to of the Group’s of the asset, the asset is recognised control of the asset nor transferred the risks and rewards at the asset is measured the transferred over that takes of a guarantee the form involvement in the asset. Continuing involvement carrying the original of to lower could be required of consideration that the Group amount of the asset and the maximum amount repay. an existing Where when the obligation under the liability or cancelled or expires. A financial liability is discharged is derecognised terms or the of an existing liabilityare terms, the same lender on substantially different by another from financial liabilityreplaced is of a liability recognition of the original the and as a derecognition treated is or modification such an exchange substantially modified, respective carrying in the income statement. in the consolidated recognised and the difference amounts is new liability, i) ACCOUNTING POLICIES (continued) ACCOUNTING policies (continued) accounting Significant h) j) p Buildings l

2 2.5 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December Vehicles

42 | Ahli Bank Q.S.C. Annual Report 2011 31 December 2011 t 2.5 2 Notes to theConsolidated Financial Statement l underLaw No. 24of2002onRetirement andP Pension andProvident Fund contribution plan plan-Defined t t k) Significant accounting policies(continued) ACCOUNTING POLICIES(continued) l) n) m) a specificallowance, have a greaterrisk ofdefaultthanwhenoriginally granted. result from foreclosure lesscostsfor obtainingandsellingthecollateral, whetherornotforeclosure isprobable. calculation ofthepresent valueoftheestimated future cashflows ofacollateralised financialassetthecash flowsthat reflects may If a loan has a variable interest aloanhasvariable rate,If thediscountrate for any lossisthecurrent measuring effective impairment interest rate. their recoverable amount,beingthenetpresent future value of theexpected cashflows, discounted attheoriginal interest rates. Specific provisions for credit lossesare calculated basedonthedifference thebookvalueofloansandadvances between statement. based onthepresent valueoffuture cashflows, andany isdetermined loss, impairment is recognized intheconsolidated income that aspecificfinancialasset may beimpaired. evidenceexists, Ifsuch theestimated recoverable amountofthatasset,computed An assessmentismadeateachconsolidated statement offinancialpositiondate whetherthereto determine evidence isobjective offinancialassets Impairment not currently exist. isbasedandto remove lossexperience conditions onwhichthehistorical thatdo theeffects period ofconditionsinthehistorical datatothose inthegroup.reflecteffects ofcurrent isadjusted onthebasisofcurrent lossexperience observable Historical cashflows oftheassetsin contractual group lossexperience similar andhistorical to for assetswithcreditrisk characteristics Future cashflows ona group offinancialassetsthat evaluatedare collectively forimpairment are estimated onthebasisof to payability allamountsdueaccording oftheassetsbeingevaluated. terms to thecontractual T For financialassetsare assessmentofimpairment, ofcollective thepurpose grouped onthebasisofsimilarcredit risk characteristics. incashflows. ordeterioration aswellweaknesses asidentifiedstructural industry risk, incountry deterioration contributions, whichare expensedwhendue. for employees Qatari calculated asapercentage employees’ oftheQatari salaries. within otherliabilities. accrued over ofemployment. theperiod period. to thecompletionofaminimumservice subject andlengthofservice, final salary gratuity benefitsplan plans-Defined End ofservice Employee’s termination benefitsandpensionfunds have activities beenexhausted.and collection or liabilities. At theconsolidated statement offinancialpositiondate, contingentliabilitiesandother commitmentsdonot represent assets actual Contingent liabilitiesandothercommitments position date. O amountofsuchliabilitiesattheconsolidated andexpected statementincome statement offinancial basedonthelikelihood provisionsOther disclosed inNote 23. oans andadvancesare offandcharged written againstspecific provision onlyincircumstances where all reasonable restructuring he Group also makes a collective impairment allowance againstexposures impairment he Groupacollective which,althoughnotspecificallyidentifiedas alsomakes requiring hose characteristics are relevanthose characteristics to theestimationoffuture cashflows for groups ofsuchassets by beingindicative ofthe debtors’ he Group provides benefits to itsemployees. for endofservice he Groupaprovision makes for any orfinancialliabilitiesasacharge obligations(legalorconstructive) expected to theconsolidated T he treatment offinancialinvestments ofimpairment isdisclosedinNote 2.5e. ther provisions are disclosedinNote 13. T he costisincludedingeneralandadministrative expensesasdisclosedinNote 23. T he provision ofemployees’ benefitsisincludedintheotherprovisions endof service T ension, theGroup isrequired to aGovernmentfundscheme contributions to make he cost is included as part ofstaffcostsingeneralandadministrative expensesas he costisincludedaspart T he entitlementto thesebenefitsisbasedupontheemployees’ (continued) T his takes into suchasany considerationfactors his takes T he Group’s obligationsare limited to these T he expected costsofthesebenefitsarehe expected T he

Ahli Bank Q.S.C. Annual Report 2011 | 43 (continued) his is not generally the case with master netting arrangements, arrangements, netting his is not generally the case with master T he share of profit of the unrestricted investment account holders is of the unrestricted investment of profit he share T he premium received is recognised in the consolidated income statement in fee and commission income on a straight line in fee income statement in the consolidated is recognised received he premium T he chief operating decision maker is the person or group that allocates resources to and assesses the performance to of the operating resources that allocates he chief operating decision maker is the person or group he unrestricted investment accounts carry preferential rights over others in respect of utilisation of funds towards financing and of utilisation of funds towards others in respect rights accounts carry over he unrestricted investment preferential he profit from Islamic operations for the year was distributed among unrestricted investment account holders and shareholders in account holders and shareholders year was distributed among unrestricted investment for the Islamic operations from he profit arrived at after takinghe profit year is distributed between expenses at the end of the financial account all income and into and the related assets and liabilities are presented gross in the consolidated statement of financial position. statement in the consolidated gross presented assets and liabilities are and the related reportingSegment T of an entity. segments performance. included in determining operating segment Income are with each segment and expenses directly associated calculated on the basis of their daily deposit balances over the year, after reducing the agreed and declared Mudaraba fee. and declared the agreed after reducing the year, on the basis of their daily deposit balances over calculated which ariseIn out of misconduct or losses, expenses on the part case of any compliance with Qatar Central non due to of the Group account be borne the unrestricted investment not to by expenses or losses are and instructions, then such regulations Bank’s decision. Bank’s subject Qatar Central are to Such matters holders. not account holders are the unrestricted investment year is a net loss, at the end of a financial results the Islamic operations Where responsibility of having Bank in its capacity Qatar Central as the regulator by as approved except of such loss, share with any charged and compliance with Islamic Shari’a rules and principles. such losses, management for assessing the Group’s activities. investment and cash equivalents Cash Central cash and cash equivalents include cash and balances with Qatar of cash flows, the purpose statement of the consolidated For Bank other than the mandatory maturity banks and other financial institutions with an original cash reserve, and balances due from 31. as disclosed in Note months or less, of three guarantees Financial and acceptances. guarantees of credit, consisting of letters financial guarantees, In gives the ordinary the Group course of business, received. being the premium at fair value, financial statements in the consolidated initially recognised are guarantees Financial at the higher of the amount initially liability is measured under each guarantee the Group’s initial recognition, Subsequent to and the best estimate income statement in the consolidated amortization cumulative recognized when appropriate, less, recognized result of the guarantee. financial obligation arising as a settle any to required of expenditure for credit “provision in income statement is takento the consolidated financial guarantees to in the liability increase relating Any losses”. of the guarantee. the life basis over Fiduciary assets of financial position. statement held in a fiduciary in the consolidated Assets as assets of the Group capacity not treated are Offsetting of financial instruments if, reported of financial position and the net amount statement in the consolidated offset assets and financial liabilities are Financial to settle on a net is an intention amounts and there recognised the legal right offset to enforceable is a currently there and only if, the asset and settle the liability realise simultaneously. or to basis, accordance with Qatar Central Bank’s instructions, which are summarized as follows: summarized instructions, which are Bank’s with Qatar Central accordance account holders and shareholders. unrestricted investment Unrestricted investment accounts’ share of profit share accounts’ Unrestricted investment t) p) q) r) s) ACCOUNTING POLICIES (continued) ACCOUNTING policies (continued) accounting Significant o) the chief operating decision maker. reported with the internal to reporting in a manner consistent are operating segments provided t t 2 2.5 t Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

44 | Ahli Bank Q.S.C. Annual Report 2011 31 December 2011 t t t 3.2 t 3.1 3 t 2.5 2 Notes to theConsolidated Financial Statement 3.2.1 Introduction Management Risk b) a) Financial Instruments FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT v) u) Significant accounting policies(continued) ACCOUNTING POLICIES(continued) fair values. valuesoffinancialassetsandliabilities, investments, excluding held to maturity the carrying are notsignificantly different fromtheir Based onthemethodsusedto thefairvalueoffinancialinstrumentsexplainedinnotes determine to thefinancialstatements, Fair value offinancialinstruments and theirrelated incomeandexpensesare disclosedinNote 2 “Significant accountingpolicies”. contingent liabilitiesandcommitments. customer deposits, otherliabilities. investment unrestricted Financial accountsandcertain instrumentsalsoincludecertain otherassets.investments Financial andcertain liabilitiesincludedueto banks, QatarCentral Bankandotherfinancialinstitutions, duefrom banksandotherfinancialinstitutions,Central Bank, loans,activities tocustomers, advancesandfinancing financial Financial instrumentscover allfinancialassetsandliabilitiesofthe Group. Financial assetsinclude cashandbalanceswithQatar Definition andclassification costlessrepayments.amortized Subordinated debtisinitiallymeasured atfair valueplusincrementalcosts, directtransaction andsubsequentlymeasured at Subordinated debt theperiod. during shareholdersprofit oftheGroup to ordinary orlossattributable by the weighted shares outstanding average numberofordinary Earnings pershare he significant accountingpoliciesadopted by theGroup inof respect recognition financialinstruments andmeasurementkey of he Group presents pershare basicanddiluted earnings shares. (EPS)datafor itsordinary BasicEPSiscalculated by dividingthe decisions. isresponsibleframeworks, policiesandlimits. for issuesandmanaging It thefundamental risk relevant andmonitoring risk Executive Committee bodies responsible for managing risks. andmonitoring Structure Management Risk T monitoring, limitsandothercontrols. to risk subject isinherentRisk intheGroup’s butitismanagedthrough activities aprocess ofongoingidentification,measurement and Group isexposed to credit, liquidity, includingtradingandnon-trading, andoperationalrisks. market, profitability andeachindividualwithintheGroup isaccountable risk exposuresfor the relating to hisorher responsibilities. he Executive Committee hastheoverall responsibilityfor strategy thedevelopment andimplementing principles, oftherisk he Board ofDirectors are ultimately responsible for identifyingandcontrolling however, risks; there are separate independent arehey monitored through theGroup’s strategic planning process. controlhe independentrisk process suchaschanges intheenvironment, doesnotincludebusinessrisks technology andindustry. T his process of risk management is critical tohis process theGroup’s managementiscritical ofrisk continuing (continued) T he

Ahli Bank Q.S.C. Annual Report 2011 | 45 his T he models make use of T hese limits reflect the business T he Group also runs worst case also runs worst he Group T reasury on economic considerations (based T (continued) he effectiveness of all the hedge relationships is monitored relationships is monitored of all the hedge he effectiveness T he effectiveness of hedges is assessed by the of hedges is assessed he effectiveness T ) from time to time. time to O) from C xecutive Committee, and the head of each Committee, the Executive of Directors, the Board and explained to is presented his information T reasury quarterly the expected will continuously monitor at each reporting the Group In period. cases of ineffectiveness, T he Group actively uses collaterals to reduce its credit risks (see 3.2.2 credit risk below for more detail). more risk for risks below (see 3.2.2 credit its credit reduce to actively uses collaterals he Group he report includes aggregate credit exposure, credit metric forecasts, hold limit exceptions, VaR, liquidity and risk ratios profile VaR, hold limit exceptions, metric forecasts, credit exposure, credit he report includes aggregate approval authorisedby the appropriate transactions, which are hedging any entering into is assessed before he risk profile he Group’s risks are measured using a method which reflects both the expected using a method which reflects both loss likelyto arise measured risks in normal are circumstances he Group’s he Risk Management Department is responsible for implementing and maintaining risk related procedures to ensure an ensure to he Risk Management procedures Department implementing and maintaining risk related for is responsible reasury is responsible for managing the Group’s assets and liabilities and the overall financial structure, as laid down by the Asset by the as laid down financial structure, and the overall assets and liabilities the Group’s managing reasury for is responsible too rather than purely the IFRS hedge based accounting regulations). the IFRS hedge based accounting regulations). rather than purely too the by performance of the hedge and take mitigating action necessary such as re-hedging wherever make effective to the hedge more on the underlying instrument concerned. business division. strategy and market environment of the Group as well as the level of risk that the Group is willing to accept, with additional is willing to of risk as the level that the Group as well of the Group and marketstrategy environment risk bearing the the overall capacity to measures and emphasis on selected in relation In industries. monitors the Group addition, all risk types across risk and activities. exposure aggregate and identify control analyse, all the business departments to Information compiled from in order is examined and processed early risks. risks detailed reporting takes and geographic Senior management On a monthly basis, customer of industry, place. changes. impairment on a quarterly for of the allowance assesses the appropriateness basis. that all business to ensure and distributed in order reports risk prepared specifically tailored are the Group, throughout all levels For departments necessary access to have and up-to-date information. on the utilization of marketrelevant of the Group members to the senior management and all other given briefing is Frequent other risk developments. plus any proprietary and liquidity, investments VaR, analysis of limits, Risk mitigation resulting manage exposures and other instruments to uses derivatives the Group partAs risk management strategy, of its overall transactions. forecast arising from and exposures risks, equity credit risks, currencies, foreign rates, changes in interest from authority mechanism within the Group. scenarios that would arise in the event that extreme events which are unlikely to occur do, in fact, occur. unlikely occur do, scenarios arise are to which extreme that events that would in the event risksMonitoring is primarily and controlling performed the Group. based on limits established by probabilities derived from historical experience, adjusted to reflect the economic environment. the economic environment. reflect to adjusted historical experience, derived from probabilities Internal Audit Internal the Internal annually by function audited Audit that examines both the are the Group Risk throughout management processes of all assessments Internal discusses the results Audit the procedures. compliance with and the Group’s adequacy of the procedures Committee. Audit to the with management, and reportsrecommendations its findings and Risk and reporting measurement systems function also ensures the complete capture of the risks and reporting in risk capture measurement function the complete systems. also ensures Treasury L (A Liability Committee actual of the ultimate loss based on statistical models. an estimate which are and unexpected losses, Risk Management Department the across monitoring compliance with risk policies and limits, It principles, for is also responsible process. independent control including of risks, department the independent control has a decentralised for Each business group which is responsible Group. against limits and the assessment of risksmonitoring the risk of new products and structured transactions. of exposures

(continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.1 Introduction (continued) t t t

t t 3 3.2 t Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

46 | Ahli Bank Q.S.C. Annual Report 2011 31 December 2011 t t t 3.2 3 Notes to theConsolidated Financial Statement 3.2.2 (continued) 3.2.1 Introduction Management (continued) Risk FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued) customers are setoutinNote 3.2.3. analysisandthegeographical ofassets, sector distribution liabilities andcommitmentsonbehalfof oftheindustry Details ofthecompositionloans, Details to customers advancesandfinancingactivities are setoutinNote 6. subsidiaries. oftheprovision itsreviewfor valueofcollateral oftheadequacy obtainedduring and monitors credit themarket losses. valueofcollateral, monitors requests themarket Management additionalcollateral inaccordance agreement, withtheunderlying - For retail over lending, andsecurities. residential mortgages properties - For commercial over lending, real mortgages estate inventory, properties, tradereceivables, cashandsecurities. - For lendingandreverse securities repurchase transactions,cashorsecurities, implemented regardingofcollateral andvaluationparameters. oftypes theacceptability T withindividualsorgroupof risks It alsoobtainscollaterals, ofcustomers inspecificlocationsorbusinesses. whenappropriate. of theGroup’s orgeographic location. industry to developments, affecting performance aparticular affectedsimilarly by changesineconomic, politicalorotherconditions. Concentrations ofcreditrisk indicate the relative sensitivity same geographic region, orhave similareconomicfeatures obligationsto to be thatwould meetcontractual causetheirability are inthe engagedinsimilarbusinessactivities,oractivities Concentrations whenanumberofcounterparties ofcredit arise risk toIn thecaseofderivativesthisislimited incura financial loss. to positive fairvalues. to afinancialinstrumentwillfail to discharge afinancialobligationandcausetheotherparty thatoneparty Credit istherisk risk Credit risk arerisks controlled andmanagedaccordingly. exposures. sector maintaining adiversified portfolio, Identifiedconcentrationsof withlimitssetongeographiccredit andindustry order toIn avoid theGroup’s excessive concentrationsofrisk, policiesandprocedures includespecificguidelines to focus on orgeographical location. industry to developments affecting aparticular performance affected by changesineconomic, politicalorotherconditions. Concentrations indicate the oftheGroup’srelative sensitivity geographic region, orhave similareconomicfeatures obligationsto to besimilarly thatwould meetcontractual causetheirability areinthesame engagedinsimilarbusinessactivities,oractivities whenanumberofcounterparties Concentrations arise Excessive riskconcentration counterparties. of creditmonitoring andcontinuallyassessingthecreditworthiness exposures, withspecificcounterparties, limitingtransactions he Group guarantees alsoobtains corporate from parent companiesfor loans, to their advancesandfinancingactivities ofcollateral obtainedarehe maintypes asfollows: ofcollateral requiredhe amountandtype dependsonanassessmentofthecreditGuidelinesare ofthecounterparty. risk he Group seeksto manageitscredit exposure risk through diversificationto oflending activities avoid undueconcentrations (continued) T he Group attempts to control credit by risk

Ahli Bank Q.S.C. Annual Report 2011 | 47 2010 Gross QR’000 562,362 295,480 exposure maximum 2,809,640 2,559,267 3,997,195 5,881,607 17,565,603 23,447,210 2011 Gross QR’000 706,048 196,864 exposure maximum 1,768,899 2,579,852 2,625,906 1,884,412 5,300,290 7,926,196 12,154,725 11,338,854 17,406,388 25,332,584 Mapping High grade grade Standard list/impaired Watch list/impaired Watch list/impaired Watch (continued) riskow – excellent Description of the grade L Standard/satisfactory risk Sub-standard – watch Doubtful Bad debts he maximum exposure is shown gross, before the effect of mitigation through the use of master netting and the use of master of mitigation through the effect before gross, is shown he maximum exposure T ther assets he table below shows the maximum exposure to credit risk for the components of the consolidated statement of financial of financial statement the components of the consolidated risk for credit to the maximum exposure shows he table below he Group’s internal rating scale and mapping to the table below are as follows: are the table below internal rating scale and mapping to he Group’s activities advances and financing to customers oans, Maximum exposure to credit risk without taking account of any collateral and other credit enhancements and other credit collateral of any risk without taking credit account to Maximum exposure position. collateral agreements. collateral Cash and balances with Qatar Central Bank (excluding cash on hand) Bank (excluding and balances with Qatar Central Cash Due from banks and other financial institutions banks and other financial Due from investments Financial Total Contingent liabilities Contingent Total risk exposure credit Total Credit qualityof financial assets per class Credit rating Bank’s Grade A Grade B Grade C Grade D Grade E Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on recorded as fair values, to those with positive limited time, at any risk derivative financial instruments is, arisingCredit from to a settlement is also exposed risk, the Group derivatives, gross-settled With of financial position. statement the consolidated honours its obligation but the counterpartybeing the risk that the Group the counter-value. deliver fails to but risk exposure credit the current represent above at fair value the amounts shown recorded financial instruments are Where of changes in values. as a result that could arisenot the maximum risk in the future exposure Credit risk (continued) Credit a)

b) (continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.2 t

3 3.2 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

l

o

facilities unused credit t

48 | Ahli Bank Q.S.C. Annual Report 2011

t

netL

l

netL

l

3.2 3 31 December 2011 Notes to theConsolidated Financial Statement

3.2.2 Management (continued) Risk FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued) b) Credit risk(continued) * Watch list orimpaired grade loansare netofspecificprovisions. Financial investments Collective Impairment P Collective Impairment Due from banksandotherfinancialinstitutions Cash andbalanceswithQatarCentral Bank 2010 At 31December Total Financial investments Collective Impairment P Collective Impairment Due from banksandotherfinancialinstitutions Cash andbalanceswithQatarCentral Bank At 31December 2011 T Credit perclassoffinancialassets(continued) quality otal oans, to customers advancesand financingactivities oans, to customers advancesandfinancingactivities he tablebelow shows thecreditby classoffinancialassets, quality basedontheGroup’s credit ratingsystem: Held-to-maturity Available-for-sale Corporate Real estate Retail Held-to-maturity Available-for-sale Corporate Real estateReal Retail oans andadvances oans andadvances rovision rovision 7,439,601 2,459,111 2,459,111 2,505,543 2,505,543 2,049,225 1,768,899 7,791,212 2,437,991 2,437,991 1,981,219 1,664,021 1,981,219 2,809,640 422,786 706,048 258,004 562,362 33,532 QR’000 QR’000 QR’000 QR’000 59,194 grade (continued) High - - - - 9,558,244 9,439,460 9,453,460 4,643,055 1,494,636 3,315,769 9,236,801 9,115,525 4,669,354 1,629,181 9,128,623 2,830,088 (14,000) Standard 120,741 (13,098) 121,276 32,760 87,981 32,760 88,516 grade - - - - impaired grade Watch listor 209,722* 242,110* 209,722 209,722 100,580 242,110 242,110 241,669 6,575,014 97,071 12,071 441 ------17,209,524 12,154,725 12,168,725 17,270,123 11,338,854 11,351,952 2,579,852 2,547,092 6,789,351 2,018,002 3,361,372 1,768,899 2,559,267 2,526,507 1,887,185 2,889,723 2,809,640 (14,000) 706,048 (13,098) 562,362 32,760 32,760 Total

Ahli Bank Q.S.C. Annual Report 2011 | 49 Total 32,760 706,048 196,864 (14,000) 1,768,899 3,361,372 2,018,002 6,789,351 2,547,092 2,579,852 12,168,725 12,154,725 17,406,388 ------12,071 97,071 100,580 209,722 209,722 Watch List Watch or Impaired his facilitates focused focused his facilitates T ------56,364 244,154 300,518 286,518 (14,000) Past due but Past not impaired - - (continued) QR’000QR’000 QR’000 QR’000 32,760 706,048 196,864 1,768,899 3,292,937 1,917,422 6,448,126 2,547,092 2,579,852 he attributable risk ratings are assessed and updated regularly. he attributable assessed and updated risk ratings are 11,658,485 16,910,148 T nor impaired Neither past due he rating system is supportedhe rating system market a varietyto by combined with processed information analytics, of financial T Retail Real estate Corporate Available-for-sale Held-to-maturity ther assets he table below shows the age analysis by class of financial assets at the consolidated statement of financial position date: statement class of financial assets at the consolidated the age analysis by shows he table below oans, advances and financing activities advances and financing to customers oans, Age analysis by class of financial assets by analysis Age T management of the applicable risks and the comparison of credit exposures across all lines of business, geographic regions and regions geographic all lines of business, across management of the applicable risks exposures and the comparison of credit products. of counterparty the measurement the main inputs for risk.provide the various to categories tailored All internal risk ratings are rating policy. with the Group’s derived in accordance and are At 31 December 2011 31 December At Bank and balances with Qatar Central Cash Credit quality per class of financial assets (continued) Credit portfolio. the credit policy risk and consistent ratings across maintain accurate to It is the Group’s Due from banks and other financial institutions banks and other financial Due from impairmentCollective provision activities customers to Financial investments Financial Total * Watch list or impaired grade loans are net of specific provisions. loans are grade list or impaired Watch * c)

Credit risk (continued) Credit b) (continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.2

3.2 3 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

l

advances and financing net loans,

o

50 | Ahli Bank Q.S.C. Annual Report 2011

p T

netloans, advancesandfinancing

l

l 3.2 3 31 December 2011 Notes to theConsolidated Financial Statement

3.2.2 Management (continued) Risk FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued)

c) Credit risk(continued) analysis ofpastdue, butnotimpaired loansandadvancesby age, isprovided below: days. * Watch listorimpaired grade loansare netofspecificprovisions. O Financial investments activities to customersactivities Collective impairment provisionCollective impairment Due from banksandotherfinancialinstitutions

activities to customersactivities Cash andbalanceswithQatarCentral Bank 2010 At 31December Age analysis by classoffinancialassets(continued) otal oans, to customers advancesandfinancingactivities oans, advancesand financing ast due, butnot impaired loans,to customers advancesandfinancingactivities includethosethatare pastdue by a few ther Available-for-sale Held-to-maturity Corporate Retail Real Real Corporate Retail T assets he majority ofthepastdueloans, to customers advancesandfinancingactivities arehe majority notconsidered to beimpaired. An estate Less than 104,874 181,644286,518 329,498 74,429 167,225241,654229,387 30,445 14,41944,864100,111 60 days QR’000 QR’000 QR’000 QR’000 QR’000 QR’000

p neither pastdue 90 days nor impaired 16,930,103 10,703,354 61 to 2011 2,559,267 2,526,507 6,046,083 2,770,086 1,887,185 2,809,640 295,480 562,362 32,760 QR’000 QR’000 QR’000 QR’000 (continued) - - Total not impaired ast duebut l (13,098) 393,390 406,488 287,292 119,196 ess than ------60 days 242,110* Impaired 242,110 241,669 441 t 90 days 51,488 280,875 12,404 112,515 63,892 393,390 61 to 2010 ------17,565,603 11,338,854 11,351,952 2,559,267 2,526,507 6,575,044 2,889,723 1,887,185 2,809,640 (13,098) 295,480 562,362 32,760 T otal otal

Ahli Bank Q.S.C. Annual Report 2011 | 51 - - 6,984 4,272 25,250 76,739 liabilities 542,765 283,987 1,884,412 1,750,341 1,884,412 Contingent - 957,345 - - 2010 Liabilities 1,570,785 108,821 and equity Assets QR’000QR’000 QR’000 210,032 2,078,826 827,958 2,084,629 2,910,086 40,427 12,320 - 3,177,289 5,000,203 - he Board of Directors measure and manage measure of Directors he Board 25 1,887,185 T 2,152 26,045 428,169 336,627 12,603 85,225 536,157 133,155 413,834 984,659 4,037,381 4,995,548 674,263 3,741,243 3,766,085 liabilities 2,625,906 17,965,718 17,965,718 2,625,906 17,965,718 17,965,718 2,466,706 17,123,715 16,058,306 (continued) 2011 298,491 1,166,979 638,387 Liabilities Contingent and equity

Assets QR’000QR’000 QR’000 256,570 2,529,279 805,401 559,274 961,434 1,338,356 644,502 2,163,328 632,009 554,179 399,166 2,018,002 38,639 3,461,169 4,483,761 4,267,242 1,013,730 2,937,908 1,524,533 3,117,577 5,128,205 17,734,145 17,734,145 17,734,145 17,734,145 15,967,310 15,836,515 he Group is exposed to interest rate risk as a result of mismatches or gaps in the amounts of assets and of mismatches risk rate as a result interest is exposed to he Group T ther thers ersonal he distribution of assets, liabilities and contingent liabilities by geographic region and industry region geographic sector liabilities by liabilities and contingent is as follows: he distribution of assets, Real estate Total period. given reprice in a or liabilities and off balance sheet instruments that mature Interest rate risk rate Interest the value of financial instruments or the future might affect rates risk the possibility rate arisesInterest from that changes in interest profitability of the Group. interest rate risk by establishing levels of interest rate risk by setting limits on the interest rate gaps for stipulated periods. Asset and Asset periods. stipulated gaps for rate risk setting limits on the interest rate by of interest risk establishing levels rate by interest bring gaps to rate the interest reduce used to are on a weekly strategies reviewed basis and hedging gaps are rate liability interest of Directors. the Board them within limits established by GCC countries GCC By industry sector: Government Government agencies Industry/Manufacturing Commercial Services Contracting Total By geographic region: By geographic Qatar Concentration analysis Concentration 3.2.4

(continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.3

p o

o

3.2 t 3 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

52 | Ahli Bank Q.S.C. Annual Report 2011 o p o onbalancesheetgap o e l t 3.2 3 31 December 2011 Notes to theConsolidated Financial Statement

3.2.4 Management (continued) Risk FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued)

As at 31 December 2011 and otherfinancialinstitutions Due to banks, QatarCentral Bank Total assets financial institutions Due from banksandother Total liabilitiesandequity Subordinated debt Customer deposits Financial investments to customersactivities Qatar Central Bank Cash andbalanceswith Interest rate risk(continued) Interest rate gap sensitivity sensitivity sensitivity gap Cumulative interest rate oans, advancesandfinancing he following tablesummarizes therepricing profile ofthe Group’s assets, liabilitiesandoffbalancesheetinstruments: quity roperty, furniture andequipment ther assets ff balancesheetgap ther liabilities

(5,800,927) (5,800,927) (6,255,586)(5,745,356)(3,216,906) (5,800,927) 1,339,509 242,252473,520 2,084,539 1,901,7773,075,1263,268,0465,246,5002,158,157 1,543,918 7,885,466 6,545,957 2,388,4371,779,418 540,621 1,811,7773,075,1262,316,1053,702,259 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 Up to 1 month months months ------2,812,689 (910,912) (454,659) 182,000 - 456,253 (311,958)(107,895) 90,000 - 1-3 - 2,252,938 822,188 2,636,3455,246,500 510,230 2,528,4505,210,100 3-12 (continued) - 951,941 1,544,241 631,701 631,701 years 1-5 - 1,993,194 More than (36,400) 5 years - - - 1,344,688 Non-interest (1,993,194) (1,993,194) 4,151,351 2,513,046 211,295 181,736 140,425 2,636,607 134,981 780,883 266,367 708,837 sensitive 27,250 - - 17,734,145 17,734,145 12,690,201 12,154,725 2,082,531 1,768,899 2,513,046 211,295 181,736 780,833 182,000 266,367 Total - - - -

Ahli Bank Q.S.C. Annual Report 2011 | 53 - - - otal 182,000 364,135 182,897 351,478 562,362 2,064,270 1,293,533 2,600,437 2,655,680 2,874,447 17,965,718 17,965,718 11,461,343 11,338,854 - - 54,011 48,301 sensitive t 364,135 351,478 182,897 874,447 4,990,062 2,064,270 1,293,533 (1,614,218) (1,614,218) - - 1,214,113 - years 5 (36,400) More than More non-interest 4,987,553 1,614,218 4,951,153 1,522,911 183,006 he effect of decreases in interest rates rates in interest of decreases he effect T - 1-5 years 659,196 659,196 (450,388) 1,522,638 1,072,250 3-12 (continued) 541,457 (546,805) (117,683) (664,488) 3,163,819 1-3 - 36,400 - - 604,471 - - 182,000 - - 830,958 4,009,088 (2,482,319) (1,877,848) ------264,065 250,000 435,698 he sensitivity of equity is calculated by revaluing fixed rate available-for-sale financial rate he sensitivity fixed revaluing of equity by is calculated T month months months QR’000QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 p to 1 Up to 3,464,642 1,735,715 799,043 1,226,304 2,367,014 1,746,136 477,661 5,143,553 4,987,553 3,375,844 3,276,704 1,526,769 2,617,014 2,181,834 1,174,011 3,969,542 2,996,130 2,622,362 - - 2,000,000 - - (1,866,849) (3,744,697) (4,409,185) (3,336,935) (1,866,849) (1,866,849) accounts equipment and debt Bank investment investment furniture furniture institutions liabilities assets Central Central ff balance sheet gap rate risk.to manage interest used which are swaps, rate of interest the net notional amounts represents ff balance sheet gap ther ther roperty, roperty, quity he following table demonstrates the sensitivity to a reasonable possible change in interest rates, with all other variables held rates, possible change in interest the sensitivity a reasonable table demonstrates to he following on the net interest rates of the assumed changes in interest is the effect he sensitivity income statement consolidated of the oans, advances and financing advances and financing oans, otal liabilities and equity otal assets otal is expected to have an equal and opposite effect of the increases shown. of the increases effect an equal and opposite have is expected to Cumulative interest rate rate interest Cumulative gap sensitivity constant, of the Group’s consolidated income statement and equity. income statement consolidated constant, of the Group’s non-trading financial assets and financial liabilities held at 31 based on the floating rate December 2011, one year, income for instruments. of hedging including the effect effects of the assumed changes for the hedges at 31 as cash flow December 2011 of swaps designated including the effect assets, parallel shifts in the yield curve. are and based on the assumption that there rates in interest Interest rate sensitivity rate Interest gap Due to banks, Qatar Central Bank Qatar Central banks, Due to deposits and other financial institutions Customer Subordinated customers to investments activities Financial Due from banks and other Due from financial Cash and balances with Cash Qatar Interest rate risk (continued) rate Interest As at 31 December 2010 December 31 at As

(continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.4 t on balance sheet gap o o t t

E nrestricted O U O t P l

3.2 3 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

54 | Ahli Bank Q.S.C. Annual Report 2011

t

uSDollar t t t e t

o e

uSDollar 3.2 3 31 December 2011

Notes to theConsolidated Financial Statement 3.2.5 3.2.6 3.2.4 Management (continued) Risk FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued) Currency risk is the risk that the value of a financial instrument will fluctuate due thatthevalueofafinancialinstrumentwillfluctuate tochangesin istherisk risk foreignCurrency exchange rates. Currency risk T anexposure in takes to theeffect offluctuation prevailing foreign exchange rates currency onitsconsolidated financialposition. investments thatmay beaccepted. T end, indices, heldconstant,isasfollows: dueto changeinequity withallothervariables priceEquity risk down forindividuallyandintotal. eachcurrency significantly exposed to theothercurrencies. dueto thepeg, risk any limitsare currency setfor exposures. USDollar exposures are Allothercurrency limited andtheGroup isnot Sterling P Sterling Currency QR’000 QR’000 20112010 Riyal Qatari Interest rate risk(continued) Qatar Exchange Market index he Board exposure, ofDirectors has setlimitsonthelevel ofcurrency whichare monitored daily. he Group hadthefollowing netopenpositionsattheyear end: he othersabove includeanexposure to E his exposure from arises theGroup’s strategic investment madein2006. he effect onequity, asa instrumentsheldas investmentsavailable-for-sale result ofachangeinthefairvalueequity atthe year exposure from risk arises price theGroup’she non-tradingequity investment portfolio. exposureshe Group withinlimitslaiddown managesitscurrency by andovernight theBoard limitsare ofDirectors. laid Intra-day uro quity price risk arises from fluctuations in equity indicesandprices. frominequity arises fluctuations risk price quity thers ounds T his ismonitored onanongoing basisby theGroup’s Credit andInvestment Committee. gyptian P basis points T he Qatar Riyal ispeggedto theUSDollar.he QatarRiyal AlthoughtheGroup isnotexposedto Change in GY) amountingto QR56,044thousand (2010:QR58,171thousand). ounds (EGY) 25 25

ofnetinterestSensitivity income T he Board has set limits on the amount and type of he Board hassetlimitsontheamountandtype QR’000 QR’000 6,124 5,233 (continued) 2011 2010 891 in equity Change 4,989 1,778 3,211 price 10% % 1,336,147 1,280,777 on equity Sensitivity ofequity Sensitivity (2,120) 56,577 QR’000 QR’000 QR’000 Effect 2011 2011 2010 913 10 10 83 - T he Group on equity 227,087 172,070 (3,559) 58,541 QR’000 3,830 E 2010 ffect 91 91 35 -

Ahli Bank Q.S.C. Annual Report 2011 | 55 - Total 182,000 181,736 266,367 2,082,531 2,513,046 1,768,899 12,690,201 12,154,725 17,734,145 17,734,145 - 211,295 - - - 780,883 Over years 5 182,000 181,736 2,513,046 2,790,939 3,922,159 o guard against this risk,o guard the - T 1-5 988 years 26,885 631,702 653,042 4,286,604 - 1,092,366 1,544,241 2,636,607 3-12 3,693 90,039 (434,349) 2,604,415 - 1-3 (continued) - 90,000 - - 114,133 15,305 21,340 95,893 662,895 2,076,334 3,819,407 4,987,121 3,080,994 (2,016,474) ------months months month Up to 1 Up to QR’000QR’000 QR’000 QR’000 QR’000 QR’000 19,696 10,948 195,666 608,968 548,000 115,959 6,713,098 2,846,815 1,064,520 2,170,066 4,939,646 7,218,300 2,724,609 2,115,590 8,604,755 1,366,759 242,252 473,520 1,678,899 (5,757,940) ) monitors the maturity profile on an overall basis with ongoing liquidity the maturityoverall O) monitors on an profile C reasury. T ther liabilities ther assets roperty, furniture and equipment furniture roperty, quity L (A and Liability Asset Committee he Group’s follows: he maturity of the assets and liabilities at 31 December 2011 is as profile reflects maturity contractual been determinedhe above on the basis of the profile maturitieshave of assets and liabilities that oans, advances and financing advances and financing oans, Total assets Total deposits Customer debt Subordinated liabilities and equity Total activities customers to investments Financial Bank and Qatar Central banks, Due to other financial institutions Net liquidity gap Cash and balances with Qatar Central Bank and balances with Qatar Central Cash Due from banks and other financial institutions banks and other financial Due from Liquidity risk cause certain which may dry of funding to downgrade sources disruptions or a credit up immediately. balance of cash, maintaining a healthy managed with liquidity and assets are in mind, funding sources management has diversified marketablecash equivalents and readily securities. deposits as a mandatory customer In Bank. maintains 4.75% of average deposit with Qatar Central addition, the Group the monitoring by to the contractual maturity of financial position date period statement and does not take at the consolidated remaining date historyretention deposit availability and the of lines of credit. by the Group’s maturities as indicated account of the effective As at 31 December 2011 December 31 at As (continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.7 o

l p o e

t 3.2 Liquidity risk market can be caused by liquidity meet its funding requirements. risk will be unable to is the risk that the Group t t 3

Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

56 | Ahli Bank Q.S.C. Annual Report 2011 l t 3.2 3 31 December 2011 p o et liquidity gap netliquidity investment unrestricted accounts E O t t Notes to theConsolidated Financial Statement 3.2.7 Management (continued) Risk FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued) As at 31 December 2010 Financial to investments customers Due from banksandotherfinancialinstitutions Cash andbalanceswithQatarCentral Bank risk(continued) Liquidity Subordinated Customer other financialinstitutions deposits Due to banks, QatarCentral Bankand otal assets otal liabilitiesandequity oans, advancesandfinancingactivities he maturity profileDecember 2010isas oftheassetsandliabilitiesat31 he maturity follows: quity roperty, furniture andequipment ther assets ther liabilities debt (2,927,353) 2,503,580 4,576,599 3,299,6582,925,890 1,228,021 3,562,037 1,386,8552,250,6034,281,5206,484,703 6,489,390 518,232 525,962 638,421 14,263 327,976 46,349 up to 1 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 month months - 250,000632,769 - - - (3,424,516) 4,811,371 594,733 1,834,7313,613,2414,777,917 177,746 482,659 830,958 198,096 17,53915,15286,999 36,400 (continued) 1-3 - (1,344,779) 3,595,382 157,611 110,495 541,458 8,261 3-12 - - 3,545,214 659,196 736,306 35,510 61,958 years o 1-5 - - - - 1,522,911 4,151,434 2,064,270 2,333,269 182,897 182,000 5 t years 978 351,478 ver - - - - - 11,338,854 17,965,718 11,461,343 17,965,718 2,874,447 2,655,680 1,293,533 2,600,437 2,064,270 562,362 182,897 182,000 364,135 otal -

Ahli Bank Q.S.C. Annual Report 2011 | 57 Total 189,275 1,991,621 2,417,561 2,087,095 15,060,057 12,733,625 (2,384,897) - 5,300,290 - 445,010 - - Over 3,133 years 5 (2,503) 186,711 201,370 7,926,196 - 1-5 years 9,314 12,108 16,464 186,081 206,673 (3,125) 655,936 633,283 3-12 1,870 - - 3,101 1-3 677 (continued) 55,083 530,029 1,590,087 2,650,145 964,594 2,306,208 3,580,777 350 months months month Up to 1 Up to QR’000QR’000 QR’000 QR’000 QR’000 QR’000 530,029 132,322 109,081 193,160 130,661 873,247 201,370 101,815 186,322 583,590 918,524 8,606,347 2,982,815 2,628,248 1,410,709 306,647 687,758 7,232,568 2,735,606 2,132,168 1,366,953 243,348 476,794 (1,404,233) (303,463) (671,573) Contractual receivable amounts Contractual payable amounts he table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted repayment repayment financial liabilities based on contractual undiscounted summariseshe table below the maturity of the Group’s profile of credit etters Total Contingent liabilities and commitments liabilities Contingent Acceptances Total Guarantees Customer deposits Customer debt Subordinated Derivative financial instruments Financial liabilities Financial Bank and Qatar Central banks, Due to other financial institutions Liquidity risk (continued) maturities contractual remaining by Analysiscontingent liabilities of financial and obligations: As at 31 December 2011 December 31 at As (continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.7

facilities unused credit l

3.2 t 3

Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

58 | Ahli Bank Q.S.C. Annual Report 2011 3.2 3 31 December 2011 Notes to theConsolidated Financial Statement l t unused credit investment unrestricted accounts facilities t

3.2.7 Management (continued) Risk FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued) 3.2.8 As at 31 December 2010 Derivative financialinstruments Derivative Subordinated Customer debt other financialinstitutions deposits Due to banks, QatarCentral Bankand Financial liabilities risk(continued) Liquidity monitored againstsetlimits. calculates the VaR onadaily basisfor metric (1Day bothtradingpurposes VaR) (10Day purposes andregulatory VaR), whichare correlation effects into asingleunitofmeasurement andalimitcanbeassigned againstit for control purposes. changes, suchasvolatility risks market to whichispopulargloballysinceitencapsulates capture allknown risks andcontrol market iscontinuouslybeing monitored atAL trading activity are monitored on adailybasisto seniormanagementandany andreported breaches are escalated immediately. additionall In interestBoth rate gapsandforeign exchange are rate fluctuations managedwithintheprescribed board limits.risk exposures All prices. equity suchasinterest rates orprices rates ofmarket changes inthelevel commoditiesprices, ofvolatility foreign exchange rates and thattheGroup’s istherisk risk Market orcapital,to meetbusinessobjectives, earnings oritsability willbeadversely affected by Market risk Guarantees Acceptances Contingent liabilitiesandcommitments sheet instrumentsthatmature orreprice over agiven period. management function. Committeeresponsibility oftheAsset andLiability (AL compliance withthismethodologyisthe andensuring risks for framework theinternal Setting themanagementofmarket otal otal etters ofcredit Contractual amountspayableContractual Contractual amountsreceivableContractual T he Group manages its market risks within the regulatory framework of limits defined by the Qatar Central Bank. oflimitsdefined framework bythe Qatar Central Bank. withintheregulatory risks he Group managesitsmarket T he Group isexposed to interest created rate risk asaresult ofassetsandliabilitiesmismatch oroffbalance 4,586,884 3,317,8682,962,762 1,228,573 6,457,298 4,639,6813,639,788 (815,197) C C 817,143 662,399 153,353 260,590569,615578,110 399,719 639,598 O level. ) which consists of senior management including members of the Risk O) whichconsistsofseniormanagementincludingmemberstheRisk up to 1 87,954 21,373 14,063 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 month months 297 T he Group utilizes methodology thewidelyused (VaR) Value-at-Risk (269,616) 832,526 272,851 120,061 794,433 1,831,8712,592,556 399,719 1,199,1581,998,599 485,459 593 (continued) 1-3 (153,777) 547,373 168,518 112,243 59,468 2,669 3,630 3-12 (11,557) 663,900 754,871 14,237 189,445207,241 25,935 15,847 62,356 years o 1-5 - - 187,849 (5,991) 5 t years T 4,395 he Group 348 5,881,607 348 ver - - - - 39,066 - - 3,997,195 (1,256,138) 11,531,414 15,679,487 2,608,472 1,288,842 1,299,655 1,562,016 283,330 otal

Ahli Bank Q.S.C. Annual Report 2011 | 59 Total he 9,406 1,225 3,006 2,802 7,607 T (8,636) 20,061 14,469 he T (92) (684) (136) (322) (351) (943) (371) (291) RSA process for for he ORSA process T Effects of his is a well established his is a well T hese documents outline ORF) consisting of the T

------lan. his includes access to criticalhis includes access to T Equity correlation RSA) process to assess, document and assess, to ORSA) process 4 9 9 47 26 21 28 14 rate Interest (continued) 1,521 3,336 RC), which has representation across all departments.ORC), across which has representation 2,885 7,964 10,043 (8,504) QR’000QR’000 QR’000 QR’000 QR’000 20,976 14,751 Foreign exchange ) and Disaster Recoverylan (BCP) and Disaster (DR) P aims to establish the level of impact upon the Group’s business of impact establish the level he BCP aims to Group’s upon the T ct 2011. Furthermore both compliance and internalcompliance audit performboth ct2011. Furthermore periodic independent O perational Risk Committee ( ORP) and the Operational Risk Committee olicy ( he Group has a robustly documented Business Continuity P documented has a robustly he Group RSA annually and reviews operational risks faced by various functions in the Group on a regular basis operational risks various the ORSA annually and reviews faced by functions on a regular he ORC in the Group approves he table below highlights year-on year changes. highlights year-onhe table below year process and takes place periodically throughout the year and its completion is signed off by all concerned off departments and takes and its completion is signed the year process place periodicallyto confirm throughout external by independently audited auditors successfully carried were them. Both the BCP & DR processes out by were tests implemented. and well be thorough to found and were back in April 2011 (in compliance with QCB requirements) An evacuation Authority. Defense wardens periodically with the assistance of Civil fire to staff provided fighting training is Basic fire drill is normally conducted annually as part and security of safety procedures. computer systems, connectivity network, local area systems, to computer database servers, internet, intranet and e-mails etc. activity of having to operate from a different site in the event of an emergency or natural disaster. of an emergency in the event site or natural disaster. a different activity from operate to of having the procedures to be followed in a disaster scenario. scenario. in a disaster be followed to the procedures reviews to assess adequacy of check and controls at any given point in time. given assess adequacy to at any reviews controls of check and perational Risk Self Assessment’ ( ‘Operational Risk Self Assessment’ known a Basel II compliant approach as utilizes Group report in the course of normal business activity. the operational risks encountered necessary. wherever controls track the status of open risks to and pursuing appropriate the year throughout back in successfully completed was 2011 perational Risk Framework ( Operational Risk Framework approved manages its Operational risk primarily the board Group through Operational RiskP Operational risk Operational 2010 Maximum 2011 2010 Minimum 2011 2010 Average daily Average 2011 At 31 DecemberAt 2010 At 31 December 2011 31 December At Market risk (continued) Market 3.2.9 (continued) AND RISK MANAGEMENT FINANCIAL INSTRUMENTS Risk (continued) Management 3.2.8

t t

external or from events. people and systems or failed internal processes, inadequate from operational risk is the loss resulting

3.2 t 3 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

60 | Ahli Bank Q.S.C. Annual Report 2011 5 6 Total Total o P

Cash 4 3.3 3 31 December 2011 O Notes to theConsolidated Financial Statement Bills O discounted L Notes:

DUE FROMBANKS ANDOTHER FINANCIALINSTITUTIONS andcannotbeusedto fundtheGroup’s reserve withQatarCentral Bankisamandatory Cash reserve day to day operations. a) LOANS, ADVANCES ANDFINANCINGACTIVITIES TO CUSTOMERS Cash reserve withQatarCentral Bank Cash reserve Current accounts ANDBALANCES CASH WITH QATAR BANK CENTRAL cost. All otherfinancialliabilitiesare atamortized reported Financial assetsandliabilitiesresulting from derivativefinancialinstrumentsare atfairvalue. reported cost. otherassetsare atamortized to customers, and financingactivities reported andcertain Financial assetssuchasbalanceswithQatarCentral Bank(excluding cash),duefrom banksandotherfinancialinstitutions, loans, advances Recognition andMeasurement International offinancialassetsandliabilitiesper Standard IAS39Summary Reporting Financial Instruments: Financial FINANCIAL INSTRUMENTS ANDRISKMANAGEMENT (continued) lacements ther balanceswithQatarCentral Bank By type (i) to customers activities Net loans, advance andfinancing Allowance for impairment Debt securities (iii) securities Debt oans verdrafts ther advances is includedinallowance for impairment. Interest insuspenseofQR66,451thousand (2010:QR64,169thousand)isfor ofQatarCentral Bankregulation thepurposes and Conventional Islamic 11,452,257 11,756,120 2,242,741 9,330,737 (303,863) 86,195 64,934 20,06885,00265,98324,027 90,010 31,513 31 December 2011 QR‘000 (62,874) (366,737)(271,880) 745,274 10,076,0118,516,9711,693,933 702,468 765,342 12,521,4629,935,6391,717,960 - 86,19596,479 - 2,242,7411,229,930 - 31,51326,276 (continued) 12,154,725 9,663,7591,675,095 Total Conventional

31 December 2010 31 December 1,768,899 1,633,918 780,883 165,957 540,091 134,981 74,835 QR’000 QR’000 QR‘000 2011 2011 (42,865) (314,745) t Islamic - 96,479 - 1,229,930 - 26,276 10,210,904 11,338,854 11,653,599 2,874,447 2,192,240 562,362 514,062 617,400 64,807 48,300 QR’000 QR’000 2010 2010 otal

Ahli Bank Q.S.C. Annual Report 2011 | 61 % 100% 100% 2.38% 0.39% 7.34% 3.19% 4.79% 3.02% 97.23% 29.73% 23.90% 16.50% 11.53% Total 298,450 399,165 599,250 377,562 2,066,565 12,521,462 12,174,187 12,521,462 - - 1,444,236 7 48,825 4 98 919,416 656 2,992,213 Other 83,227 3,723,055 advances - - 2,210 - Debt 17,443 - 17,442 26,978 securities - 26,978 - 20,068 - (continued) Bills 842 3,420 2,021 20,514 he Group identified assets eligible under the amendments, for under the amendments, identified assets eligible he Group 21,306 T discounted - 156 - - - 2,361 - 89,280 3,924 227,811 301,131 Overdrafts 2,242,741 31,513 85,002 86,195 2,240,380 31,513 40,581 86,188 2,242,741 31,513 85,002 86,195

il). Also, as at 31 December 2011, the equity would have included QR 1,831 thousand (31 included QR 1,831 thousand at 31 December as 2011, the equity have would il). Also, Loans QR’000QR’000 QR’000 QR’000 QR’000 QR’000 21,840 21,938 1,395,320 278,646 303,751 765,889 132,567 531,987 44,724 377,406 9,775,525 1,994,745 51,752 3,411,175 2,669,120 10,076,011 10,076,011 he carrying to loans and advances at 1 July 2008 was QR 304,555 thousand (31 reclassified value of the financial assets Islamic financing activities to customers is carried at net of deferred profits of QR 19,116 thousand (2010: QR 76,634 thousand). of QR 19,116 thousand profits is carriedIslamic financing activitiesto customers at net of deferred December 2010: QR 1,909 thousand) of unrealized fair value losses on the reclassified financial assets available-for-sale, which available-for-sale, financial assets reclassified fair value losses on the December 2010: QR 1,909 thousand) of unrealized not impaired. were securities securities to QR 45,535 thousand and rate and floating rate amounting fixed Included debt securities are in the above (31 December and QR 41,305 thousand respectively). 2010: QR 46,677 thousand QR 37,510 thousand respectively which at 1 July 2008, it had clear change of intent to hold for the foreseeable future rather than to exit in the short rather than to future term. Under the foreseeable hold for to which at 1 July 2008, it had clear change of intent from 1 July 2008 at fair value at that date. made with effect were the reclassifications IAS 39 as amended, December 2011: QR 83,045 thousand and 31 December 2010: QR 87,982 thousand) with the fair value at 31 December 2011 financial assets fair value gains on reclassified of QR 85,002 thousand (31 December 2010: QR 90,129 thousand). Unrealized fair value gains of July 2008, such unrealized As equity. directly in recorded were not impaired, that were available-for-sale QR 14,579 thousand. in equity directly to amounted recorded to from 4.12% available-for-sale ranged reclassified financial assets on rates interest the effective date, of the reclassification As of QR 483,080 thousand. cash flows 6.46% with expected recoverable year for the income statement Group’s on the effect been any would not have there If had not been made, the reclassification ended 31 December 2011 (2010: N Following the amendments to IAS 39 and IFRS 7, “Reclassification of Financial Assets”, the Group reclassified certain the Group financial Assets”, Financial “Reclassification of IAS 39 and IFRS 7, to the amendments Following loans and advances category. to available-for-sale assets from thers ther GCC Countries ther GCC ersonal GCC countries comprise the members of the Gulf Co-operationGCC being Kingdom Council of of Kuwait, Sultanate of Bahrain, State Kingdom Arab Emirates. of Saudi Arabia and the United of Qatar, Oman, State Total By geographic region By geographic Total By type (continued) (ii) By industry sector (iii) At 31 December 2011 December 31 At By industry sector and geographic region before allowance for impairment for allowance By industry before region sector and geographic (continued) CUSTOMERS TO ACTIVITIES AND FINANCING ADVANCES LOANS, a) b)

O o Qatar

estate Contracting Real Services P Commercial Industry/Manufacturing

6 Government

Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December Government agencies Government

t

62 | Ahli Bank Q.S.C. Annual Report 2011

et non-performing/watch listloans, advancesandfinancing netnon-performing/watch l l

activities activities to customers

Government 6 31 December 2011 Notes to theConsolidated Financial Statement

Industry/Manufacturing Commercial Services Contracting Real Real estate P T

o T O l b) LOANS, ADVANCES ANDFINANCINGACTIVITIES TO CUSTOMERS (continued) c) At 31 December 2010 customers’ for portfolio QR14,000thousands (2010;QR13,098thousand). additiontheallowance for hasbeen madeontheGroup’sIn impairment collective loans,to advancesandfinancing activities activities to customersactivities under watch list(2above) 2011 2. 1. sector By industry andgeographic sector region beforeBy industry allowance for impairment (continued) Government Qatar By geographic region Age loans, analysis advances ofnon-performing tocustomers and financingactivities T otal otal ess: Allowance loans for for impairment performing ess: Allowance loans(1above) for for impairment nonperforming oans, to customers advancesandfinancingactivities whichare pastdue over three monthsare considered to benon-performing. he age analysis of non-performing loans,to customers advances andfinancingactivities isas he ageanalysisofnon-performing follows: ersonal ther GCC Countries thers Gross performing loansunderwatch list Gross performing Gross non-performing loans, advancesandfinancing Gross non-performing agencies 10,210,904 10,210,904 3,445,427 1,852,840 3,276,504 9,765,484 403,294 455,242 132,816 552,257 328,126 117,294 - 92,524 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 L o oans

1,229,930 26,27690,01096,479 1,227,565 26,27644,49496,479 1,229,930 26,27690,01096,479 462,188 488,928 verdrafts 24,221 99,383 79,496 10,318 65,377 2,365 19 - discounted 14,992 3,000 6,882 1,402 Bills - - - - (continued) 3 months (74,136) - (48,364) (153,516) 178,142 18,73412,846 300,642 172,250 193,468 - 107,174 172,250 to 1year securities QR’000 QR’000 QR’000 QR’000 28,238 20,467 17,278 24,027 17,278 28,238 - o Debt - - - 1 -3years t advances 87,838 1,364 6,634 467 176 ther - - - 11,653,599 11,160,298 11,653,599 3,950,711 1,887,185 3,431,121 (76,721) (278,601) 582,950 403,313 503,397 256,535 638,387 145,532 347,769 89,567 562,459 89,567 368,991 3 years Over otal (74,136) 209,722 193,468 33.91% 16.20% 29.43% 95.77% 5.00% 3.46% 4.32% 2.20% 5.48% 1.25% 2.98% 100% 100% Total %

Ahli Bank Q.S.C. Annual Report 2011 | 63 otal otal QR’000 (8,391) 242,110 543,757 211,421 130,242 341,306 202,451 (39,700) (18,527) (261,947) - 314,745 ------ver 1,551 3 years t 65,842 65,842 (64,291) 2010 - - QR’000QR’000 80,335 34,328 (5,029) 15,195 170,944 170,944 - (8,391) 1 - 3 years (155,749) Retail Corporate state e t QR’000 234,410 QR’000QR’000 QR’000 QR’000 1 year to 225,364 306,971 202,451 104,520 (39,700) (41,907) months 3 o Total 366,737 314,745 177,093 119,784 70,815 59,427 (continued) - (41,625) (13,498) - (26,167) - RealReal Estate 48,587 48,587 2011 56,265 80,335 13,351 (11,254) Corporate

- (26,167) Retail QR’000QR’000 QR’000QR’000 57,846 261,885 234,410 (30,371) ess): Gross performingGross list loans under watch Gross non-performingGross advances and financing loans, he aggregate amount of gross non-performing performing advances and financing activities amount of gross (excluding loans, under watch loans he aggregate was QR 124,608 and financing activities advances to customers loans, impaired held against the above he fair value of collaterals ess: Allowance for impairment for performing impairment for for under loans ess: Allowance ess: Allowance for impairment for non performing impairment for for loans (1 above) ess: Allowance list) to customers at 31 December 2011 represented 2.95% of total gross loans, advances and financing activities to customers (2010: advances and financing activitiesto customers loans, gross 2.95% of total at 31 December customers 2011 represented list) to 2.93%). thousand at 31 December 2011 (2010: QR 37,950 thousand). major sectors by in suspense) is as follows (including interest impairment for in allowance movement The activities customers to list (2 above) watch 31 December At Amounts written off during the year Recoveries during year 2. the year for Charge At 1 JanuaryAt 1. Age analysis of non-performing loans, advances and financing activities (continued) to customers of non-performing advances analysis loans, Age 2010 d) (continued) CUSTOMERS TO ACTIVITIES AND FINANCING ADVANCES LOANS, c) t t net non-performing/watch advances and financing list loans, l

l L Add/(

6 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

customers to activities

64 | Ahli Bank Q.S.C. Annual Report 2011

Total

Total o E Managed funds QCB securities

Individually impaired 6 31 December 2011 Notes to theConsolidated Financial Statement

netimpaired/watch listloans, to customers 7 a) Held to maturity investmentsHeld to (b) maturity Available-for-sale investments (a) d) LOANS, ADVANCES ANDFINANCINGACTIVITIES TO CUSTOMERS (continued) FINANCIAL INVESTMENTS Available-for-sale investments GCC Governmentdebtsecurities Governmentdebtsecurities Qatari 1. advances and loans The movement inallowance for impairment (including interest isasfollows insuspense)by majorsectors (continued) 2. non performing loans(1above) non performing Allowance for for impairment advances and financing activities advances andfinancingactivities list (2above) loansunderwatch performing Allowance for for impairment customers’ for portfolio QR14,000thousands(2010;QR13,098thousand) additiontheallowance for hasbeenmadeontheGroup’sIn impairment collective loans, to advancesandfinancingactivities quity quity securities debtsecurities ther corporate Gross impaired loans, advances customers to and financingactivities Gross performing loans Gross performing under watch list (250,384) 262,455 262,455 12,071 QR’000 QR’000 QR’000 QR’000 Retail - - (46,395)(27,741)

Corporate 490,181 2,113,6662,603,847 407,651 2,037,7352,445,386 100,710 150,836 (7,370) Quoted 11,710 56,755 21,00077,755 14,065 50,126 97,071 QR’000 2011 - 54,931 -

(20,847) 149,168 100,580 Unquoted 56,410 92,758 Estate QR’000 Real Real 2011 - 11,71012,141 - 14,065 (278,601) (continued) (74,136) 368,991 232,114109,192 193,468 562,459 232,114311,643 209,722 Total QR’000 Total (231,673) QR’000 t estate CorporateRetail 441 241,669 - 202,451 - (39,700) 508,122 2,114,7982,622,920 385,504 1,540,3461,925,850 t Quoted Unquoted 96,412 QR’000 QR’000 QR’000 (30,274) QR’000 QR’000 - 53,452 - 500,000 2,636,607 2,603,847 32,760 2010 QR’000 QR’000 2011 2010 21,000 117,412 2010 - 12,141 - 14,065 - - - 543,757 - - (39,700) - 242,110 2,655,680 2,622,920 (261,947) 341,306 202,451 32,760 QR’000 otal otal

Ahli Bank Q.S.C. Annual Report 2011 | 65 otal Total 21,115 136,672 181,736 305,017 318,408 122,120 - 32,760 - 32,760 - - (7,633) - 22,185 - - (7,724) 2010 49,658 in progress Capital Work Capital

- - 7,739 1 49,658 31 414 722 41,919 415 383 (307) QR’000QR’000 QR’000 Unquoted Quoted t Vehicles Total 8,020 QR’000 76,154 89,094 equipment Furniture and Furniture - 32,760 32,760 - 32,760 32,760 (continued) 2011 ments QR’000 41,556 54,322 improve- Unquoted Lease hold Lease

- (5,147) (2,486) - 5,241 8,135 he fair value of the held to maturity investments at 31 December31 at maturity QR is 2011 to held the of value fair he investments T (70) (4,821) (2,526) 3,246 10,888 QR’000 QR’000QR’000 QR’000 QR’000 QR’000 QR’000 32,760 32,760 18,548 15,302 35,815 70,620 Quoted building 106,371 12,766 12,940 124,989 53,902 83,485 124,919 Land and ther corporate debt securities 35,045 thousand (2010: QR 33,890 thousand). All held to maturity investments are fixed rate securities. securities. rate fixed are maturity to held All investments (continued) investments Available-for-sale equity securities are Included with a fair value of QR 829 thousand at 31 December 2011 (2010: investments in the available-for-sale company. in the investee holding directorship the Group QR 864 thousand) restricted due to securities securities to QR 2,457,096 thousand and QR Included rate and floating rate amounting fixed in the debt securities are (2010: QR 1,937,991 thousand and QR 14,065 thousand respectively). 14,065 thousand respectively maturity investments Held to PROPERTY, FURNITURE AND EQUIPMENT PROPERTY, Net book value: 2011 31 December At : Cost 1 JanuaryAt 2011 (continued) FINANCIAL INVESTMENTS a) b) At 31 December 2011 31 December At At 31 December 2011 31 December At Depreciation related to disposal to related Depreciation Additions during the year Additions depreciation: Accumulated 1 JanuaryAt 2011 during the year charge Depreciation At 31 December 2011 31 December At Disposal during the year 8

o Total

7 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

66 | Ahli Bank Q.S.C. Annual Report 2011 10 Total O p Total p l

Deposits

p

8 31 December 2011 Cost: L Notes to theConsolidated Financial Statement

9 DUE TO BANKS, QATAR BANK AND OTHER CENTRAL FINANCIALINSTITUTIONS Certificates ofdeposit Certificates Accounts receivable Advances anddeposits Current accounts At 31 December 2010 At 31December Balances dueto QatarCentral Bank Interest receivable PROPERTY, FURNITUREANDEQUIPMENT (continued) At 1 January 2010 At 1January QR’000 QR’000 QR’000 QR’000 Additions theyear during Disposals during theyearDisposals during At 31 December 2010 At 31December At 1 January 2010 At 1January Accumulated depreciation: Depreciation charge theyear during Depreciation related to disposal At 31 December 2010 At 31December At 31 December 2010 At 31December Net bookvalue: OTHER ASSETS oans from banks ositive fairvalue ofderivatives(Note 27) repaid expenses rofit receivable (Islamic) thers land 124,989 109,687 building 96,569 28,420 13,395 15,302 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 1,907 - - l ease hold improve- 53,368 53,902 26,875 35,815 18,087 ments 1,490 9,270 (956) (330) (continued) Furniture and equipment 79,952 83,485 61,333 70,620 12,865 3,533 9,287 - - Vehicles 1,055 (333) (513) 722 857 383 339 39 -

2,082,531 1,628,757 211,295 260,773 159,749 Capital Work 91,000 10,648 32,511 25,280 69,490 t in progress 6,487 1,186 5,806 2,139 2011 2010 2011 2010 34,180 41,919 41,919 7,739 - - - - - 2,600,437 1,474,731 351,478 877,078 212,876 232,521 265,124 305,017 102,460 122,120 182,897 (1,289) 50,276 14,152 25,804 44,530 41,182 20,503 4,248 4,670 1,081 9,948 (843) otal

Ahli Bank Q.S.C. Annual Report 2011 | 67 otal 1,213 6,193 65,899 40,427 44,346 18,578 25,812 12,921 14,295 26,426 28,555 182,000 364,135 119,897 2,074,681 4,000,203 5,346,032 - 568,575 - 8,721,705 2010 164,416 11,461,343 164,416 2,171,063 2011 2010 2011 2010 2011 2010 1,351 5,217 5,311 38,432 58,093 23,875 27,645 14,412 10,221 26,191 55,619 182,000 1,013,730 2,090,080 4,409,850 5,176,541 12,690,201 11,461,343 QR’000 QR’000 QR’000 Islamic Conventional t Total QR’000

- 840,368 568,575 - 9,008,332 8,721,705 (continued) 2011 8,844 12,690,201 11,296,927 8,844 2,841,501 2,006,647 Islamic QR’000

QR’000 840,368 erm Notes 9,008,332 2,832,657 T 12,681,357 December 27, 2017 December 27, 2012 3 month LIBOR + 168 bps January at quarterly 28, 2011 and thereafter intervals Conventional ier II qualified Subordinated Medium ier II qualified Subordinated T erm deposits erm By sector By type and call accounts Current ther provisions (a) ther provisions thers he total amount of customer deposits pledged against loans and advances was QR 573,992 thousand at 31 December deposits pledged against 2011 (2010: QR amount of customer he total he terms of the issue are summarised below:he terms of the issue are 680,948 thousand). QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 Date of maturityDate date Call rate Interest date reset Interest LIABILITIES OTHER payable Interest b) CUSTOMER DEPOSITS CUSTOMER a) Commission received in advance received Commission Accrued expenses Accrued SUBORDINATED DEBT SUBORDINATED fund Staff provident Staff pension fund Dividends payable Bills payable QE clients payable 266,367 Total t T t 13

uSD 50 million

Government

Saving accounts Saving

11 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

Government agencies Government Retail Corporate o Total 12

27) Note fair value of derivatives ( negative O

68 | Ahli Bank Q.S.C. Annual Report 2011 on27February 2011,theGroup issuedtheshares inrespectofthefinaltranche uponobtainingapproval from shareholders inthe 2011,theGroup received shares) thefinaltrancheof share on17January capitalofQR321,191thousand(5,839,844ordinary

t 15 EQUITY

Shares ofQR10each Authorised 13 31 December 2011 Notes to theConsolidated Financial Statement p

p At 31December 14 a) Total - Call andSaving accounts (a) OTHER LIABILITIES(continued) QR’000 QR’000 UNRESTRICTED INVESTMENT ACCOUNTSUNRESTRICTED erm deposits erm Authority (16.7%)and membersofthepublic(50%). Authority sharesAhli United BankB.S.C., oftheGroup Bahrainholds33.3%oftheordinary withtheremaining shares held by Qatar Investment meetingheld on27February 2011. Annual General shares onQatarExchange on12 O authorized capitaloftheGroup toatQR55pershare, theQatarInvestment Authority representing oftheBank’s theclosingprice 2008. heldon23December Meeting General Extra-ordinary by way placementto ofaprivate theQatarInvestment Authority, inaccordance witharesolution oftheshareholders intheir At 31 December 2011 At 31December Issue of new sharesIssue ofnew on27February 2011 At 1 January 2011 At 1January Issue of new sharesIssue ofnew on14March 2010 Share capital At 1 January 2010 At 1January paid fully and Issued At 1January provisionsOther ayments made during theyearayments made during rovision theyear madeduring ctober 2008. ctober indemnity (1,909) 18,074 21,982 20,073 QR’000 QR’000 QR’000 QR’000 3,908 Staff claims 4,756 4,756 4,756 Legal 2011 - - T he resolution approved shares theissueofequity upto 20%ofthe Others 2,982 2,982 2,816 (166) - (continued) (2,075) 25,812 16,101 29,720 19,492 27,645 3,908 3,391 Total indemnity (1,418) 18,074 QR’000 Staff L Number ofshares QR’000 QR’000 claims O 4,756 4,756 4,756 2,982 egal thousands 700,781 2010 - - QR’000 70,078 64,238 61,318 5,840 2,920 2011 2010 2011 - - 2,734 2,982 t thers 248 - 1,293,533 1,195,792 700,781 642,383 613,183 642,383 QR’000 (1,418) 58,398 29,200 97,741 23,591 27,230 25,812 QR’000 QR’000 3,639 2010 otal

Ahli Bank Q.S.C. Annual Report 2011 | 69 otal T 11,328 (6,242) - (2,004) - (144) 2010 hedges Cash flow Cash he appropriation of profits of profits he appropriation T 2,945 (18,367) (15,422) QR’000QR’000 QR’000 9,782* (16,024) for-sale (2,004) Available- investments

Total QR’000 11,346 (6,242) il). his reserve is not available for distribution except in distribution except his reserve for available is not T

- (6) - 78 (144) (continued) 2011 2,343 7,954 17,516 8,985 QR’000 flow Cash

78 (6) 9,782 (16,024) 9,562 QR’000 for-sale 19,416* (8,070) Available- hedges investments he fair value reserve fair value of QR 12,625 thousand (2010: QR 19,613 thousand). includes a negative he Board of Directors have proposed the issue of bonus shares at the rate of 6 shares for every the ordinary for held by of 6 shares 10 shares at the rate the issue of bonus shares proposed have of Directors he Board he above proposed issue of bonus shares is subject to the approval of the shareholders in their Annual General Meeting. of the shareholders is subject the approval issue of bonus shares to proposed he above At 1 JanuaryAt Statutory reserve to be transferred required year is for the Articles 10% (2010: 10%) of the net profit Association, of In Group’s with the accordance the statutoryto reserve until the reserve 100% of the paid up capital. equals o. 5 of 2002 and with the approval of Qatar Central Bank. Central of Qatar the As and with the approval 5 of 2002 No. Law Companies’ Commercial Qatar specified in the circumstances profits. year’s the current been made from have amount, no transfers statutory of the minimum required reserve in excess is already statutory to QR 262,793 thousand was credited reserve amounting to of new issue shares arising from premium the share However, 15a). (Note during the year. Risk reserve advances and a risk contingencies on the loans, reserve cover is made to Bank rules and regulations, In with Qatar Central accordance recommended)/ 2012(mandatory) of 1.5% in 2011(2% requirement and 2.5% in with a minimum financing activitiesto customers after deduction and its branches inside and outside Qatar, Group the by facilities granted direct credit 2013 (2010: 1.5%) of the total and to Qatar government granted facilities of credit with the exception profits, impairment deferred and for allowance of any the risk reserve in As against cash deposits. is already facilities granted and credit credit collateralized establishments, government earnings in 2011. the retained been made from have amount, no transfers of the minimum required excess reserve value Fair during the year 31 December At Realised during the year Amortised during on the year receivables to loans and reclassification * Includes unamortised fair value reserve) to QR 1,831 thousand (2010: QR 1,909 thousand – positive relating portion fair of negative receivables. to loans and available-for-sale transferred value reserve on financial investments will be restricted to the extent of the above negative fair value. negative the extentwill be restricted to of the above and dividend bonus shares Proposed at 31 December QR 420,469 thousand (2010: N 2011, amounting to shareholders A cash dividend of QR nil per share amounting to QR nil has been proposed by the Board of Directors for the year ended 31 the year for of Directors the Board by QR nil has been proposed amounting to A cash dividend of QR nil per share QR 321,192 thousand). to totaling December 2011 (2010: QR 5 per share QR to totaling share QR 321,192 thousand (2010: QR 5 per to totaling paid an amount of QR 5 per share the Group During the year, 2010. the year dividend for 2008) as cash the year 306,592 thousand as cash dividend for Dividends Waived 2010 of QR 14,599 thousand in April 2010. entitlement for b) c) d) e) f)

15 EQUITY (continued)

Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

fair values in unrealised net movement

t t t subsidiary Qatar Holding L.L.C (a wholly owned one of the shareholders, Authority) its dividend of Qatar Investment waived

70 | Ahli Bank Q.S.C. Annual Report 2011 17 19

18

p O l

20

31 December 2011 16 Notes to theConsolidated Financial Statement Availa invble-for-sale l

INTEREST EXPENSE DIVIDEND INCOME Total FEE ANDCOMMISSION INCOME Total Total Share ofprofit onIslamicOperations Commission oninvestment for activities customers Customer deposits securities Debt Total services Banking Due to banks andotherfinancialinstitutions Due from banksandotherfinancialinstitutions Gain fromGain revaluation ofassetsandliabilities credit facilities Indirect NET GAINFROMDEALINGINFOREIGNCURRENCIES NET Balances withQatarCentral Bank Balances withQatarCentral Bank INTEREST INCOME Gain fromGain dealinginforeign currencies oans andadvancesto customers oans and advances and financing activities to customersoans andadvancesfinancingactivities rofit from IslamicOperations thers estments (continued) 817,182 100,793 244,831 586,319 203,352 128,196 90,023 20,303 20,161 18,558 24,754 20,156 65,078 QR’000 QR’000 QR’000 QR’000 QR’000 2,283 3,189 5,489 4,376 2,618 8,268 4,562 2011 2011 2011 2011 2011 5 1,044,203 159,483 477,776 766,583 344,840 90,927 86,274 56,443 22,366 46,285 24,526 56,256 22,345 55,063 QR’000 QR’000 QR’000 QR’000 QR’000 3,495 2,060 5,783 5,438 4,248 2010 2010 2010 2010 2010 377 21

Ahli Bank Q.S.C. Annual Report 2011 | 71 988 262 6.48 2010 2010 2010 2010 (428) 1,931 2,250 4,939 2,919 2,084 5,000 3,391 6,965 1,844 6,575 QR’000 QR’000 QR’000 92,696 10,765 10,594 21,770 412,329 164,539 63,654,298 - 71 329 6.39 2011 2011 2011 2011 2,340 3,115 7,098 2,340 3,515 6,000 3,908 4,980 3,713 8,283 QR’000 QR’000 QR’000 98,430 11,849 11,580 23,711 442,245 179,552 69,166,150 (continued) & equipment furniture oss) on disposal of property, thers thers rofit for the year – QR’000for the rofit rinting and stationery fees egal and professional Staff costs Rental income NET GAIN ON FINANCIAL INVESTMENTS AND DERIVATIVES AND NET INVESTMENTS GAIN ON FINANCIAL number of shares average Weighted Gain/(L Marketing and advertising expenses Basic and diluted earnings per share (in QR) earnings per share Basic and diluted Communication, utilities and insurance Communication, OTHER OPERATING INCOME OPERATING OTHER remuneration Director’s GENERAL AND ADMINISTRATIVE EXPENSES GENERAL AND ADMINISTRATIVE Rent and maintenance Staff indemnitycosts IT maintenance EARNINGS PER SHARE in issue during the number of shares average weighted by the year for the dividing the profit by is calculated Basic earnings per share year. p

investments net gain on sale of available-for-sale 21 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

trading for swaps held rate net gain on interest O Total Total 22 23

l p

O Total 24

72 | Ahli Bank Q.S.C. Annual Report 2011 l

O L l 25 t Total Guarantees e unusedcredit facilities Acceptances 31 December 2011 t 24 Notes to theConsolidated Financial Statement Acceptances, guarantees andletters ofcredit theopinionofBoardGroup ofDirectors, (2010:QR4,756 thousand).In theprovisions are taken considered sufficient. At theendoffinancial year 2011,theGroup hasallocated provisions ofQR4,756thousand to meetprobable legalclaimsagainstthe Legal claims representnot necessarily future cashrequirements. dates clauses. orother termination Sincecommitmentsmayfixed expire expiry withoutbeing drawn amountsdo upon,the total contract Commitments credit to extend represent commitmentsto fundloansandrevolving contractual credits. Commitments generally have Unused credit facilities Total in theform ofirrevocable letters ofcredits, advancepayment guarantees andendorsementsliabilitiesfrom billsrediscounted. asloans. thesamerisk Credit Guarantees andstandby guarantees ofthecontract. letters undertheterms canbe ofcredit carry to perform b) a) CONTINGENT LIABILITIES,GUARANTEES ANDOTHER COMMITMENTS pershare.basic earnings Qualifying shares atthebeginning oftheyear EARNINGS PERSHARE(continued) QR’000 QR’000 QR’000 QR’000 etters ofcredit, guarantees andacceptancescommittheGroup payments to onbehalf ofcustomers make contingentupontheirfailure here were nopotentially dilutive shares outstandingatany theyear, timeduring therefore, per share thediluted earnings isequalto the he weighted average numberofshares hasbeencalculated asfollows: ffect share of new issue Commitments andothercontingencies Forward foreign exchange contracts Contingent liabilities Interest rate swaps egal claims andexport) etters ofcredit (import ther commitment T he commitments generally have expiry dates oflessthanoneyear.he commitmentsgenerallyhave expiry (continued) 10,135,463 7,603,188 69,166,150 63,654,298 64,238,282 7,509,557 2,625,906 1,696,679 1,991,621 4,927,868 5,300,290 445,010 456,253 189,275 54,400 1,935 2011 2010 2011 2010 2011 61,318,360 5,718,776 1,884,412 1,082,143 1,562,016 2,335,938 3,997,195 283,330 604,471 25,293 39,066 9,674 2010

Ahli Bank Q.S.C. Annual Report 2011 | 73 otal Total 364,135 351,478 182,897 562,362 780,883 266,367 181,736 211,295 1,293,533 2,064,270 2,600,437 2,655,680 2,874,447 1,768,899 2,513,046 2,636,607 2,082,531 17,965,718 11,461,343 17,965,718 11,338,854 17,734,145 12,154,725 17,734,145 - - 182,000 - - - 182,000 thers t Others 38,465 80,894 42,473 12,690,201 214,480 150,422 559,274 ------516,801 urope o 5,055 58,110 4,908 55,926 36,400 97,288 Europe 122,147 - - GCC GCC 8,740 35,181 418,449 330,491 Countries e 298,450 21,840 25,028 777,396 Countries 1,570,785 1,338,356

- 182,000 - 182,000 (continued) Qatar Qatar QR’000 QR’000 QR’000 QR’000 QR’000 QR’000QR’000 QR’000 QR’000 QR’000 364,135 - - - 351,478 - - - 182,897 305,912 482,000 589,200 385,448 312,251 - 780,883 - - - 266,367 - - - 211,295 - - - 181,736 - - 2,064,270 - - - 1,258,352 1,367,120 935,155 122,147 176,015 2,517,912 74,603 2,874,447 2,501,989 73,784 - 2,513,046 - - 1,186,770 378,960 16,058,306 17,123,715 413,834 138,743 289,426 11,004,429 10,891,069 11,809,407 15,836,515 393,205 15,967,310 961,434 412,196 11,870,332 liabilities assets ther ther ther liabilities ther assets roperty, furniture and equipment furniture roperty, roperty, furniture and equipment furniture roperty, quity quity his represents the contractual commitment on the purchase of a plot of land. As at the consolidated statement of financial position date, position date, of financial statement at the consolidated As of a plot of land. the contractual purchase commitment on the his represents advances and financing activitiesto customers oans, activities advances and financing to customers oans, otal liabilities and equity otal assets otal Subordinated debt Subordinated other financial institutions financial Bank and Qatar Central banks, Due to other deposits Customer investments Financial Due from banks and other financial institutions Due from investments Financial Due from banks and other financial institutions banks and other financial Due from Cash and balances with Qatar Central Bank and balances with Qatar Central Cash Cash and balances with Qatar Central Bank and balances with Qatar Central Cash (continued) COMMITMENTS AND OTHER LIABILITIES, GUARANTEES CONTINGENT Other commitment in 1 quarterly value payable 3.75 % of the committed installment. has approximately and the Group the land is still under development GEOGRAPHICAL DISTRIBUTION OF ASSETS AND LIABILITIES At 31 December 2010 December 31 At At 31 December 2011 December 31 At Total liabilities and equity liabilities and Total Subordinated debt Subordinated Total assets Total Bank and Qatar Central banks, Due to other financial institutions Customer deposits Customer E t O accounts unrestricted investment

T O

p l

l

25 t 26 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

E o

p o

74 | Ahli Bank Q.S.C. Annual Report 2011

t t 27 DERIVATIVES 31 December 2011 Notes to theConsolidated Financial Statement

T

Total - Interest rate swaps Derivatives heldasfairvalue hedges: - Forward foreign exchange contracts - Interest rate swaps Derivatives heldascashflow hedges: - Interest rate swaps* Derivatives heldfor trading: - Interest rate swaps* Derivatives heldfor trading: norcreditrisk risk. measured. the amountofaderivative’s asset,reference underlying rate orindexandisthebasisuponwhichchangesinvalueofderivativesare either favourable orunfavourable. exchange change, are may those oninceptionofthederivativeinstruments,become determined terms infinancialmarkets asprices anexchange. andanobligationto make instrumentsembodybotharight Some ofthe theterms Because ofthecontract. on maturity place nordoessuchatransfer take financialinstrumentoninceptionofthecontract, necessarily in atransfer primary oftheunderlying underconditionsthatare potentially unfavourable.assets orfinancialliabilitieswithanotherparty However, generallydonot they result underconditionsthatare potentially favourable, obligation to exchangefinancial liabilitieswithanotherparty oracontractual financial right to exchange financialassetsor acontractual financial instrument.Oninception,aderivativeinstrument gives oneparty oftheinstrumentoneormoreprimary risksinherent ofthefinancial have inanunderlying theeffect theparties oftransferring between one ormore financialinstruments, underlying reference rates orindices. where payments two parties are dependentupon movementsprice in between in derivative financialinstrumentisacontract courseofbusiness, thatinvolve theGroup oftransactions theordinary enters types into derivativefinancialinstruments.In various A - Forward foreign exchange contracts - Interest rate swaps Derivatives heldascashflow hedges: - Interest rate swaps Derivatives heldasfairvalue hedges: hedging relationship thehedge instrumentsandthehedgeditems, between thesehave been treated asderivatives held for trading. * otal he tablebelow shows thefairvaluesofderivativefinancialinstruments together withthenotionalamounts. hese includefinancialoptions, futures and interestforwards, swaps, rate whichcreate swapsandcurrency rights andobligationsthat T hese interest rate swapdealswere originally intended to behedgeinstrumentsqualifyingunderIAS39.However, dueto ineffective T he notional amounts indicate the volume of transactions outstanding at period-end and are neither indicative of the market andare neitherindicative ofthemarket he notionalamountsindicate outstandingatperiod-end thevolume oftransactions fair value fair value Positive QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 P QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 1,186 1,186 1,186 notional negative ositive 4,248 4,248 4,248 ------

2011 2010 fair value (26,191) 2,152,9321,556,358 (10,702) 1,696,6791,556,358 (15,616) 1,805,8791,556,358 Negative fair value (16,024) (11,871) (28,555) (2,505) 112,840 (8,070) 234,213 (4,914) 109,200 (9,573) (2,298) (660) (continued) 1,082,143 1,191,343 659,390531,844 1,686,614 659,390649,528 377,696 Notional 109,200 279,724 215,547 amount amount

p 3 months 3 months 659,390 Within Within Principal value at maturity rincipal valueat maturity rincipal - - 202,758 - 109,200 - - - T he notionalamountis 452,279 140,321 249,521 109,200 422,644 102,707 Months Months 14,977 3-12 3-12 - 112,840 144,295 1-5 Years 1-5 Years 264,747 112,840 31,455 109 109 - - - -

Ahli Bank Q.S.C. Annual Report 2011 | 75 Total 4,367 1,929 (8,129) (16,024) ositioning 131 3,030 (6,956) 5 years he Group also uses he Group (1,021) T less than 1 year but 1 year More than More 985 1,268 (5,785) but less (4,475) 3 months More than More than 1 year

352 529 il). (continued) or less (3,283) QR’000QR’000 QR’000 QR’000 (2,633) 3 months his is achieved by hedging specific financial instruments and forecasted transactions, as well as strategic strategic well as transactions, as forecasted specific financial instruments and hedging by his is achieved T he Group has adopted a comprehensive system for the measurement and management of risk. the measurement for system a comprehensive has adopted he Group contractscurrency hedge against specifically identified exchange to Group uses risks. In addition, the uses forward foreign he Group At 31 December 2011 31 December At assets from inflows Cash Cash flow hedges flow Cash arise cash flows and the expected principal impact expected balances on which the interest on the consolidated A schedule of forecast as follows: are income statement Income statement At 31 DecemberAt 2010 assets from inflows Cash statement Income Derivative product typesDerivative buy or sell a specified currency either to contracts contractual at a specific in the price and date agreements exchange are Forwards contracts contracts customised transacted in the over-the-counter exchange are Forwards market.future. based on a specific notional currency differentials between or foreign two contractual partiesinterest are agreements Swaps exchange to payments based on a notional value in interest counterparties and floating rate swaps, fixed rate generally exchange interest amount. For a single currency. purposes held for trading Derivatives driven transactions P as positioning and arbitrage. customer as well to trading activities derivative relate Most of the Group’s involves managing positions with the expectation of profiting from favorable movements in prices, rates or indices. Arbitrage involves Arbitrage involves or indices. rates in prices, movements favorable positions with the expectation from managing of profiting involves between marketsproducts. price or differentials from identifying and profiting held for hedging purposes Derivatives currency to its exposure reduce to part purposesAs in order hedging uses derivatives for of its asset and liability management, the Group movements. rate and interest of financial position exposures. statement consolidated against overall hedging rate exposures. fixed risk specifically identified rate arising from interest hedge against the swaps to rate interest cash flow hedge against the risks arising swaps to on certain rate relationship interest liabilities. In all such cases the hedging floating rate and the transactions documented are formally instrument, are and hedging including details of the hedged item and objective, hedges. flow as fair value or cash for accounted swaps to rate risk rate is also carried interest monitoring the duration of assets and liabilities and entering into out by of interest Hedging derivatives are related special hedge accounting, net positions does not qualify for of Since hedging exposures. rate hedge net interest as trading instruments. the same way for accounted

(continued) 27 DERIVATIVES

Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

in 2011 (2010: N recognised hedges was cash flow on no hedge ineffectiveness t t

76 | Ahli Bank Q.S.C. Annual Report 2011

T

T t

l l

L l t 28 31 December 2011 Notes to theConsolidated Financial Statement Total thousand) whichwere issuedinlieuofsalereal estate loans andQatarExchangeinvestments equity to theGovernment ofQatar. Financial investments inL transfers into andoutofL theyear 2011,thereDuring ending31December were notransfers L between Interest rate swaps Derivatives -Forward Derivatives contracts Financial liabilities Interest rate swaps Total Derivatives -Forward Derivatives contracts Financial liabilities Financial investments Financial investments 31 December 2011 31 December 2010 Derivatives -Forward Derivatives contracts Financial assets -Forward Derivatives contracts Financial assets FAIR VALUE OFFINANCIALINSTRUMENTS otal otal t evel 3: o evel 2: evel 1: he following tableshows ananalysisoffinancialinstruments recorded atfairvalue by level ofthefairvaluehierarchy: he Group usesthefollowing hierarchy for anddisclosingthefairvalueoffinancialinstruments determining by valuation technique: market data. market indirectly; and indirectly; Quoted (unadjusted) prices in active markets for identicalassets orliabilities; Quoted markets inactive (unadjusted) prices echniques whichuseinputshave asignificant effect onthe recorded fairvaluethat are notbased ther techniques for whichallinputshave asignificant effect onthe recorded eitherdirectlyor fairvalue are observable, evel 3 fairvaluemeasurements. evel 2 above amountingto includeQatar GovernmentBonds QR290,710thousand, (2010:QR290,710 1,289,971 1,289,971 806,860 806,860 QR’000 QR’000 QR’000 QR’000 Level 1 QR’000 QR’000 QR’000 QR’000 l evel 1 andL (continued) evel 1 ------evel 2 fairvaluemeasurements, andno 1,347,822 1,346,636 1,799,308 1,795,060 26,191 15,489 10,702 Level 2 28,555 26,257 L 1,186 2,298 4,248 evel 2 Level 3 L evel 3 ------on observable on observable 2,637,793 2,636,607 2,606,168 2,601,920 26,191 15,489 10,702 28,555 26,257 1,186 2,298 4,248 Total T otal

Ahli Bank Q.S.C. Annual Report 2011 | 77 he estimated fair value of fixed interest interest fair value of fixed he estimated T hose assets that are held in a fiduciaryhose assets that are capacity are T (continued) his assumption is also applied to call accounts, demand deposits, savings accounts savings demand deposits, call accounts, his assumption is also applied to T he Group enters into transactions with major shareholders, directors and key management personnel of the Group, and entities and key directors management personnel of the Group, transactions into with major shareholders, enters he Group he Group provides investment brokerage and custody services brokerage and custody investment customers. to provides he Group he fair value of fixed rate financial assets and liabilities carried rate at amortisedhe fair value of fixed by comparingwhen market rates are estimated cost interest he fair value of the following financial instruments approximate their carrying their instruments approximate financial values: he fair value of the following maturity at 31 Decemberhe fair value of held to 2011 is QR 35,045 thousand (2010: QR 33,890 thousand). investments oans, advances and financing activities advances and financing to customers oans, excluded from these consolidated financial statements and amount to QR 649,424 thousand at 31 and amount December 2011 (2010: QR 736,058 financial statements these consolidated from excluded thousand). DISCLOSURES PARTY RELATED related by such parties. advances and financing influenced to or significantly All the loans, activities parties jointly controlled, controlled, losses. possible credit at market for performing allowance these are and given of any rates are and free bearing deposits is based on discounted cash flows using prevailing money market interest rates for debts with similar credit risk and with similar credit for debts money market rates using prevailing bearing cash flows deposits is based on discounted interest quoted issued where those notes market based on quoted calculated For prices. debt issued the fair values are quoted For maturity. for the yield curve rate interest appropriate model is used based on a current cash flow a discounted market not available, prices are maturity. term to remaining ACTIVITIES FIDUCIARY without a specific maturity and variable financial instruments. rate for similar financial instruments. market with current recognised offered rates first they were (continued) OF FINANCIAL INSTRUMENTS VALUE FAIR assets Financial Bank Central and balances with Qatar Cash institutions banks and other financial Due from investments Financial liabilities Financial other financial institutions Bank and Qatar Central banks, Due to deposits Customer debt Subordinated having a shortare liquid or and financial liabilities that financial assets term maturity months), it is assumed that the than three (less For carrying their fair value. to amounts approximate 30 t 29 t t 28 t l accounts unrestricted investment t Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

78 | Ahli Bank Q.S.C. Annual Report 2011

l

Liabilities

Total l

Assets t 30 31 December 2011 Notes to theConsolidated Financial Statement Compensation ofkey management personnelisasfollow: 5,000 thousand). Board ofDirectors remuneration charged to theconsolidated incomestatement for theyear amounted to QR6,000thousand(2010: fees are includedingeneralandadministrative expenses. feesManagement dueto AhliUnited Bank B.S.C, Bahrainfor theyear amounted to QR13,678thousand(2010:12,752thousand). Interest andfee andcommissionexpense Interest andfee andcommissionincome Income statement Interest rate swaps indirect credit facilities balance sheetitemsOff Due to banks, QatarCentral Bankandotherfinancialinstitutions Customer deposits Financial investments Balances ofL Staff indemnity provisionStaff indemnity Salaries and other short term benefits term andothershort Salaries Due from banksandotherfinancialinstitutions RELATED PARTY DISCLOSURES (continued) etters ofguarantee, letters ofcredit, commitmentsand oans, to customers advancesandfinancingactivities he balances of related parties includedintheconsolidated financial statementshe balancesofrelated are as parties follows: oans to key managementpersonnel oans to key Directors 221,182 159,146 QR’000 1,372 5,949 (continued) 706 2011 - - - - Shareholders 456,253 24,302 15,000 62,074 94,090 QR’000 106 - - - Directors 264,867 187,800 16,180 11,673 QR’000 24,085 QR’000 QR’000 4,507 5,176 6,106 2011 474 2010 - - - - Shareholders 604,471 QR’000 75,000 62,461 13,402 T 5,016 2,724 hese 4,127 9,275 2010 491 - - - -

Ahli Bank Q.S.C. Annual Report 2011 | 79 2010 2010 12.3% 14.9% QR’000 QR’000 257,047 331,895 1,530,635 3,062,363 1,862,530 3,319,410 12,490,967 2011 2011 19.3% 22.1% QR’000 QR’000 240,792 335,283 1,768,899 2,283,015 2,618,298 2,009,691 11,854,194 (continued) he following table summarises the capital adequacy under he following of the Group T ier 2 Ratio T ier 2 capital ier 1 Ratio ier 1 + T T T Cash and balances with Qatar Central Bank do not include mandatory and balances with Qatar Central Cash reserve deposit. ier 1 capital ier 2 capital ier 1 + he primary objectives of the Group’s capital management are to ensure that the Group complies with externally that the Group imposed capital ensure to capital management are he primary objectives of the Group’s the Basel Committee the rules and ratios established by among other measures, using, capital is monitored he adequacy of the Group’s he minimum required capital adequacy ratio is 10% under Qatar Central Bank requirements and 8% under Basel Committee on Banking and 8% under Basel Committee capital adequacy Bank requirements ratio is 10% under Qatar Central he minimum required ier 1 capital includes issued capital, advance against share capital, statutory capital, advance against share reserve, other reserves earnings. ier 1 capital includes issued capital, and retained debt and 45% of the fair value reserves. ier 2 capital includes risk reserve, subordinated otal risk weighted assets otal risk weighted T CASH AND CASH EQUIVALENTS Bank (a) and balances with Qatar Central Cash Balances with banks and other financial institutions maturingBalances with banks and other financial institutions 3 months or less in Basel-II requirements: (a) MANAGEMENT CAPITAL support to capital ratios in order its business and to ratings and healthy credit maintains strong and that the Group requirements value. maximise shareholders’ or issue capital shareholders to of dividend payment adjust the amount may Group the maintain or adjust the capital structure, In to order years. the previous from policies and processes made in the objectives, No changes were securities. on Banking Supervision Bank. Qatar Central by and adopted Basel II- Basel II- Supervision requirements. FUND SOCIAL AND SPORTS 2.5% of QR 11,056 .thousands (31 December made an appropriation 2010- QR 10,308 thousands) representing the Group During the year, 2008 and further the year Law for the for clarifications No.13 year ended 31 to the Law December 2011, pursuant for the of the net profit issued in 2011.

31 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

t

t Total t 32 t t

t t t 33

80 | Ahli Bank Q.S.C. Annual Report 2011 t t p Depreciation

P t o

netinterest incomefrom conventional andnetincomefrom Islamicactivities 34 31 December 2011 Notes to theConsolidated Financial Statement General andadministrativeGeneral expenses 31 December 2011 Segment information for theyear 2011and2010are ended31December asfollows: isevaluated basedonoperatingprofit orloss. assessment.Segment performance allocation andperformance monitors theoperatingresultsManagement oftheoperatingsegmentsdecisionsaboutresource separately for ofmaking thepurpose p subsidiary investments andbrokerage treasury,Corporate banking, p and wealth management banking andprivate Retail For managementpurposes, theGroup isorganised into three majoroperatingsegments: SEGMENT INFORMATION otal liabilities otal assets otal operatingincome rofit for the year rovisions ther income owned subsidiary, AhliBrokerageCompany SPC. as well asmanagementoftheGroup’s funding. services, tradingandtreasury andinstitutionalcustomerscorporate andproviding market, money products, funds, credit facilities, trustsandalternative investments. individualsthrough arangeofinvestment highnetworth wealth managementrepresents servicing loans, residential overdrafts, mortgages, credit cards andfundtransfer facilities. P rincipally handlingloansandothercreditrincipally facilities, anddepositcurrent accountsfor handlingindividualcustomers’rincipally depositandcurrent accounts, providing consumer (continued) T his includes the brokerage activities ofthewholly his includesthebrokerageactivities private banking management and wealth 4,795,416 3,770,204 (102,181) (15,853) (12,699) 131,917 262,650 216,419 Retail & Retail 46,231 QR’000 treasury and treasury 10,425,683 13,963,941 investments Corporate (77,371) (45,142) 310,328 439,172 355,932 banking, (6,331) 83,240 QR’000 rivate banking and banking rivate 15,221,099 17,734,145 (179,552) (22,184) (57,841) 442,245 701,822 129,471 572,351 QR’000 Total

Ahli Bank Q.S.C. Annual Report 2011 | 81 otal QR’000 566,427 121,572 687,999 412,329 (90,628) (20,503) (164,539) 17,965,718 15,901,448 QR’000 80,247 (5,122) banking, 346,385 426,632 300,631 (51,292) (69,586) Corporate 9,328,990 investments t treasury and QR’000 41,325 Retail & 220,042 261,367 111,697 (39,336) (94,953) (15,381) 3,846,993 14,118,725 6,572,458 and wealth management private banking (continued) ther income rovisions rofit for the year for the rofit otal operating income otal assets otal otal liabilities (continued) SEGMENT INFORMATION 31 December 2010 General and administrative expenses General and administrative 2011 or 2010. information. this segmental Intra-group from transactions eliminated are

Islamic activities and net income from conventional income from net interest 34 Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

o t P

Depreciation p T t in revenue total transactions from with a single external or counterparty customer no revenue Group’s of the 10% or more to amounted

82 | Ahli Bank Q.S.C. Annual Report 2011

p

EQUITY nrestricted investment unrestricted accounts

o

LIABILITIES

o p

l

ASSETS (i) T SUPPLEMENTARY INFORMATION TO THE FINANCIALSTATEMENTS 31 December 2011 Notes to theConsolidated Financial Statement he statement offinancialpositionandincomestatement oftheparent company are presented below: TOTAL LIABILITIESANDEQUITY Total Equity earnings Retained Fair valuereserve reserve Risk reserve Statutory Share capital Total Liabilities Subordinated debt Customer deposits Due to banks, QatarCentral Bankandotherfinancialinstitutions LIABILITIES ANDEQUITY Total Assets Financial investments Due from banksandotherfinancialinstitutions Cash and balanceswithQatarCentral Bank Statement ofFinancial Position asat 31December: oans, to customers advancesandfinancingactivities roposed dividend roperty, furniture andequipment ther liabilities ther assets (continued) 17,779,732 15,263,981 15,901,448 15,263,981 12,734,016 11,461,343 17,779,732 12,154,725 2,515,751 1,038,722 2,082,531 2,686,607 1,768,899 546,218 218,684 700,781 265,434 182,000 211,210 177,409 780,882 11,346 QR’000 2011 - - 17,965,718 14,607,915 17,965,718 11,338,854 2,064,270 1,293,533 2,600,437 2,655,680 2,874,447 112,324 321,192 218,684 775,929 642,383 364,135 182,000 351,478 182,897 562,362 (6,242) QR’000 2010

Ahli Bank Q.S.C. Annual Report 2011 | 83 2010 (972) 4,248 2,919 2,084 QR’000 90,927 89,955 22,366 31,617 566,427 687,999 597,371 412,329 (90,628) (20,503) (477,776) (164,539) (185,042) 1,044,203 2011 4,562 2,340 3,658 QR’000 98,266 20,161 30,721 (1,900) 817,182 572,070 100,166 701,057 643,216 444,902 (57,841) (21,613) (245,112) (176,701) (198,314) (continued) (continued) rofit on Islamic Operations rofit rofit from Islamic Operations Islamic from rofit ther operating income rovisions for credit losses on loans and advances losses credit for rovisions Interest income from Conventional and P Conventional income from Interest Income Statement for the year ended 31 December: the year for Statement Income Interest expense from Conventional and Share of P of and Share Conventional expense from Interest AND PROFIT FROM ISLAMIC OPERATIONS NET INTEREST INCOME Fee and commission income and commission Fee Fee and commission expense and commission Fee INCOME NET FEE AND COMMISSION Dividend income INCOME OPERATING TOTAL INCOME NET OPERATING General and administrative expenses General and administrative OPERATING EXPENSES OPERATING PROFIT FOR THE YEAR

(ii) SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS TO INFORMATION SUPPLEMENTARY Notes to the Consolidated Financial Statement Financial the Consolidated to Notes 2011 31 December

currencies dealing in foreign net gain from and derivatives net gain on financial investments o

p

Depreciation

Islamic Banking cease booking banks to new Islamic any all conventional no 315/275/2011 has directed Bank vide circular the Qatar Central During the year, 31 January from their Islamic windows business through the Group. 2011, which has been complied with by on Islamic banking financial information no separate financial statements. been included in these consolidated activitiesHence, have

84 | Ahli Bank Q.S.C. Annual Report 2011

Suhaim Bin Hamad Street, Al Sadd Area PO Box 2309, Doha, Qatar Tel: +974 4423 2222 Fax: +974 4444 4652 www.ahlibank.com.qa