2008 - Fab€¦ · buoyant hydrocarbon receipts with Abu Dhabi accounting for over 90% of...

www.nbad.ae

2008A N N U A L R E P O R T

The Late His Highness Sheikh Zayed Bin Sultan Al NahyanFirst President of the United Arab Emirates

His Highness Sheikh Khalifa Bin Zayed Al NahyanPresident of the United Arab Emirates and Ruler of Abu Dhabi

His Highness Lt. General Sheikh Mohamed Bin Zayed Al NahyanCrown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces

Contents

Vision, Mission, Values, Customer Pledge and CSR Policy . . . . . . . . . . . . . 03

Board of Directors and Senior Management . . . . . . . . . . . . . . . . . . . . 07

Chairman’s Report to the Shareholders . . . . . . . . . . . . . . . . . . . . . . . 11

Chief Executive Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

NBAD Corporate Social Responsibility Report . . . . . . . . . . . . . . . . . . . 29

Risk Management and Basel II Compliance . . . . . . . . . . . . . . . . . . . . . 41

Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 45

Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . 46

Consolidated Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . 47

Consolidated Income Statement. . . . . . . . . . . . . . . . . . . . . . . . 48

Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . 49

Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . 50

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . 51

Major Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Group Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Vision, Mission, Values, Customer Pledgeand CSR Policy

Our VisionTo be the Number One Arab Bank

Our MissionTo provide our customers with the best services

Our ValuesValue our stakeholders

Accessible to our customers 24 / 7

Loyal to our heritage but global in our outlook

Understand our customers needs

Empower our people

Strive constantly for organisational excellence

Our Customer PledgeWe will recognize you

We will listen to you

We will understand your needs

We will dedicate all our energies to serving you

Our Corporate Social Responsibility Policy To act as a role model in the social and environmental development of the UAE

Board of Directors & Senior Management

National Bank of Abu Dhabi | Annual Report 2008 9

Audit Committee:

Chairman SHEIKH MOHAMMED BIN SEIF BIN MOHAMMED AL NAHYAN

Members MR. KHALIFA SULTAN AL SUWEIDI

MR. DAVID BEAU (Appointed with effect from 11.03.2009)

MR. MOHAMMED KHALIFA AL YOUSUF AL SUWEIDI (Resigned with effect from 11.03.2009)

Corporate Governance Committee:

Chairman H.E. NASSER AHMED KHALIFA ALSOWAIDI (Appointed with effect from 06.01.2009)

H.E. KHALIFA MOHAMMED AL KINDI (Resigned with effect from 05.01.2009)

Members H.E. MOHAMMED OMAR ABDULLA

MR. KHALIFA SULTAN AL SUWEIDI

Remedial Advances Committee:(Merged with RMC with effect from 17.03.2009)

Chairman MR. SULTAN BIN RASHED AL DHAHERI (Until 17.03.2009)

Members SHEIKH MOHAMMED BIN SEIF BIN MOHAMMED AL NAHYAN

(Until 17.03.2009)

SHEIKH AHMED BIN MOHAMMED SULTAN AL DHAHERI (Until 17.03.2009)

Senior Management:

Chief Executive MR. MICHAEL H. TOMALIN

Group Chief Operating Officer MR. ABDULLA MOHAMMED SALEH ABDULRAHEEM

Senior GM Domestic Banking Division MR. SAIF ALI MOHAMMED MUNAKHAS AL SHEHHI

Senior GM International Banking Division MR. QAMBER ALI AL MULLA

Senior GM Corporate & Investment Banking Division MR. AKRAM-MARK YASSIN

Senior GM & Group Chief Risk Officer MR. ABHIJIT CHOUDHURY

Senior GM Financial Markets Division MR. MAHMOOD AL ARADI

GM & Chief Audit & Compliance Officer MR. JOHN GARRETT



Deputy Chairman H.E. DR. JAUAN SALEM AL DHAHERI

Members H.E. MOHAMMED OMAR ABDULLA

MR. KHALIFA SULTAN AL SUWEIDI

MR. HASHIM FAWWAZ AL KUDSI (Appointed with effect from 11.03.2009)

MR. DAVID BEAU (Appointed with effect from 11.03.2009)

MR. SULTAN BIN RASHED AL DHAHERI

SHEIKH AHMED BIN MOHAMMED SULTAN AL DHAHERI

SHEIKH MOHAMMED BIN SEIF BIN MOHAMMED AL NAHYAN

MR. AHMED ATEEQ AL MAZROUI (Resigned with effect from 11.03.2009)

MR. EISSA MOHAMMED GHANEM AL SUWEIDI (Resigned with effect from 11.03.2009)

MR. MOHAMMED BIN JAUAN RASHED AL BADI AL DHAHERI (Resigned with effect from 11.03.2009)


Risk Management Committee:



Members H.E. DR. JAUAN SALEM AL DHAHERI

MR. SULTAN BIN RASHED AL DHAHERI


MR. HASHIM FAWWAZ AL KUDSI (Appointed with effect from 11.03.2009)


Compensation and Nomination Committee:

Chairman H.E. MOHAMMED OMAR ABDULLA

Members MR. KHALIFA SULTAN AL SUWEIDI

SHEIKH MOHAMMED BIN SEIF BIN MOHAMMED AL NAHYAN


Board of Directors & Senior Management

Chairman’s Report to the Shareholders

13

On behalf of the Board of Directors of National Bank of Abu Dhabi, I would like to thank Mr. Khalifa AlKindi, the outgoing chairman for his valuable contribution and guidance throughout the past years, and have the honor of presenting you the Chairman’s report for the year 2008. Economic performance of the United Arab Emirates in 2008 continued to be strong. Forecasts indicate that the trade surplus reached a record high of AED 287 billion as a result of higher energy prices, up from AED 235 billion in 2007. Fiscal balances also recorded a record surplus reflecting buoyant hydrocarbon receipts with Abu Dhabi accounting for over 90% of hydrocarbon production in the UAE. Real GDP growth is forecast at 6.1% year-on-year. Per capita income in Abu Dhabi estimated at AED 262 thousand, already one of the highest levels in the world, is expected to have risen sharply in 2008. A significant slowdown in economic activity is evident going forward. Inflation is expected to have peaked in 2008 driven by higher food prices and rents but expected to fall sharply in 2009.

United Arab Emirates has been a net capital exporter in the last few years as a result of strong hydrocarbon revenues, thus building a cushion of significant foreign assets. Throughout the same period, non-bank corporate entities and the financial sector had increasingly funded the vibrant non-oil economic activity through external finance. The rapid growth in external borrowing, domestic credit, and real estate development; while reflective of vibrant economic activity, created macroeconomic vulnerability. The reversal of large speculative flows betting on a Dirham revaluation versus the US Dollar and the drying up of external finance translated to tight liquidity conditions in the latter half of the year. Credit availability further declined as financial institutions adopted a significantly more conservative stance in lending due to increasing uncertainty in their operating environment and prospect of an imminent rise in non-performing loans. Expectations became self-fulfilling as a sharp correction in the real estate sector started and a negative feedback loop between the financial sector and economic activity got underway. Loss of confidence by households compounded by uncertainty about employment prospects coupled with poor prospects for sales and profits is translating to cutbacks in consumption and investment.

Economic activity is expected to have declined markedly in the final quarter of 2008 and a further retrenchment in aggregate demand is apparent going into 2009. The intrinsic strength of the Abu Dhabi economy – the core of the trade and fiscal surpluses generated by the United Arab Emirates – will help cushion the impact from a fall in energy prices and allow Abu Dhabi to weather the global economic turmoil and be well-positioned for a recovery in activity. In a climate of economic uncertainty, the financial strength of Abu Dhabi is also the strength of National Bank of Abu Dhabi.

In the middle of the international crisis, not witnessed in decades and whose impacts are progressively felt by all economies at various levels, the bank reported an excellent record results for the financial year ended 31 December 2008 with operating profit of AED 3.8 billion and net profits of AED 3 billion, the highest in the Bank’s history. This is the time to retain our profits for the future growth of our bank, to increase

our capital resources, maintain our asset quality and ratings while at the same time be well prepared to seize opportunities and continue to play a pivotal role in the development plans of Abu Dhabi and the UAE. Accordingly, the Board of Directors has recommended the distribution of a 30% cash dividend and 10% bonus shares to shareholders.

The Bank’s operating income for the year 2008 reached a record AED 5.3 billion with net interest income up 50% over last year attributed to higher volumes and wider spreads. Non interest income, increased by 34% year-on-year reflecting the planned diversification of sources of income and despite the weak local equity markets which affected income in both the Bank’s asset management and brokerage businesses. Expenses increased within plan by 42% to finance the organic growth in the Bank’s network, IT systems and staff. The 2008 return on equity of 24.8% remains one of the highest in the UAE banking industry and worldwide.

Total assets reached AED 164.6 billion, 18% above 2007 levels. This is due to the increase in loans and advances to AED 111.7 billion, up 40%, and customer deposits increased 27% to AED 103.5 billion during the year.

All the bank’s businesses performed well with exceptional performance from our strong domestic banking business with net profits of AED 2.1 billion. Our international business contributed AED 542.7 million of net profits and the financial markets division profits reaching AED 745.5 million.

The bank has completed the restructuring of its existing businesses which in 2009 will comprise of the domestic business, the international business, the new corporate and investment banking business, financial markets, islamic business and global wealth business.

We are a socially responsible bank and we contribute to good causes. In 2008, our donations and charity contributions amounted to AED 47 million including the 1% of net profit to Abu Dhabi entities.

The solid performance has resulted from the efforts exerted by the board committees and the dedication of the Bank’s management and staff. I should also like to express my appreciation to our loyal customers for their valued business with the Bank.

Finally, on behalf of the shareholders, the members of the Board of Directors and the management and staff of the Bank, I wish to extend our most sincere appreciation and gratitude to His Highness Sheikh Khalifa Bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi, to His Highness Sheikh Mohammed Bin Rashed Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and to His Highness Sheikh Mohamed Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, for their continued support and interest in the Bank’s activities.

Nasser Ahmed Khalifa AlsowaidiChairman

CHAIRMAN’S REPORT TO THE SHAREHOLDERSFOR THE FINANCIAL YEAR 2008


Chief Executive Review

17

Chief Executive Reviewfor the Year 2008

The National Bank of Abu Dhabi (NBAD) once again delivered

an outstanding financial performance in a year fraught with

financial global challenges. Our strong performance was

achieved despite the global crisis that erupted in September

2008 with the collapse of Lehman Brothers in the United States

of America.

Thereafter, the global economy deteriorated markedly and the

unprecedented turmoil that followed in the financial markets

brought about the collapse of major banks and financial

companies worldwide.

Banking systems around the world had to be recapitalised.

Several major British banks have now effectively been placed

under the ownership of the British government. Throughout

the world, bank liquidity became extremely tight, the interbank

market was closed for everything but overnight transactions

and the international capital markets closed altogether.

Equity, foreign exchange and capital markets witnessed

unprecedented moves, forcing major financial institutions

worldwide to take massive write-downs and report record losses.

The United Arab Emirates (UAE) financial markets were hit

by massive withdrawals of foreign speculative flows which

pressured local currency liquidity and severely impacted the

currency movements of capital and equity markets.

Towards the end of the year, the first green shoots of a possible

recovery were visible. Governments and Central Banks were

actively engaged in pumping liquidity and capital into the

system. The UAE government, the Government of Abu Dhabi

in respect of its banks and the UAE Central Bank moved

quickly and decisively to shore up liquidity and recapitalise

the financial system.

In the UAE and Abu Dhabi, in particular, there remain good

opportunities for growth. The banking system has been

supported by the government and although liquidity remains

tight for UAE banks generally, the capital position of most UAE

banks is solid. The UAE economy is likely to grow, albeit at a

slower rate, notwithstanding the fall in energy prices. Although

asset prices, particularly in real estate and equities, have

declined, there is still intrinsic long-term value.

As evidenced in our results, NBAD is well positioned to weather

the storm. While some global banks showed huge losses for

2008, NBAD’s operating and net profits for 2008 were up

45.8% and 20.5%, respectively. Of course, neither NBAD, nor

the UAE, is immune from events in the global markets. NBAD

is an active international bank with business round the world.

NBAD disclosed in 2007 that we had no direct exposure to

CDOs, SIVs or the US sub prime market, although, of course,

it does have exposure to financial institutions that do. NBAD

has no direct exposure either to Lehman Brothers or Madoff

Investments although there is US$ 8.8 million of settlement

exposure caught in the Lehman’s administration. No significant

new specific credit provisions were required this year as a

direct result of the international credit crisis.


Our score card Chief Executive Review for the Year 2008

We thought it prudent to take higher collective impairment

provisions of AED 603 million at the year-end and we may

have to do more of this during 2009. However, the strength

of our franchise gives us an opportunity to grow where other

banks may be in retreat.

During the year under review, we invested substantially in our

future growth and grew organically by expanding our franchise in

the UAE and the Middle East and North Africa (MENA) regions.

Financial Performance

We have consistently delivered on our stated strategic financial

objectives and for the financial year ending 2008, we reported

24.8% return on equity after the dividend distribution. This is

in line with our medium-term objectives to achieve an average

return of 25% over the economic cycle.

NBAD’s operating profits, before provisions and taxes,

increased by 45.8% to AED 3808 mllion and net profits of AED

3019 million represented a 20.5% increase on the AED2505

million achieved for 2007.

Earnings were AED 1.5 per share compared with AED 1.3 per

share in 2007. These profits were achieved after collective

provisions of AED 603 million, specific provisions of AED

214 million and write-offs of AED 18 million, mitigated by

recoveries and write-backs of AED 118 million.

These additional collective provisions were taken across the

whole performing portfolio as a precautionary measure in

tough markets. Actual underlying performance of the loan book

remains good. Non-performing loans at the end of 2007 were

AED 859 million and, during the whole of 2008, despite a AED

32 billion increase in the size of the loan book, non-performing

loans rose by AED 213 million to AED 1072 million.

Total collective provisions of AED 848 million represent 0.76%

of total performing loans and 1.15% of performing loans

excluding those related to the Government or public sector

entities in Abu Dhabi. The respective figures for 2007 were

0.31% and 0.48% illustrating the substantial increase the Bank

has chosen to make in provisions this year.

No property revaluations were taken during the year. We have

not elected to reclassify investments in our trading book as

approved in the latest amendment to IAS39 and IFRS7, thus

both 2007 and 2008 results are comparable.

Total assets at the end of 2008 reached AED165 billion, 18.1%

higher than at the end of 2007. The tightness in the credit market

was reflected in the fourth quarter of 2008, when during this

period, loans did not grow at all. Deposits rose from AED 82

billion at the end of 2007 to AED 103 billion at the end of 2008,

a growth of 26.6%. Customer loans grew from AED 80 billion to

AED 112 billion for the same period, a growth of 40.2%.

Operating income increased 44.6%, to AED 5.3 billion, and costs

grew 41.6% to AED 1.5 billion. The growth of costs was in line

with budget and reflects the Bank’s continuing investment in new

markets, products, people, processes, systems and its brand.

The cost income ratio of 28.2% at the end of 2008 compares

favourably with competing banks around the world and is

slightly better than the 28.8% cost income ratio achieved in

2007. The provision for taxes on overseas earnings rose by

AED 8 million to AED 72 million in 2008.

Operating Activities

During the year, the Bank completed the restructuring phase

of its business to provide greater customer focus. This annual

report sets out the new operating structure; the segmental

financial reporting will be done in 2009.

A new Corporate and Investment Banking division was created

absorbing the old Investment Bank, the Corporate Banking

Group (previously in Domestic Banking) and Wholesale

Banking (previously in International Banking). This new

Corporate and Investment Banking division earned AED 1360

million in 2008 reallocating some of the earnings of Domestic

and International Banking. Financial Markets, Global Wealth

and Islamic Banking are unaffected by these changes.

All the main businesses of the Bank performed well in 2008,

enjoying a record year. Together Domestic Banking, Financial

Markets and International Banking accounted for 94% of the

Bank’s top line earnings. Head office, which runs as a business,

earned AED 143 million in 2008.

Domestic Banking

Domestic Banking Division (DBD) comprises Consumer

Banking, Commercial Banking and Elite Banking. DBD’s

earnings were up 48% at AED2.2 billion contributing 56.5% of

top line operating profits.

DBD enjoyed significant new business growth and ample liquidity

in the first half of 2008. Credit tightened considerably in the second

half of the year as real estate activities declined. Notwithstanding

this decline, DBD achieved record financial results.


Organisational structure

Consumer Banking experienced a flurry of activity with the

opening of 11 new branches, growing the bank’s network to

84 branches in 2008 from 73 in 2007 and by year-end we had

expanded our ATM network to 250. Our focus on alternative

channels saw the introduction of the NBAD Arrow, an SMS and

mobile phone money remittance service, for domestic users.

Our Online users increased by 40% and our Internet Banking

unit achieved ISO certification – the first for an internet bank

in the UAE.

We also commenced the transformation process within branches

to train staff to better serve customers and restructured our

organisation to focus more explicitly on customer segments.

Our campaign – ‘Security and Convenience in Banking’ –

highlights NBAD’s strengths as a conservative institution with

one of the highest credit ratings in the world and a bank that

provides its customers with the convenience of banking when,

how and where they prefer.

During 2008, we introduced a number of new products such

as Ratibi (payroll card) which provides both employers and

employees with a low-cost efficient electronic payroll method;

the new Mastercard Debit Card was also introduced to combine

the previous two debit cards into one for greater convenience,

security and international functionality.

Our profile within the UAE has grown extensively through

our qualitative awareness approach supported by selective

advertising, promotions and campaigns. Our customer satisfaction

ratings have also improved significantly. All areas of Consumer

Banking contributed to its record success and we were awarded

the ‘Best Personal Loan in the Middle East’ by the publication

Banker Middle East in recognition of our efforts in this area.

Elite Banking expanded and enhanced its services to our clients

through the introduction of new products and the expansion

of Elite centres and lounges. An Elite Centre was opened in

Al Ain and Elite lounges were introduced at branch level in

Muroor and Corniche in Abu Dhabi. New Elite segmentation

was implemented by upgrading some Elite clients to Elite Gold.

The two new products, Elite Motari and Mastercard Premium

Debit card, were launched successfully.

Our Elite banking received their ISO 9001-2000 accreditation

for quality management systems in 2008.

We made good progress with the restructuring and

transformation phase in creating an autonomous Commercial

Banking to serve the financial needs of small and medium-

sized businesses across the UAE.

We expanded our commercial desks to seven at specifically

designated hub branches. We also hired new employees to

equip the commercial banking business with adequate credit

and support staff.

Financial Markets

Against a global crisis backdrop, our Financial Markets

Division (FMD) produced earnings of AED 745 million

representing a 161% increase on 2007 and contributing 19.6%

towards NBAD’s top line operating profits. In addition, FMD

managed our liabilities effectively and ensured adequate and

timely funding to meet all the bank’s obligations and financing

needs.

FMD comprises five business units: Institutional and Corporate

Coverage, International Money Market, International Debt &

Capital Markets, Portfolio Management and Foreign Exchange.

In January 2008, FMD moved to its new trading floor in the

Head Office building in Khalifa Street and now operate from

a state-of-the-art dealing room, fully equipped with the latest

technology. The trading floor is designed to accommodate up

to 60 traders and their support teams.

Our Institutional and Corporate Coverage (ICC) extended

its coverage to include accounts throughout the Gulf Co-

operation Council (GCC) and MENA regions. The ICC team

also increased its focus on Northern Emirates by opening a new

trading facility in Dubai, directly linked to our main dealing

room in Abu Dhabi Our structured product team focused on

delivering wealth preservation and hedging ideas to our prime

clients and investors. We also set up a fully dedicated team to

focus on specialised client segments, such as sovereign funds,

central banks and Islamic institutions.

Our International Money Market (IMM) is widely recognised

as one of the key players in the Arab Emirate Dirham market

(spot, forward, IRS and cash). During the year, we set up a

fully dedicated REPO desk specialising in REPO financing and

managing our contingent liquidity pool.

We expanded our coverage of local currency to include all

the other GCC currencies to improve cross-flows. One of

the key roles for IMM is liquidity management including the

issuance of short-medium and long-term debt. In 2008, we

established a Malaysian Ringgit programme and accessed the

Japanese Samurai market for potential issuance. The IMM team

was instrumental in executing our successful AED 2 billion

Convertible Bond issuance in February 2008.

Chief Executive Review for the Year 2008


The International Debt & Capital Market (ICM) operates

through three businesses, including Structured Product

Portfolio management, GCC Fixed Income Trading and

GCC Bond Syndication. With the recent turbulence and

volatility, the GCC Fixed Income Holdings was impacted

by the negative marked-to-market valuations. This set-back

was offset by strong returns from our Structured Product

Holdings and Fixed Income Trading gains. Our syndication

team successfully improved the NBAD positioning by

syndicating five landmark transactions totalling about

US$4.6 billion.

Our Foreign Exchange team continued to use the latest

technologically advanced trading platforms and IT solutions to

support our marketing efforts by offering timely and efficient

execution of our clients’ foreign exchange requirements in a

broad number of markets and currencies.

In 2009, we plan to further diversify our income streams by

adding two new lines of businesses. Portfolio Management

will focus on investing in the alternative assets by designing

and launching our own portfolio of diversified alternative

investments aimed at producing reoccurring income with

low volatility. Our aim is to produce a solid track record

to help us attract third party funds. In addition, we plan

to set up a GCC Equity Desk that will focus on regional

and domestic equities and offer our clients hedging and

investment solutions.

International Banking

International Banking Division (IBD) consists of Arab World

Banking and International Banking. IBD’s earnings were up

44% at AED 694 million accounting for 18.2% of operating

profits. The increase was mainly driven by our branches in

Egypt, Kuwait, Bahrain, London and Paris.

The business units of IBD had another good year, expanding

in size and business volumes. By the end of 2008, we had

a network spanning 39 units in nine countries (including

Switzerland which is part of Global Wealth).

During 2008, we launched several new products through

our international branches. In Oman we launched the Visa

Electron Card in March 2008; London, the Sterling Credit

and Prepaid Cards in June 2008 and in Bahrain, we launched

the car loan (Sayyarati) and credit cards in April and July

2008, respectively.


The following activities occurred in the countries stated below:

Egypt

Opened four new branches during the year and started

the Abu Dhabi Brokerage Egypt in August 2008.

Oman

Opened two new branches and moved to our newly

constructed regional office building.

Sudan

Successfully implemented a new Islamic Core Banking

System in October.

Jordan

Received the approval of the Central Bank of Jordan

to establish a full commercial unit in Amman which is

expected to be open for business by the end of fourth

quarter 2009.

Libya

Established a representative office in Tripoli, Libya.

Hong Kong

Commenced the process of establishing a full

commercial branch in Hong Kong, subject to approval

from Hong Kong Monetary Authority, we hope to start

the branch by the end of the third quarter 2009.

Corporate and Investment Banking

Corporate and Investment Banking (CIB) comprises Corporate

Banking, Investment Banking, Wholesale Banking, Private Equity,

Abu Dhabi National Properties and Abu Dhabi National Leasing.

Formed in 2008, the Banks’ newly established CIB strives

to unlock and realise the potential synergies across the

bank’s institutional client base. These synergies include the

distribution of innovative products between business units,

strategic advice and customised solutions to our corporate and

institutional customers.

Corporate Banking Group had another successful year in terms

of balance sheet growth and provided a significant contribution

to the bank’s profitability.

The year under review witnessed significant broadening of

the product and service range available to our corporate and

institutional clients both in terms of volume and value.

Investment Banking Group continued to expand our corporate

advisory, debt and equity capital market origination business,

using customised financing solutions through integrated

debt and equity platforms. Whilst our regional product suite

continues to grow, our success during 2008 included securing

lead roles in several prestigious debt and equity transactions

for top tier UAE clients.

In the third quarter of 2008, Private Equity mandated a

private equity platform to expand the use of private equity

funds that will source, sponsor, promote and execute variable

private equity initiatives across multiple industry sectors.

CIB’s vision and strategic objectives are inextricably linked

to NBAD as a major regional and global player in the private

equity business.

The Wholesale Banking Group comprises four main

departments including Global Project & Structured Finance,

Syndications & Specialised Portfolio, Financial Institutions

department and Global Trade Finance.

Global Project & Structured Finance (GPSF) (previously

Project Finance & Syndications) successfully closed 26 deals

in 2008. GPSF is actively involved in supporting government-

sponsored projects in oil and gas, infrastructure and utilities as

well as privately-sponsored projects in hospitality, real estate

and other industrial sectors.

During 2008, we set up a Global Trade Finance to serve the

needs or our exporting and importing customers. NBAD’s

unrivalled global network among UAE banks gives us a unique

competitive advantage.

Abu Dhabi National Properties (ADNP) the wholly-owned

subsidiary of NBAD, is one of the leading real estate property

management organisations in Abu Dhabi, with a current

portfolio of over 7,000 units under management. In addition

to providing first class property management services, ADNP

undertakes extensive in-house and external real estate

valuation and advisory services. ADNP is broadening its real

estate services to provide value addition across the whole real

estate property life cycle.

During 2008, ADNP updated its property management

and asset management software systems and commenced

integrating best-in-class service models, whilst selectively

recruiting key personnel and creating a solid foundation for

steady growth in 2009.

Abu Dhabi National Leasing (ADNL) grew from strength

to strength during 2008. It was able to build a diversified

asset portfolio including plant and machinery, aircraft and

cargo vessels.

Global Wealth

Global Wealth comprises Private Banking, Asset Management

Group and our wholly-owned stockbroker Abu Dhabi Financial

Services. Global Wealth had a difficult year given the adverse

equity markets with operating profits declining to AED 52

million compared with AED183 million in 2007.

Our Private Banking business in Geneva is a wholly-owned

subsidiary of NBAD. NBAD Suisse operates as a fully

independent Swiss private bank subject to Swiss laws and

regulations. The private banking business focuses on offering

high net-worth individuals customised private banking and

wealth management services including asset management

(advisory and discretionary portfolio management), wealth and

estate planning, and banking services.

Our private banking business is still in a growth phase. Assets

under management reached AED 5 billion by year-end, but

the yield on these assets was low as most clients preferred

to invest defensively in deposits. The on-shore private

banking business in the UAE has shown strong growth and

professional teams of private bankers stationed in both Abu

Dhabi and Dubai.

The Asset Management Group (AMG) within Global Wealth

launched a GCC equity fund at the start of 2008, as well as

a number of feeder funds to afford foreigners easier access.

AMG made great strides in the implementation of advanced

IT systems to support the growing sophistication of its client

base which almost doubled its discretionary and advisory

accounts business.

Abu Dhabi Financial Services (ADFS) has seven active branches

across the UAE. It also has its own dedicated call centre, secure

online trading platform and segregated dealing room for local

and regional trade execution.

The ongoing strategy is to transform ADFS from a local

brokerage house into a regional operation which is able to offer

its customers execution in both local and MENA equity markets.

2008 saw the acquisition of 70% of the Al Salam brokerage



company in Cairo thereby giving ADFS a foothold in the

Egyptian market (Abu Dhabi Brokerage, Egypt), as well as the

offering of services in the Bahrain, Saudi and Qatari markets

through strategic partnerships. Further regional expansion is

planned during 2009.

2008 was a challenging year for the brokerage business as the

global turmoil spread to the UAE markets which witnessed

substantial falls in values and volumes. ADFS was, however,

able to maintain its top five ranking on the combined Abu

Dhabi and Dubai markets, notwithstanding the global equity

market turmoil.

Islamic Banking

Islamic Banking comprises Abu Dhabi National Islamic Finance

and NBAD Islamic Division. In its first full year of activity

Islamic Banking earned AED 24 million, compared with the

start-up loss of AED 10 million in 2007.

IT Department

A range of new technology products for the benefit of our clients

was deployed in the UAE market, inducing NBAD Arrow, an

SMS payment service; Customer Linkages and Relationship

Query System (CLARIS); Electronic Cheque Clearing System

(ICCS) and SMS Alerts for account credits.

During 2008, we implemented a range of Risk Management

solutions and systems. The Advent system was implemented

in AMG and Wholesale Operation Centre, while a treasury

system and Intellect were installed in Oman and Bahrain,

respectively. A total of 70 new ATMs were installed in 2008.

Our achievements in the UAE banking technology were

acknowledged in 2008 and our IT department was awarded

the Top 20 IT Managers in the region; the CIO of the Year and

the Banking IT Project of the Year by ACN Arab Technology.

Risk Management and Basel II Compliance

After a benign period, the region is witnessing a change in

the credit cycle. NBAD remains well positioned to emerge

successfully from the current market crisis, as the asset quality

of the portfolio continues to remain intact with non-performing

assets forming only 0.92% of the loan portfolio and provision

cover exceeding 145%. Further, taking cognizance of the

operating environment, the Bank progressively increased the

provisions for Collective Impairment by AED 603 million during

2008 to protect the Bank’s capital. It now stands at 0.76% of

total performing loans and 1.15% of performing loans excluding

those related to the Government or public sector entities in Abu

Dhabi. The respective figures for 2007 were 0.31% and 0.48%.

Regulatory risk compliance, including Basel II implementation,

continues to be of paramount importance to our Bank. Basel

II capital adequacy stood at a comfortable level of 15.4% as at

December 2008 against a minimum requirement of 10%.

Investor Relations

Our investor relations experienced a busy year keeping

investors and financial analysts informed of the bank’s progress.

Investor interest in the region and NBAD continues to grow.

During 2008, we addressed investor questions at one-on-one

meetings round the world.

The demand for information from investors remains strong and

we are meeting this requirement through the ongoing analysts

meetings, conference calls, webcasts and a dedicated investor

relations website page.

Corporate Social Responsibility

For a second successive year, the board of directors agreed

to pay 1% of net profits to worthy causes in Abu Dhabi, in

addition to other social contributions, as part of our Corporate

Social Responsibility (CSR) programme, bringing the total

contributions for the year to AED 47 million.

This commitment reflects our corporate culture of being one of the

region’s leading corporate citizens. Although we acknowledge a

special responsibility in the UAE region, our CSR programmes

are also active in communities in other countries where we

do business. Our focus areas are community development,

education and the environment. A detailed report on our CSR

activities follows on page 29 of this report.

Our People

Through the dedication and loyalty of our employees, NBAD

came through a turbulent 2008 with record financial results and

in many respects with a stronger business model than we had 12

months ago. Their sterling efforts and performance contributed

in no small measure to the delivery of the Bank’s net profits in

excess of AED 3 billion, our best ever performance.

2008 was one of our most successful years for recruiting UAE

Nationals, where an additional 160 UAE nationals joined our


team. Towards the end of the year, NBAD’s branch managers

totalled 78 of whom 53 are UAE nationals: 25 male managers

and 28 female managers.

The diversity of our employees is also our strength and at the

end of December 2008, NBAD had a complement of 3,666

employees comprising more than 52 nationalities. The value

of such diversity is reflected in innovative and creative thinking

and ways of doing business.

Our focus for 2009, will be laying the foundation for a

meaningful learning environment that embraces staff at all

levels across the business and sets about creating a culture that

encourages the free and open exchange of ideas, essentially

bottom up rather than top down. The building of a state-of-the-

art Learning Academy, situated at Between Two Bridges in Abu

Dhabi, which will open in 2009, will play a significant role in

creating a learning culture.

Dividends

At the Annual General Meeting held on Wednesday 11 March

2009, the Assembly declared an annual dividend of 30%

cash and 10% stock dividend for the financial year ending 31

December 2008.

Post Balance Sheet Developments

Since the release of our 2008 financial year-end results, NBAD

has received two significant injections of new capital.

On 4 February 2009 in responses to the Government of the

Abu Dhabi ‘s initiative to inject additional capital into certain

Abu Dhabi financial institutions, NBAD issued Tier I capital

notes to the Government with a principal amount of AED 4

billion. The Notes are non-voting, non-cumulative perpetual

securities, and are callable subject to certain conditions as

specified by the Government, but not putable.

In October 2008, the Ministry of Finance announced a AED 70

billion loan facility to UAE banks to strengthen the banks’ capital

adequacy positions. On 5 January 2009, The Ministry of Finance

announced that banks could convert these loans to Tier II capital.

On 11 March 2009, at our AGM, NBAD voted in favour of

converting the liquidity support loans into AED 5.6 billion of Tier

II capital.

This means that NBAD’s Tier-I capital resources will increase

by AED 4 billion and take the bank’s Tier-I ratio, based on

NBAD’s 31 December 2008 risk assets, to 16%. Similarly,

taking both the Tier-I capital and Tier-II capital increases,

NBAD’s combined capital will reach AED 27.8 billion taking

the capital ratio to 23.5%, based on 31 December 2008 risk

assets on Basel II principles.

NBAD’s long term ratings are amongst the strongest combined

ratings of any financial institution in the MENA region, with

Moody’s Aa3, Standard & Poor’s A+, and Fitch AA-.

Outlook

The Bank continues to perform at the operational level

reflecting the sound fundamentals of the Abu Dhabi economy

and the UAE. However, we will not be able to expand our

business at the rate we did in the past. We will need to stay

selective, supporting our customers and our old friends so that

all of us emerge, from what continues to be a severe financial

storm, fitter and leaner and well prepared to take advantage of

the opportunities Abu Dhabi, the UAE and the MENA market

in general present.

A word of thanks

I wish to thank the senior management and the staff generally

for the way in which they have met the demanding challenges

confronting our business over the past year.

I would also like to thank the Board of Directors for their

counsel and advice during the year. We look forward to serving

the interests of our clients and shareholders in the year ahead.

Michael H Tomalin

Chief Executive



The year 2008 in pictures The year 2008 in pictures

In our 40th anniversary year, NBAD engaged in a multitude of banking-related activities from national celebrations and opening of branches to cementing relationships with foreign dignitaries, assiduously building on our regional and international partnerships and strengthening our community and business networks.

Mr Ahmed Obaid, Branch Manger of Dubai Internet City and Mr Abdulla Ghobash, Regional Manager - Northern Emirates (right) inaugurate NBAD’s 80th branch in Dubai Internet city.

(Left to right) Messrs Khalaf Al Dhaheri, Deputy General Manager & CRO; Qamber Ali Al Mulla, Senior General Manager - IBD; Michael Tomalin, Chief Executive; Saif Al Shehhi, Senior General Manager - DBD; and John Malouf, General Manager - CBG starting NBAD’s National Day celebrations.

Consumer Banking launched 40 branded vehicles as part of an incentive programme and brand reinforcement.

NBAD’s Annual General Meeting presided by the Chairman H.E. Nasser Ahmed Khalifa Alsowaidi.

Mr Srood Sherif, Chief Information Officer, receives the ACN Arab Technology award.

(Left to right) Kent Gardner, Partner and Deputy CEO - Evans Randall, Michael Evans, Chairman & Chief Executive - Evans Randall, Michael Tomalin, NBAD’s Chief Executive, Akram Mark Yassin, Senior General Manager of CIB at the signing ceremony of a MoU to provide mezzanine investments.

Mr Mahmood Al Aradi, Senior General Manager of FMD and Dr. Alan Greenspan, former Chairman of the U.S. Federal Reserve, special guest at the inauguration of NBAD’s new dealing room.

Mr George Bush (Snr), a former President of the USA, guest speaker at NBAD’s 40th anniversary celebrations held at Emirates Palace.

(Left to right) Messrs John Malouf, General Manager - CBG; Saeed Husain Al Khourei, Head - Elite Banking; Saif Al Shehhi, Senior General Manager - DBD; Anand Lobo, Manager - Business Planning & Strategy displaying the ISO 9001-2000 certification.

NBAD Corporate Social Responsibility Report


Commitment to the future

The leaders of Abu Dhabi Emirate have identified sustainability

as key to future competitiveness. NBAD’s management has

made an ongoing commitment to be a strong advocate of CSR

and sustainable business in the United Arab Emirates (UAE).

We considered how, as a leading UAE bank, we could make

a positive impact within our sphere of influence through

implementing CSR and sustainability management into our

business. We began to assess where our involvement in

projects and initiatives would make an impact.

1. Abu Dhabi Sustainability Group

NBAD joined forces with 15 of Abu Dhabi’s leading

government entities, private companies and non-profit

organisations and signed the Abu Dhabi Sustainability

Group Declaration (ADSG). As a founding member of

the ADSG, the National Bank of Abu Dhabi committed to

help realise the vision of HH Sheikh Khalifa Bin Zayed Al

Nahyan, President of the UAE, by supporting the uptake of

sustainability management within the Bank, and to issue

our first sustainability report, which we expect to publish

with our 2009 Annual Report.

2. OECD MENA Regional Taskforce on Responsible

Business Conduct

At a regional level, NBAD is a member of the OECD MENA

Regional Taskforce on Responsible Business Conduct. We

participated in the first meeting held in 2008, which was

organised in response to the Ministerial Declaration of the

MENA OECD Investment Programme (November 2007)

wherein MENA countries called ‘for a regional dialogue

on responsible business conduct and encouraged effective

support to businesses in fighting corruption, improving

corporate governance and engaging in responsible business

practices’.

3. ISO 26000 – a new CSR standard

NBAD agreed, at the end of last year, to participate in

the beta test of ISO 26000, a new standard for social

responsibility. The standard was developed in a multi-

stakeholder process involving experts from over 70

countries covering six different stakeholder groups. NBAD

is one of four banks globally to test the committee draft

of the standard on behalf of the banking and financial

sector. Our involvement in the beta test of ISO 26000

will be to measure its practical implementation by a bank,

the relevance to the banking sector and any strengths and

weaknesses. Our findings will be reported back to the ISO

committee responsible for developing the standard.

Commitment to our people

We recognise the value of our people as our most significant

assets. They are the new generation of employees and we

recognize the long term value of meeting their expectations.

NBAD’s vision is to be ‘The Number One Arab Bank’ and

to provide the best financial services in our markets. With

the ongoing global ‘war for talent’, we improved our Human

Resources strategy and support structure to enable us to gain

competitive advantage. We expect the changes we have

implemented to successfully attract and retain highly motivated,

skilled professionals. We will pursue our policy of training and

developing existing high achievers who are already members

of the NBAD team.

Engaging our people

It is important that NBAD continues to be a place where our

people feel valued and have a sense of belonging; a company

they believe in, support its values and goals and as a result

‘go the extra mile’. We carry out employee engagement

surveys annually to assess in which areas we are performing

well and where we need to improve. We are becoming

increasingly aware of the importance of recognising and

rewarding values-based behaviour, which in turn should result

in increased employee loyalty, commitment and higher levels

of performance and retention rates.

Learning and development

It is important that our employees have both the access to

and opportunities for refining their skills and acquiring new

knowledge throughout their career with NBAD.

Employees are encouraged to discuss their training needs

during their annual performance appraisal, with the aim of

choosing at least three training courses annually. Employees

are also encouraged to further their studies in higher education

relevant to their field of work and they are provided study leave

and reimbursement of costs to support them.

Corporate Social Responsibility Report 2008

During the year we celebrated NBAD’s 40th anniversary

and reflected on our past growth and achievements. Whilst

reflecting on past achievements and lessons learned, we also

planned our future, concentrating on areas where innovative

leadership and change management would add value to the

bank. As the global crisis deepened, we looked at the short

and long term risks and impacts to our business with a view to

identifying new opportunities and overcoming the challenges

resulting from the upheaval in the global capital markets.

As a responsible financial institution, we strive to be a leading

role model, in terms of our economic, social and environmental

responsibilities. We are determined to lead by example as

we remain committed to learning more about how we can

contribute positively to the markets in which we operate whilst

delivering earnings to our shareholders achieved through

responsible business practices.

This is our third Corporate Social Responsibility (CSR) report

covering our business in the UAE. It is a transitional report as

we prepare for our first sustainability report in 2009, which will

form part of the 2009 Annual Report.

Our CSR approach throughout 2008, involved:

A strategy supporting economic growth through continued •

development and provision of reliable and accessible

products and services to meet the needs of our existing and

prospective customers.

Ongoing investment in our employees, built upon •

recognition, respect, empowerment, a safe and healthy

working environment, opportunities for learning and

career development and a strategic plan of development

for UAE nationals.

Increasing our knowledge of climate change and working •

towards minimising our impact on the environment.

Dialogue with peers, members of civil society and •

government agencies to share ideas and knowledge.

Interaction with our community involved contributing to •

raising awareness of community issues involving health,

learning opportunities, knowledge sharing, sponsorships

and financial donations.

Recognition for NBAD

Our key areas of focus are broad, exceeding beyond just

our profitability, performance and delivery of innovative and

accessible products and services. Equally important and vital

to our overall success are our strategic relationships, levels of

customer service, strong corporate governance as well as the

technology we use to help us execute our business. NBAD was

the proud recipient of several prestigious awards during 2008.

The awards listed below reflect the success of our ongoing

efforts to set ourselves apart from our competitors.

1. Middle East Banking Award for Best Local Bank

emeafinance’s 2008 awards sought to recognise the best

banks, teams, and deals in the EMEA region.

2. The UAE Bank Corporate Governance Award

Launched in 2008 by Hawkamah – The Institute for

Corporate Governance and Emirates Bankers’ Forum –

the UAE Bank Corporate Governance Award identifies

and honours banks that show leadership and initiative in

enhancing good corporate governance.

3. Arab Technology Award - Winner of the Banking and

Finance Implementation of the Year

The awards honour the region’s finest vertical projects,

vendors, individuals, integrators and service providers.

Chief Information Officer (CIO) of the Year was awarded

to NBAD.

4. The Banker Middle East Product Awards – Personal

Loan category

The winners of Banker Middle East Product Awards are

selected through a process of review, assessment, and

public participation.

5. Emirates Institute of Banking & Finance Studies (EIBFS) –

Human Resources Development Award

The Human Resources Development Award, the most

prestigious UAE Emiratisation Award for organisations in

the banking and financial sector, has been developed by

the National Human Resources Development Committee

in the banking sector, which is run by the Emirates Institute

for Banking and Financial Studies (EIBFS). The criteria

set by the award organisers cover key areas including

Emiratisation, development and training, career planning,

communication processes, recruiting effectiveness and

internship programmes.

6. ISO 9001:2000 Accreditation of Quality Management

System for Elite Banking.

Corporate Social Responsibility Report 2008


What we did in 2008

Customers Employees

✓ NBAD’s branch network increased from 73 to 84

branches

✓ ATM network increased from 193 to 256

✓ Increased our cash and cheque deposit machines

(CDM) to 48

✓ Internet kiosks installed in 11 branches

✓ Ongoing campaign to educate customers on the

convenience of online banking.

✓ Held the NBAD Employee Wellness Day to raise

awareness of healthy lifestyles and give our employees

opportunities to experience different aspects of

wellness

✓ Significant changes were made to employees’ benefit

packages and are set out below on a separate table.

✓ Greater gender equality for benefits entitlement were

introduce to provide airfare, housing and furniture

allowance to female staff

✓ Enhancement to UAE National Pension Scheme and

introduction of UAE National Education Allowance

✓ Enhancement to medical insurance and life insurance

coverage

Community Environment

✓ Finalised the evaluation criteria for sponsorship and

donation requests evaluation

✓ ASK Lecture Q1 – Q&A Session with Dr Alan

Greenspan

✓ ASK Lecture Q2 – Rationale and Benefits of the Clean

Development Mechanism

✓ Sponsorship of 25th Abu Dhabi Ladies Open Golf

Championship

✓ Sponsorship of NBAD Abu Dhabi Harlequins Rugby

Club

✓ 4th Annual NBAD Blood Drive, held outside our Head

Office in Abu Dhabi with 335 donors and 161 people

screened for Thalassemia

✓ Participated in the Bank Challenge for the 2008 Terry

Fox Run

✓ Entered into an agreement with the Ministry of

Social Affairs to participate in the ‘Dirham Wa Bas’

campaign

✓ Installed 45 new recycling bins during 2008 in Abu

Dhabi, Al Ain, Dubai and Sharjah. A regular collection

schedule was also established

✓ Entered into a service agreement with a local company

to collect used toner cartridges

✓ An agreement was signed with Envirofone to link the

new mobile phone-based NBAD Arrow Service with

collecting mobile phones for recycling

✓ Proposals from toner re-manufacturers were received

with a view to implementing tests of the products

Corporate Social Responsibility Report 2008Corporate Social Responsibility Report 2008

Diversity of the team

The diversity of our employees is our strength. In 2008, NBAD’s complement comprised more than 52 nationalities. The value of

such diversity is reflected in innovative and creative thinking and ways of doing business. At the same time, it provides us with a better

understanding of our clients needs, enabling us to better serve them.

Development of UAE Nationals

Since 2006, the number of UAE nationals employed at NBAD increased by 39 per cent in real terms, and the number of expatriate

employees increased by 34 per cent over the same period. We are working hard to meet the quota requirement of Emiratis who are

under-represented in the UAE workforce. Whilst there are specific quotas set by the UAE Federal Government for banks to provide

jobs for Emiratis, we implemented a strategic Emiratisation plan (SEP) which has allowed us to track our progress since 2006. The

Compensation and Nomination Committee (CNC) of the Board of Directors was set up in 2006 and oversees the SEP.

UAE nationals - By Job Level and Gender

Year Senior Management Middle Management

Male % Female % Male % Female %

31/12/2006 17 94% 1 6% 36 60% 24 40%

31/12/2006 24 96% 1 4% 34 52% 31 48%

31/12/2006 23 96% 1 4% 42 50% 42 50%

Year Others Total

Male % Female % Male % Female %

31/12/2006 124 29% 308 71% 177 35% 333 65%

31/12/2007 127 27% 349 73% 185 33% 381 67%

31/12/2008 172 29% 427 71% 237 34% 470 66%

Opportunities for women

We support and encourage women to develop and pursue careers within the bank. A significant number of our branch managers are

UAE National females.

2008 Male Female

Total branch managers

78 49 29

Branch managers - UAE Nationals

53 25 28


Employee wellbeing

The wellbeing of our employees became more significant last year. The Employee Wellness Day provided opportunities for our people

to learn about different aspects of wellness. We used the bank’s intranet to post fact sheets and short self assessments addressing

areas such as emotional, financial, and occupational wellness. In addition to a range of basic health tests, short sessions on stress

relief methods and first aid were conducted. Nutritionally balanced lunchboxes, Thalassemia screening, stretching exercises and head

massage were also amongst the activities offered. The aim was to give our employees access to information, advice and experiences

to increase their overall wellbeing.

The Wellness Day was attended by 407 employees, a significant increase over the 164 employees who attended in 2007. We plan to

expand this programme in 2009 with two events to provide more employees to participate.

Health Day 2006 Health Day 2007 Employee Wellness Day 2008

1 health service providerHealth checks carried out:

• Blood pressure• Blood sugar• BMI (Body Mass

Index)• Lipid profile

1 health service providerHealth checks carried out:

• Blood pressure• Blood sugar• BMI• Lipid profile

3 health service providersHealth checks carried out:

• Genetic screening, for Thalassemia,Sickle Cell anemia

• Blood sugar• Blood pressure• BMI• Cholesterol indicator

Raising awareness of the benefits of a healthy diet

Raising awareness of the benefits of a healthy diet

Information and awareness provided on:• Breast cancer• First Aid• Stress management through breathing exercises• Scalp and hair analysis• Benefits of exercise• Healthy diet

Health seminars• Diabetes• Health Awareness for

Women

Health seminars• Good nutrition• Cancer• Cosmetic surgery• Depression

Additional activities and services:• Stretching exercises• Head and shoulder massage• Nutritionally balanced snack boxes• Health and fitness publications • Distribution of health care products• Awareness campaign on intranet for one month

prior to the event on different aspects of wellness • Information and awareness material relating to

healthy lifestyles

Facts and figures for the 2008 Blood Drive:

• A total of 335 blood donors

• 161 people screened for Thalassemia

• 5 per cent increase in the number of Emiratis donating blood compared to 2007

• 27 per cent increase in donors overall compared to 2007

NBAD customers

National Bank of Abu Dhabi established a Customer Care Unit (CCU), with the aim to take a quality assurance approach towards meeting

the needs of our customers in our domestic banking group. We communicated with our customers through a range of channels.

How did we reach our customers?

WHAT DID WE DO?

Letter The CCU took responsibility to monitor the data clean-up in branches to ensure that customers’ personal details are kept up- to-date (particularly post office box and mobile telephone numbers which are key contact points).

Telephone • Any feedback or complaint is directly transferred to the relevant team member • Telephone surveys are conducted regularly to maintain regular contact with our customers.• Retention planning is conducted by branches to gather information on the reasons for termination of customer

relationship with NBAD.

Email • CCU handles all the feedback that is received through dedicated email addresses which are linked to the NBAD website

• Requests and queries are received from our NBADOnline customers and a response is sent to them through their online account

Face-to-Face • CCU handles all the feedback that is received through dedicated email addresses which are linked to the NBAD website

• Requests and queries are received from our NBADOnline customers and a response is sent to them through their online account

• Regular surveys on the service level skills of branches which also obtains feedback on the bank’s product and service offerings

• Daily surveys in branches are conducted to allow customers to provide in-depth feedback and suggestions

Surveys Quick and short questionnaires are designed to determine our customers’ opinion about the level of courtesy and staff behaviour in serving the customer, as well as the overall appearance of the branchFeedback forms with suggestions boxes are placed in branches for customers to fill in. Forms are monitored monthly and results are tracked monthly and kept updated

Surveys, focus groups, advisory groups, etc

Over 2,000 surveys were conducted in our branches relating to our customers’ comments regarding:• Product knowledge • Cross selling of other financial products or• Services not provided by the front line officers. Complaints were dealt on the spot to ensure that the matter was resolved effectively and any action is taken achieves full customer satisfaction.

Phone Hotlines

Most of NBAD branches are connected to our 24/7 Call Centre. Our staff receives high calibre training to ensure they are well versed with our products and services so that they can deal with all customer queries or complaints.

Developing our products

The Arrow is a SMS payment service that allows customers to access the money in their bank accounts via their mobile phone. It is a secure facility and customers are required to be users of our online banking service in order to access this facility. Arrow is also used as a tool for making donations to charity and non-profit organisations.

Prepaid Visa CardWe launched a new pre-funded Visa Electron card to provide a safe alternative to carrying cash. The card was designed to provide customers with increased levels of financial control and spending and can be used for cash withdrawals and purchases within the UAE and globally. Both account and non-account holders and overseas visitors to the UAE can be cardholders.

Key topics and concerns raised by stakeholders

The CCU received over 900 complaints during 2008 all of which were resolved. Our target is to respond and resolve complaints within two working days from the day the issue was raised and discussed with the customer, to the date the customer was advised of the solution or action taken to resolve the matter.



Accessibility to our services

NBAD continued to expand domestic operations to meet

the needs of our customers. This continuous expansion

enables us to serve a broad customer base in both urban and

rural locations. Additionally, a range of payment services

are available through our ATM services and these facilities

can be used by both our account and non-account holders

to give greater levels of accessibility to financial services in

the community.

NBAD cash offices have been set up within the premises of the

major oil companies and military bases. NBAD tellers also visit

remote offshore and onshore oil facilities to provide banking

services to the people working at these sites.

Access points

Our branches are strategically located across the Emirates to reach all our customers and members of the community. We have branches strategically located across the emirates reaching low populated areas such as Ruwais, AlMirfa, Liwa, Madinat Zayed and soon opening in Gayathi and AlSila’.

Access to financial services

We offer our clients a 24 /7 call centre along with online access to their bank accounts. From our ATMs and nbadOnline, services available include:

• Utility payments• Telephone account payments• Donations to charities• Other bills• Cable and satellite television account

payments • Payments to Dubai and Abu Dhabi

Traffic Departments

NBAD’s Community

Building partnerships

As we transit to a more strategic CSR and sustainable business

approach, we entered into new partnerships, whilst continuing

to develop and strengthen existing relationships.

In addition to partnerships, we entered into a number of

sponsorships and made financial donations to not-for-profit

(NPO) organisations, community sports and cultural groups

and activities, professional groups and charities. This support

amounted to more than AED 7 million during 2008.

We engaged in discussion and dialogue with the government,

private and non-profit sectors to share ideas and knowledge

in areas relating to sustainability and CSR. We explored

and identified issues of mutual concern relating to the

implementation of sustainable business practices in the UAE

and the region.

Relationships and partnerships promoting dialogue and collaboration in CSR and sustainability issues

Organisation

• Emirates Environmental Group (EEG)

• Sheikh Khalifa Medical Centre, Abu Dhabi Blood Bank

• Emirates Wildlife Society-World Wildlife Fund (EWS-WWF)

• MENA-OECD Regional Taskforce on Responsible

Business Conduct

• Dubai Chamber Centre for Responsible Business

• UAE Genetic Diseases Association

• Emirates Foundation

• Abu Dhabi Sustainability Group

• Regional Blood Centre Al Ain

• Ministry of Social Affairs

• Red Crescent Authority

We hold memberships and affiliations with UAE based

professional and business groups. The memberships provide

us with the opportunity to interact with and enter dialogue on

current issues relating to the UAE business community as well

as providing us with opportunities for learning and updating

knowledge and skills. We also support the groups by making

presentations related to our areas of business and influence.

Memberships provide us with opportunities for learning and

updating knowledge and skills.

Business Group memberships

• British Business Group

• Egyptian Businessmen’s Board

• American Business Group

• International Business Women’s Group

• French Business Group

• Italian Business Group

We signed a Memorandum of Understanding (MoU) with four

UAE based universities to set up permanent offices in the

Student Affairs sections. The purpose is to enable NBAD to

work with various student bodies to increase awareness of

career opportunities at the bank and the businesses within

our group.

Environment

We continued to learn about the increasing risks of global

warming, especially as the debate and issues surrounding

measuring and managing the environmental footprint of the

UAE is increasingly important. We will continue to follow this

closely to learn and better understand potential impacts to

NBAD in the future.

Reduce, Re-use, Recycle

The NBAD Reduce, Re-Use, Recycle initiative continued

throughout 2008. We installed 45 new wastepaper recycle

bins at our Head Office and branches in Abu Dhabi, Al Ain,

Dubai and Sharjah, with a supporting awareness campaign.

The awareness campaign is supported through our intranet and

with the recruitment of Environment Champions representing

departments and branches. The number of Environment

Champions reached 12 by the end of last year.

Collection of wastepaper for recycling has been ongoing for

five years through Emirates Environmental Group, and 2008

saw a significant increase in the quantities of paper being

collected for recycling.

Energy, water and car fleet

We collected data on our usage of water and electricity with

the intention of setting targets to reduce consumption. With

regard to our electricity and fuel consumption for our fleet, we

expect to calculate our carbon emissions in these two areas by

the end of 2009 with the intention of setting reduction targets

to lessen negative environmental impacts.

Waste paper collection 2006 (kg )

Jan Feb March April May June July Aug Sept Oct Nov Dec Total

240 370 320 340 440 620 1510 1910 1420 1690 1500 1320 11680



1260 1300 1480 980 760 2400 2520 2790 880 1440 2320 1190 19320



1150 2260 1730 4050 3100 3200 2280 3836 3358 2060 2810 3079 32913



As a caring and responsible corporate citizen, NBAD sponsors and donates to non-profit organisations, community activities, sport, cultural and professional groups and charities.

The two campaigns for NBAD’s successful Wellness Day and Blood DriveNBAD supported “Donate a Brick” campaign launched by Special Care Centre NBAD organised Employee Wellness Day

NBAD sponsored the 25th Abu Dhabi Ladies Open Golf Championship held at Al Ghazal Golf Club Excellent response for blood donations in front of NBAD’s head office

The two campaigns for NBAD’s suc essful Wellness Day and Blood Drive


NBAD organised Employee Wellness Day

Risk Managementand Basel II Compliance


Basel II Compliance

The Bank views regulatory risk compliance, including Basel

II implementation, from the overall perspective of Enterprise-

wide Risk Management. The Bank has completed ten rounds

of parallel capital computation under the Standardized

approach of Basel II and submitted the findings to Central Bank

of UAE. The Basel II capital charge stands at a comfortable

level of 15.39% as at December 2008 as against the minimum

requirement of 10%.

The Bank is committed to implementing the higher approaches

and has initiated concrete steps in this direction. Specifically,

in 2008, the Bank completed verification of the Corporate

Risk Rating Model along with Moody’s Analytics. The model

was rolled out on the new RA-5 platform across all domestic

and international branches. Internal estimates of Capital

under the foundation IRB approach were also made for the

corporate portfolio.

Conclusion

In line with our ambition to be at the leading edge of

risk management, Risk Management Division remains

committed to:

Enhancing risk models and processes.•

Aligning business objectives with risk appetite of the •

Bank.

Optimizing risk/return decisions through calculation of •

risk-adjusted return of capital.

Strengthening risk infrastructure in line with industry •

best practices.

Helping senior management improve control through •

management reports and risk based monitoring of

credits.

Providing forward looking estimates of Collective •

P r o v i s i o n s , k e e p i n g i n v i e w t h e o p e r a t i n g

environment.

RISK MANAGEMENT AND BASEL II COMPLIANCE

Risk Management continues to be one of the focus areas of your

Bank. The Bank has consistently invested in people, systems

and analytics to keep pace with the business and changing

operating environment.

Risk Management Division (RMD), reporting to the Risk

Management Committee, assists in carrying out the oversight

responsibility of the Board. There are three main independent

functions of the RMD, which are: (i) Credit Underwriting; (ii)

Credit Administration and (iii) Independent Risk Management.

The Credit underwriting function deals with independent

underwriting of domestic, international and the management

and oversight of remedial advances. There is a clear segregation

between the credit approval and independent risk management,

the latter constituted of Credit, Market & Operational Risk,

with a middle office i.e. Credit Administration, straddling

between the two areas, to provide logistical support from an

administrative, systems and compliance perspective.

Operating Environment

The results of severe disruption in the US sub-prime mortgage

market, leading into a global financial crisis were felt across

many credit markets in 2008. This has manifested in the

form of wider credit spreads, higher volatility, tight liquidity in

interbank markets, more constrained debt issuance and lower

investor risk appetite.

Over the past several years, backed by strong economic

growth, the GCC region has enjoyed a positive credit cycle.

Credit spreads and other indicators signal that 2008 is an

inflection point in the credit cycle and banks need to exercise

extreme caution. While NBAD took proactive steps early

in 2007 by concentrating on lending to Sovereign, Public

Sector entities and good quality Corporate clients, the bank

has also progressively increased the provisions for Collective

Impairment by AED 603 million during 2008 to protect the

Bank’s capital.

This challenging environment has led to a more cautious

approach to credit assessment, pricing and ongoing control

in the financial industry. The pace of loan growth witnessed

in the first half of 2008, slowed rapidly in the second half of

2008 and we believe this trend will continue in 2009. Despite

these developments in the operating environment, the Bank’s

liquidity position remains strong as a result of continued

Sovereign support and diversity of institutional funding sources

across tenors, counterparties and geographies.

Risk Infrastructure

The Bank has undertaken several technological initiatives in

the direction of strengthening the risk infrastructure, keeping

with industry best practices. In 2008, the Bank completed

automation of business process workflows related to processing

of Corporate credit applications with the deployment of FACT

(Financial Analysis & Credit Tool).

Risk Management And Basel II Compliance

ConsolidatedFinancial Statements31 December 2008


Independent Auditors’ ReportAs at 31 December 2008

Consolidated Balance SheetAs at 31 December 2008

Report on the consolidated financial s tatements

We have audited the accompanying consolidated financial

statements of National Bank of Abu Dhabi PJSC (the “Bank”)

and its subsidiaries (the “Group”), which comprise the

consolidated balance sheet as at 31 December 2008, and the

consolidated income statement, the consolidated statement

of cash flows and the consolidated statement of changes in

equity for the year then ended, and a summary of significant

accounting policies and other explanatory notes.

Board of Directors’ responsibility for the consolidated financial statements

The Board of Directors’ are responsible for the preparation

and fair presentation of these consolidated financial

statements in accordance with International Financial

Reporting Standards. This responsibility includes: designing,

implementing and maintaining internal control relevant to the

preparation and fair presentation of consolidated financial

statements that are free from material misstatements, whether

due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that

are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these

consolidated financial statements based on our audit. We

conducted our audit in accordance with International Standards

on Auditing. Those standards require that we comply with

relevant ethical requirements and plan and perform the audit

to obtain reasonable assurance whether the consolidated

financial statements are free of material misstatement. An

audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the consolidated financial

statements. The procedures selected depend on our judgment,

including the assessment of the risks of material misstatement

of the consolidated financial statements, whether due to fraud

or error. In making those risk assessments, we consider internal

control relevant to the group’s preparation and fair presentation

of the consolidated financial statements in order to design audit

procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness

of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting principles used

and the reasonableness of accounting estimates made by

management, as well as evaluating the overall presentation

of the consolidated financial statements. We believe that the

audit evidence we have obtained is sufficient and appropriate

to provide a basis for our opinion.

Opinion

In our opinion, the consolidated financial statements present

fairly, in all material respects, the financial position of the Group

as at 31 December 2008, and of its financial performance

and its consolidated cash flows for the year then ended, in

accordance with International Financial Reporting Standards

and comply with the Articles of Association of the Bank and

the UAE Federal Law No. 8 of 1984 (as amended).

Report on other legal and regulatory requirements

As required by the UAE Federal Law No. 8 of 1984 (as

amended), we further confirm that we have obtained all

information and explanations necessary for our audit, that

proper financial records have been kept by the Group and that

the contents of the Chairman’s report which relate to these

consolidated financial statements are in agreement with the

Group’s financial records. We are not aware of any violation

of the above mentioned Law and the Articles of Association

having occurred during the year ended 31 December 2008

which may have had a material adverse effect on the business

of the Group or its financial position.

KPMG

Munther Dajani

Registration No. 268 2 February 2009

2008 2007

Note AED’000 AED’000

AssetsCash and balances with central banks 7 19,432,923 36,399,339

Investments at fair value through profit or loss 8 1,295,641 1,200,725

Due from banks 9 6,788,528 8,158,270

Loans and advances 10 111,764,267 79,729,100

Non-trading investments 11 14,982,756 10,054,224

Other assets 12 9,071,165 3,305,764

Premises and equipment 13 1,319,200 583,296

Total assets 164,654,480 139,430,718

LiabilitiesDue to banks 14 25,796,996 27,041,015

Repurchase agreements with banks 15 4,535,345 5,305,965

Euro commercial paper 16 73,997 105,912

Customers’ deposits 17 103,481,145 81,736,671

Medium-term borrowings 18 8,594,284 7,405,149

Other liabilities 19 4,765,176 4,182,093

147,246,943 125,776,805

Subordinated convertible notes 20 3,050,938 2,439,681

Total liabilities 150,297,881 128,216,486

EquityShare capital 21 1,976,614 1,591,304

Statutory and special reserves 21 3,116,560 1,591,304

Share option scheme 22 7,214 -

Other reserves 21 6,206,335 7,158,698

Subordinated convertible notes - equity component 20 85,408 72,926

Retained earnings 2,964,468 800,000

Total equity 14,356,599 11,214,232

Total liabilities and equity 164,654,480 139,430,718

Nasser Ahmed Khalifa Alsowaidi Michael TomalinChairman Chief Executive

The notes 1 to 39 are an integral part of these consolidated financial statements.

The independent auditors’ report is set out on page 46.


2008 2007


Interest income 23 7,383,170 7,084,126

Interest expense 24 (3,775,605) (4,679,169)

Net interest income 3,607,565 2,404,957

Fee and commission income 1,212,947 932,395

Fee and commission expense (81,640) (47,118)

Net fee and commission income 25 1,131,307 885,277

Net (loss) / gain on investments 26 (193,222) 118,667

Net foreign exchange gain 27 424,039 218,990

Other operating income 331,593 37,713

562,410 375,370

Operating income 5,301,282 3,665,604

General, administration and other operating expenses 28 (1,493,416) (1,054,369)

Profit before net impairment charge and taxation 3,807,866 2,611,235

Impairment charge, net 29 (717,080) (41,690)

Profit before taxation 3,090,786 2,569,545

Overseas income tax expense 30 (72,051) (64,408)

Net profit for the year 3,018,735 2,505,137

Basic earnings per share (AED) 36 1.54 1.30

Diluted earnings per share (AED) 36 1.50 1.30



2008 2007


Cash flows from operating activitiesProfit before taxation 3,090,786 2,569,545Adjustments for:Depreciation 13 82,171 67,992Accreted interest 12,214 7,213Write-offs and impairment charge 835,101 148,432Foreign currency translation adjustment (506,056) 151,384Share option scheme 7,214 - Write back of provisions for loans and advances 29 (74,449) (66,101) 3,446,981 2,878,465Change in investments at fair value through profit or loss (98,167) (792,464)Change in due from banks and central banks 9,590,396 (16,530,194)Change in loans and advances (32,666,575) (22,295,739)Change in other assets (5,646,322) (1,107,154)Change in due to banks (1,244,019) 20,972,133Change in repurchase agreements with banks (770,620) (703,813)Change in customers’ deposits 21,744,474 10,998,772Change in other liabilities 453,225 1,005,653 (5,190,627) (5,574,341)Overseas income tax paid, net of recoveries 19 (76,334) (63,414) Net cash used in operating activities (5,266,961) (5,637,755)

Cash flows from investing activitiesPurchase of non-trading investments (8,632,275) (5,484,196)Proceeds from sale / maturity of non-trading investments 2,982,143 6,047,285Purchase of premises and equipment, net of disposals (818,075) (227,237) Net cash (used in) / from investing activities (6,468,207) 335,852

Cash flows from financing activitiesNet movement of Euro commercial paper (31,915) 105,912Proceeds from medium term borrowings 2,196,158 3,683,829Redemption of medium term borrowings (515,966) - Issue of subordinated convertible notes 20 2,000,000 - Dividends paid 21 (658,871) (489,632) Net cash from financing activities 2,989,406 3,300,109

Net decrease in cash and cash equivalents (8,745,762) (2,001,794)

Cash and cash equivalents at 1 January 24,345,317 26,347,111

Cash and cash equivalents at 31 December 31 15,599,555 24,345,317



Consolidated Income StatementAs at 31 December 2008

Consolidated Statement of Cash FlowsAs at 31 December 2008


1 Legal status and principal activities

National Bank of Abu Dhabi PJSC (the “Bank”) was

established in Abu Dhabi in 1968 with limited liability and

is registered as a Public Joint Stock Company in accordance

with the United Arab Emirates Federal Law No. 8 of 1984

(as amended) relating to Commercial Companies.

Its registered office address is P.O.Box 4, Abu

Dhabi, United Arab Emirates. The consolidated

financial statements as at and for the year ended

31 December 2008 comprise the Bank and its

subsidiaries (the “Group”). The Group is primarily

engaged in corporate, retail, private and investment

banking activities and carries out its operations through

its local and overseas branches and subsidiaries located

in Bahrain, Egypt, France, Oman, Kuwait, Sudan, the

United Kingdom, Switzerland, China and the United

States of America.

The consolidated financial statements were authorised for

issue by the Board of Directors on 2 February 2009.

2 Basis of preparation

(a) Statement of compliance The consolidated financial statements have been prepared

in accordance with the International Financial Reporting

Standards (IFRSs) and the requirements of UAE Federal

Law No. 8 of 1984 (as amended).

(b) Basis of measurement The consolidated financial statements are prepared under

the historical cost basis except for the following:

derivative financial instruments are measured at fair •

value;

investments at fair value through profit or loss are •

measured at fair value;

non-trading investments classified as available for sale •

are measured at fair value;

the carrying values of recognised assets and liabilities •

that are hedged items in fair value and cash flow

hedges, and are otherwise carried at amortised cost, are

adjusted to record changes in fair values attributable to

risks that are being hedged; and

non-financial assets acquired in settlement of loans •

and advances are measured at the lower of their fair

value less costs to sell and the carrying amount of

the loan.

(c) Functional and presentation currency These consolidated financial statements are presented

in United Arab Emirates Dirhams (“AED”), which is the

Bank’s functional currency. Items included in the financial

statements of each of the Bank’s overseas subsidiaries and

branches are measured using the currency of the primary

economic environment in which they operate. These

consolidated financial statements are presented in AED,

which is the Group’s presentation currency. Except as

indicated, information presented in AED has been rounded

to the nearest thousand.

(d) Use of estimates and judgements The preparation of consolidated financial statements

requires management to make judgements, estimates

and assumptions that affect the application of accounting

policies and reported amounts of assets and liabilities,

income and expense. Actual results may differ from these

estimates.

Estimates and underlying assumptions are reviewed on

an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised

and in any future periods affected.

Information about significant areas of estimation

uncertainty and critical judgements in applying accounting

policies that have the most significant effect on the amount

recognised in the consolidated financial statements are

described in note 5.

3 Significant accounting policies

The accounting policies set out below have been applied

consistently to all periods presented in these consolidated

financial statements and have been applied consistently by

Group entities.

(a) Basis of consolidation(i) Subsidiaries

Subsidiaries are entities controlled by the Group. Control

exists when the Group has the power to govern the financial

and operating policies of an entity so as to obtain benefits

from its activities. The financial statements of subsidiaries

are included in the consolidated financial statements

from the date that control commences until the date that

control ceases.

The consolidated financial statements of the Group comprise

the Bank and its fully owned subsidiaries as listed overleaf:

----

--------

--- O

ther

res

erve

s ----

--------

---

Fo

reig

n Su

bord

inat

ed

Sh

are

curr

ency

co

nver

tible

Sh

are

Stat

utor

y Sp

ecia

l op

tion

Gen

eral

Fa

ir v

alue

tr

ansl

atio

n no

tes

- equ

ity

Ret

aine

d

capi

tal

rese

rve

rese

rve

sche

me

rese

rve

rese

rve

rese

rve

com

pone

nt

earn

ings

To

tal

A

ED’0

00

AED

’000

A

ED’0

00

AED

’000

A

ED’0

00

AED

’000

A

ED’0

00

AED

’000

A

ED’0

00

AED

’000

Bal

ance

at 1

Janu

ary

2007

1,

224,

080

715,

400

612,

040

- 5

,926

,879

(2

10,1

49)

14,0

88

72,9

26

650,

000

9,00

5,26

4Fo

reig

n cu

rren

cy tr

ansl

atio

n ad

just

men

t -

-

-

-

-

-

20

,095

-

-

20,0

95N

et m

ovem

ent i

n fa

ir v

alue

res

erve

(not

e 21

) -

-

-

-

-

18

5,76

5 -

-

-

18

5,76

5A

djus

tmen

t for

Dir

ecto

rs’ r

emun

erat

ion

-

-

-

-

-

-

-

-

(8,6

87)

(8,6

87)

Tota

l inc

ome

and

expe

nses

for

the

year

re

cogn

ised

dir

ectly

in e

quity

-

-

-

-

-

18

5,76

5 20

,095

-

(8

,687

)

197,

173

Net

pro

fit fo

r th

e ye

ar

-

-

-

-

-

-

-

-

2,50

5,13

7 2,

505,

137

Tota

l inc

ome

and

expe

nse

for

the

year

-

-

-

-

-

18

5,76

5 20

,095

-

2,

496,

450

2,70

2,31

0D

ivid

end

paid

for

2006

(not

e 21

) -

-

-

-

-

-

-

-

(4

89,6

32)

(489

,632

)D

irec

tors

rem

uner

atio

n -

-

-

-

-

-

-

-

(3

,710

) (3

,710

)B

onus

sha

res

issu

ed (n

ote

21)

367,

224

-

-

-

(367

,224

) -

-

-

-

-

Tr

ansf

er to

res

erve

s -

80

,252

18

3,61

2 -

1,5

89,2

44

-

-

-

(1,8

53,1

08)

-

Bal

ance

at

31 D

ecem

ber

2007

1,

591,

304

795,

652

795,

652

- 7

,148

,899

(2

4,38

4)

34,1

83

72,9

26

800,

000

11,2

14,2

32

Fore

ign

curr

ency

tran

slat

ion

adju

stm

ent

-

-

-

-

-

-

(15,

000)

-

-

(1

5,00

0)N

et m

ovem

ent i

n fa

ir v

alue

res

erve

(not

e 21

) -

-

-

-

-

(6

07,9

27)

-

-

-

(607

,927

)O

ther

adj

ustm

ent

-

-

-

-

-

-

-

-

(1,9

98)

(1,9

98)

Tota

l inc

ome

and

expe

nses

for

the

year

re

cogn

ised

dir

ectly

in e

quity

-

-

-

-

-

(6

07,9

27)

(15,

000)

-

(1

,998

)

(624

,925

)N

et p

rofit

for

the

year

-

-

-

-

-

-

-

-

3,

018,

735

3,01

8,73

5

To

tal i

ncom

e an

d ex

pens

e fo

r th

e ye

ar

-

-

-

-

-

(607

,927

) (1

5,00

0)

-

3,01

6,73

7 2,

393,

810

Opt

ions

gra

nted

to s

taff

(not

e 22

) -

-

-

7,

214

-

-

-

-

-

7,21

4D

irec

tors

rem

uner

atio

n -

-

-

-

-

-

-

-

(7

43)

(743

)

Div

iden

d pa

id fo

r 20

07 (n

ote

21)

-

-

-

-

-

-

-

-

(658

,871

) (6

58,8

71)

Subo

rdin

ated

con

vert

ible

not

e is

sued

-

-

-

-

-

-

-

52

,984

-

52

,984

Con

vers

ion

of s

ubor

dina

ted

c

onve

rtib

le n

otes

(not

e 20

) 55

,874

-

1,

332,

601

-

-

-

-

(40,

502)

-

1,

347,

973

Tran

sfer

to s

tatu

tory

res

erve

-

19

2,65

5 -

-

-

-

-

-

(1

92,6

55)

-

Bon

us s

hare

s is

sued

(not

e 21

) 32

9,43

6 -

-

-

(3

29,4

36)

-

-

-

-

-

Bal

ance

at

31 D

ecem

ber

2008

1,

976,

614

98

8,30

7

2,12

8,25

3

7,21

4 6,

819,

463

(6

32,3

11)

19,1

83

85,4

08

2,96

4,46

8

14,3

56,5

99

The

note

s 1

to 3

9 ar

e an

inte

gral

par

t of t

hese

con

solid

ated

fina

ncia

l sta

tem

ents

.

The

inde

pend

ent a

udito

rs’ r

epor

t is

set o

ut o

n pa

ge 4

6.

Con

solid

ated

sta

tem

ent o

f cha

nges

in e

quity

For

the

year

end

ed 3

1 D

ecem

ber

2008

Notes to the consolidated financial statements


Subsidiaries Country of incorporation

Abu Dhabi International Curacao,

Bank Inc. Netherlands Antilles

Abu Dhabi Financial Abu Dhabi,

Services LLC United Arab Emirates

Abu Dhabi National Abu Dhabi,

Leasing LLC United Arab Emirates

NBAD Trust Company Jersey,

(Jersey) Limited Channel Islands

NBAD Private Bank (Suisse) SA Geneva, Switzerland

Abu Dhabi National Abu Dhabi,

Islamic Finance Company United Arab Emirates

Ample China Holding Limited Hong Kong, China

(ii) Special purpose entities

Special purpose entities are entities that are created to

accomplish a narrow and well defined objective. The

financial statements of special purpose entities are not

included in the Group’s consolidated financial statements

except when the substance of the relationship is that the

Group controls the special purpose entity. Information about

the Group’s special purpose entities is set out in note 38.

(iii) Fund management

The Group manages and administers assets held in trust or

in fiduciary capacity on behalf of investors. The financial

statements of these funds are not included in these

consolidated financial statements. Information about the

Group’s fund management and fiduciary activity is set out

in note 37.

(iv) Transactions eliminated on consolidation

The carrying amount of the Bank’s investment in each

subsidiary and the equity of each subsidiary is eliminated

on consolidation. All significant intra-group balances, and

unrealised income and expenses arising from intra-group

transactions are eliminated on consolidation.

(b) Financial assets and liabilities(i) Recognition

The Group initially recognises loans and advances,

customers’ deposits, medium term and subordinated debt

on the date that they are originated. All other financial

assets and liabilities are initially recognised on the balance

sheet when, the Group becomes a party to the contractual

provisions of the instrument.

All regular way purchases and sales of financial assets are

recognised on the settlement date, i.e. the date the asset is

delivered to or received from the counterparty. Regular way

purchases or sales of financial assets are those that require

delivery of assets within the time frame generally established

by regulation or convention in the market place.

(ii) Derecognition

The Group derecognises a financial asset when the

contractual rights to the cash flows from the financial

asset expire, or when it transfers the rights to receive the

contractual cash flows on the financial asset in a transaction

in which substantially all the risks and rewards of ownership

of the financial asset are transferred.

The Group derecognises a financial liability when its

contractual obligations are discharged or cancelled or expire.

The Group enters into transactions whereby it transfers

assets recognised on its balance sheet, but retains

either all or substantially all of the risks and rewards

of the transferred assets or a portion of them. In such

transactions, the transferred assets are not derecognised

from the balance sheet. Transfers of assets with retention

of all or substantially all risks and rewards include

repurchase transactions (Refer note 15).

The Group also derecognises certain assets when it

writes off balances pertaining to the assets deemed to be

uncollectible (Refer note 4).

(iii) Designation at fair value through profit or loss

The Group has designated financial assets and liabilities at

fair value through profit or loss when either:

the assets or liabilities are managed, evaluated and reported

internally on a fair value basis; or

the designation eliminates or significantly reduces an

accounting mismatch which would otherwise arise.

(iv) Held for trading

Trading assets are those assets that the group acquires

for the purpose of selling in the near term, or holds as

part of a portfolio that is managed together for short-

term profit taking.

Notes to the consolidated financial statements Notes to the consolidated financial statements

Trading assets are initially recognised and subsequently

measured at fair value in the balance sheet with transaction

costs taken directly to the consolidated income statement.

All changes in fair value are recognised as part of net trading

income in the consolidated income statement. Trading assets

are not reclassified subsequent to their initial recognition.

(v) Designation as available for sale

The Group has non-derivative financial assets designated

as available for sale when these are not classified as loans

and receivables, held-to-maturity investments or financial

assets at fair value through profit or loss.

(vi) Offsetting

Financial assets and liabilities are set off and the net amount

presented in the balance sheet when, and only when, the

Group has a legal right to set off the amounts and intend

either to settle on a net basis, or to realise the asset and

settle the liability simultaneously.

(vii) Amortised cost measurement

The amortised cost of a financial asset or liability is the

amount at which the financial asset or liability is measured

at initial recognition, minus principal repayments, plus

or minus the cumulative amortisation using the effective

interest method of any difference between the initial

amount recognised and the maturity amount, minus any

reduction for impairment.

(viii) Fair value measurement

The determination of fair values of financial assets and

liabilities is based on quoted market prices or dealer

quotations for financial instruments traded in active

markets. Quoted bid prices are used for financial assets

and quoted ask prices are used for financial liabilities. For

financial instruments not traded on an active market, fair

value is determined based on recent transactions or brokers’

quotes. The Group uses widely recognised valuation

models for determining the fair value of derivative financial

instruments such as interest and currency swaps.

(ix) Identification and measurement of impairment

An assessment is made at each balance sheet date and

periodically during the year to determine whether there is

any objective evidence that financial assets, not carried at

fair value through profit or loss, are impaired. Financial

assets are impaired when objective evidence indicates that

a loss event has occurred after the initial recognition of the

asset and that the loss event has an impact on the future

cash flows of the asset that can be estimated reliably.

The Group considers evidence of impairment at both

a specific asset and collective level. All individually

significant assets are assessed for specific impairment. All

individually significant assets found not to be specifically

impaired are then collectively assessed for any impairment

that has been incurred but not yet identified. Assets that

are not individually significant are collectively assessed

for impairment by grouping together financial assets with

similar risk characteristics.

In assessing collective impairment the Group uses

statistical modelling of historical trends of the probability

of default, timing of recoveries and the amount of loss

incurred, adjusted for management’s judgement as to

whether current economic and credit conditions are such

that the actual losses are likely to be greater or less than

suggested by historical modelling. Default rates, loss rates

and the expected timing of future recoveries are regularly

benchmarked against actual outcomes to ensure that they

remain appropriate.

Impairment losses on financial assets carried at

amortised cost are measured as the difference between

the carrying amount of the financial asset and the

present value of estimated cash flows discounted at

the original effective interest rate. Impairment losses

are recognised in the consolidated income statement

and reflected in an allowance account against such

financial assets. When a subsequent event causes the

amount of impairment loss to decrease, the decrease in

impairment loss is reversed through the consolidated

income statement.

Impairment losses on available for sale investment securities

are recognised by transferring the difference between

the amortised acquisition cost and current fair value out

of equity to the consolidated income statement. When

a subsequent event causes the amount of impairment

loss on available-for-sale debt security to decrease, the

impairment loss is reversed through the consolidated

income statement.

Impairment losses on an unquoted equity instrument

that is carried at cost because its fair value cannot

be reliably measured, is measured as the difference

between the carrying amount of the financial asset

and the present value of estimated future cash flows

discounted at the current market rate of return for a

similar financial asset. Such impairment losses shall

not be reversed.


Buildings 20 years

Office furniture and equipment 1 to 5 years

Alterations to premises 4 years

Safes 10 to 20 years

Computer systems and equipment 3 to 7 years

Vehicles 3 years

Depreciation methods, useful lives and residual values are

reassessed at the reporting date.

(iii) Impairment

The carrying amounts are reviewed at each balance sheet

date for indication of impairment. If any such indication

exists then the asset’s recoverable amount is estimated. An

impairment loss is recognised in the consolidated income

statement to the extent that carrying values do not exceed

the recoverable amounts.

(j) Collateral pending sale Non-financial assets acquired in settlement of loans and

advances are recorded as assets held for sale and reported

in “Other assets”. The asset acquired is recorded at the

lower of its fair value less costs to sell and the carrying

amount of the loan (net of impairment allowance) at the

date of exchange. No depreciation is provided in respect

of assets held for sale. Any subsequent write-down of the

acquired asset to fair value less costs to sell is recorded

as an impairment loss and included in the consolidated

income statement. Any subsequent increase in the fair

value less costs to sell, to the extent this does not exceed

the cumulative impairment loss, is recognised in the

consolidated income statement. The Group’s collateral

disposal policy is in line with the respective regulatory

requirement of the regions in which the Group operates.

(k) Due to banks, customers’ deposits, Euro commercial paper and medium-term borrowings

Due to banks, customer deposits and medium-term

borrowings are initially recognised at their fair value plus

transaction costs and subsequently measured at their

amortised cost using the effective interest method.

(l) Repurchase agreements Assets sold with a simultaneous commitment to repurchase

at a specified future date (repos) are not derecognised. The

liability to the counterparty for amounts received under

these agreements is shown as repurchase agreements with

banks in the consolidated balance sheet. The difference

between sale and repurchase price is treated as interest

expense and accrued over the life of the repurchase

agreement and charged to the consolidated income

statement using the effective interest method.

(m) Subordinated convertible notes Subordinated convertible notes that can be converted into

share capital at the option of the holder, where the number

of shares issued do not vary with changes in their fair value,

are accounted for as compound financial instruments. The

equity component of the subordinated convertible notes

is calculated as the excess of issue proceeds over the

present value of the future interest and principal payments,

discounted at the market rate of interest applicable to

similar liabilities that do not have a conversion option.

(n) Share option scheme The grant date fair value of options granted to staff is

recognised as staff cost, with a corresponding increase

in equity, over the period in which the staff become

unconditionally entitled to the options. The amount

recognised as an expense is adjusted to reflect the number

of share options for which the related service conditions

are expected to be met, such that the amount ultimately

recognised as an expense is based on the number of share

options that do meet the related service and non-market

performance conditions at the vesting date.

The fair value of the amount payable to staff in respect

of the share appreciation rights that are settled in cash is

recognised as an expense with a corresponding increase in

liabilities, over the period in which the employees become

unconditionally entitled to payment. The liability is

remeasured at each reporting date and at settlement date.

Any changes in the fair value of the liability are recognised

as staff costs in consolidated income statement.

(o) Interest Interest income and expense are recognised in the

consolidated income statement using the effective interest

method. The effective interest rate is the rate that exactly

discounts the estimated future cash flows through the

expected life of the financial asset or liability to the carrying

amount of the financial asset or liability.

The calculation of the effective interest rate includes all fees

paid or received that are an integral part of the effective

interest rate. Transaction costs include incremental costs

that are directly attributable to the acquisition or issue of a

financial asset or liability.

(c Cash and cash equivalents For the purpose of consolidated statement of cash flows,

cash and cash equivalents comprise cash, balances with

central banks and due from banks with original maturity of

three months or less from the date of placement.

Cash and cash equivalents are carried at amortised cost in

the balance sheet.

(d) Investments at fair value through profit or loss These are financial assets classified as held for trading

or designated as such upon initial recognition. These

are initially recognised and subsequently measured at

fair value with transaction costs taken directly to the

consolidated income statement. All related realised

and unrealised gains or losses are included in net

investment income.

(e) Due from banks These are stated at amortised cost, less any allowance for

impairment.

(f) Loans and advances Loans and advances are non-derivative financial assets

with fixed or determinable payments that are not quoted in

an active market and that the Group does not intend to sell

immediately or in the near term.

These are initially measured at fair value (being the

transaction price at inception) plus incremental direct

transaction costs and subsequently measured at amortised

cost using the effective interest method, adjusted for

effective fair value hedges, net of interest suspended and

provisions for impairment.

(g) Non-trading investments Non-trading investments are classified as available for sale

and are initially recognised at fair value plus incremental

transaction costs directly attributable to the acquisition.

After initial recognition, these investments are remeasured

at fair value. For investments which are not part of an

effective hedge relationship, unrealised gains or losses

are reported as a separate component of equity until

the investment is derecognised or until the investment is

determined to be impaired, at which time the cumulative

gain or loss previously recognised in equity, is included

in the consolidated income statement for the period.

For investments which are part of an effective fair value

hedge relationship, any unrealised gain or loss arising

from a change in fair value is recognised directly in the

consolidated income statement to the extent of the changes

in fair value being hedged.

For the purpose of recognising foreign exchange gains

and losses, a monetary available-for-sale financial asset is

treated as if it were carried at amortised cost in the foreign

currency. Accordingly, for such a financial asset, exchange

differences are recognised in the consolidated income

statement.

For unquoted equity investments where fair value cannot

be reliably measured, these are carried at cost less provision

for impairment in value. Upon subsequent derecognition,

the profit or loss on sale is recognised in the consolidated

income statement for the period.

(h) Reverse repurchase agreements Assets purchased with a simultaneous commitment

to resale at a specified future date (reverse repos) are

not recognised. The amount paid to the counterparty

under these agreements is shown as reverse repurchase

agreements within “Other assets” in the consolidated

balance sheet. The difference between purchase and

resale price is treated as interest income and accrued over

the life of the reverse repurchase agreement and charged

to the consolidated income statement using the effective

interest method.

(i) Premises and equipment(i) Recognition and measurement

All items of premises and equipment are measured at

cost less accumulated depreciation and impairment

losses, if any. Capital projects in progress are initially

recorded at cost, and upon completion are transferred to

the appropriate category of premises and equipment and

thereafter depreciated.

Cost includes expenditures that are directly attributable

to the acquisition of the asset. Purchased software that

is integral to the functionality of the related equipment is

capitalised as part of that equipment.

(ii) Depreciation

Depreciation is recognised in the consolidated income

statement on a straight-line basis over the estimated useful

lives of all premises and equipment. Freehold land and

capital work in progress are not depreciated.

The estimated useful lives of assets for the current and

comparative period are as follows:



A deferred tax asset is recognised only to the extent that it is

probable that future taxable profits will be available against

which the asset can be utilised. The carrying amount of

deferred tax assets is reviewed at each balance sheet date

and reduced to the extent that it is no longer probable that

sufficient taxable profit will be available to allow all or part

of the deferred tax asset to be utilised.

(t) Derivative financial instruments and hedging Derivatives are initially recognised, and subsequently

measured at fair value with transaction costs taken directly

to the consolidated income statement. The fair value of a

derivative is the equivalent of the unrealised gain or loss

from marking to market the derivative or using valuation

techniques, mainly discounted cash flow models.

Derivatives with positive fair values (unrealised gains) are

included in other assets and derivatives with negative fair

values (unrealised losses) are included in other liabilities.

The method of recognising the resulting fair value gains

or losses depends on whether the derivative is held for

trading, or is designated as a hedging instrument and, if so,

the nature of the risk being hedged. All gains and losses

from changes in fair value of derivatives held for trading are

recognised in the consolidated income statement. When

derivatives are designated as hedges, the Group classifies

them as either: (i) fair value hedges which hedge the

exposure to changes in the fair value of a recognised asset

or liability; (ii) cash flow hedges which hedge exposure

to variability in cash flows that is either attributable to a

particular risk associated with a recognised asset or liability.

Hedge accounting is applied to derivatives designated as

hedging instruments in a fair value or cash flow, provided

certain criteria are met.

Hedge accounting

It is the Group’s policy to document, at the inception of a

hedge, the relationship between hedging instruments and

hedged items, as well as risk management objective and

strategy. The policy also requires documentation of the

assessment, at inception and on an ongoing basis, of the

effectiveness of the hedge.

Hedge accounting is discontinued when the hedging

instrument expires or is sold, terminated or exercised, or

no longer qualifies for hedge accounting.

Fair value hedge

In relation to fair value hedges, any gain or loss from

remeasuring the hedging instrument to fair value, as well

as related changes in fair value of the item being hedged,

are recognised immediately in the consolidated income

statement.

Cash flow hedge

In relation to effective cash flow hedges, the gain or loss

on the hedging instrument is recognised initially in equity

and transferred to the consolidated income statement in

the period in which the hedged transaction impacts the

consolidated income statement. Gain or loss, if any, relating

to the ineffective portion is recognised immediately in the

consolidated income statement. If the hedged transaction

is no longer expected to occur, the net cumulative gain or

loss recognised in equity is transferred to the consolidated

income statement.

Other derivatives

All gains and losses from changes in the fair values of

derivatives that do not qualify for hedge accounting or

are not designated as such are recognised immediately in

the consolidated income statement as a component of net

investment income.

(u) Provisions A provision is recognised if, as a result of a past event,

the Group has a present legal or constructive obligation

that can be estimated reliably, and it is probable that an

outflow of economic benefits will be required to settle

the obligation. Where the effect of time value of money

is material, provisions are determined by discounting the

expected future cash flows, at a pre-tax rate, that reflects

current market assessments of the time value of money

and, where appropriate, the risks specific to the liability.

(v) Staff terminal benefits UAE operations: UAE nationals employed by the Group

are registered in the scheme managed by Abu Dhabi

Retirement Pensions & Benefits Fund in accordance

with Law number (2) of 2000. Staff terminal benefits for

expatriate employees are accounted for on the basis of

their accumulated services at the reporting date and in

accordance with the Group’s internal regulations, which

comply with the UAE federal labour law.

An actuarial valuation is not performed on staff terminal

and other benefits as the net impact of the discount rate

and future salary and benefits level on the present value of

the benefits obligation are not expected by management to

be significant.

Interest income and expense presented in the consolidated

income statement include:

interest on financial assets and liabilities at amortised cost

on an effective interest basis.

interest on available-for-sale investment securities on an

effective interest basis.

interest on held for trading securities.

(p) Fee and commission The Group earns fee and commission income from

a diverse range of services provided to its customers.

Recognition of revenue for fee and commission income

depends on the purposes for which the fees are assessed

and the basis of accounting for the associated financial

instrument. Fee and commission income is accounted

for as follows:

income which forms an integral part of the effective •

interest rate of a financial instrument is recognised as

an adjustment to the effective interest rate (for example,

loan commitment fees) and recorded in “Interest

income”;

income earned from the provision of services is •

recognised as revenue as the services are provided (for

example, loan processing fees, investment management

fees and loan syndication fees); and

income earned on the execution of a significant act is •

recognised as revenue when the act is completed (for

example, commission on the allotment of shares to a

client, placement fees for arranging a loan between the

borrower and an investor).

Fee and commission expense relates mainly to transaction

and service fees which are expensed as the services are

received.

(q) Net investment income Net investment income comprise gains less losses relating

to realised and unrealised gains and losses on investments

at fair value through profit or loss, realised gains and

losses on non-trading investments and dividend income.

Dividend income is recognised when the right to receive

payment is established.

(r) Foreign currency (i) Foreign currency transactions

Transactions in foreign currencies are translated into the

respective functional currencies of the Group entities at

spot exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign

currencies at the reporting date are retranslated to the

functional currency at the spot exchange rates at the

balance sheet date. The foreign currency gain or loss

on monetary items is the difference between amortised

cost in the functional currency at the beginning of the

period, adjusted for effective interest and payments during

the period, and the amortised cost in foreign currency

translated at the exchange rate at the end of the period.

Foreign currency differences arising on retranslation are

recognised in profit or loss.

(ii) Foreign operations

The activities of subsidiaries and branches based outside

the UAE are not deemed an integral part of the head

office operations, as they are financially and operationally

independent of the head office. The assets and liabilities

of the subsidiaries and overseas branches are translated

into UAE Dirhams at rates of exchange at the balance sheet

date. Income and expense items are translated at average

rates, as appropriate, at the dates of transactions. Exchange

differences (including those on transactions which hedge

such investments) arising from retranslating the opening

net assets, are taken directly to foreign currency translation

adjustment account in equity.

(s) Overseas income tax Income tax expense is provided for in accordance with fiscal

regulations of the respective countries in which the Group

operates and is recognised in the consolidated income

statement. Income tax expense is the expected tax payable

on the taxable income for the year, using tax rates enacted

or substantively enacted at the balance sheet date and any

adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability

method on all temporary differences between the carrying

amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary

differences: the initial recognition of goodwill, the initial

recognition of assets or liabilities in a transaction that is not a

business combination and that affects neither accounting nor

taxable profit or loss, and differences relating to investments

in subsidiaries to the extent that they probably will not

reverse in the foreseeable future. Deferred tax is measured

at the tax rates that are expected to apply to the period when

the asset is realised or the liability is settled, based on laws

that have been enacted at the balance sheet date.



Any pre-existing interest in an acquiree will be •

measured at fair value, with the related gain or loss

recognised in profit or loss.

Any non-controlling (minority) interest will be measured •

at either fair value, or at its proportionate interest in the

identifiable assets and liabilities of an acquiree, on a

transaction-by-transaction basis.

Revised IFRS 3, which becomes mandatory for the Group’s

2010 consolidated financial statements, will be applied

prospectively and therefore there will be no impact on

prior periods in the Group’s 2010 consolidated financial

statements.

IFRS 8 Operating Segments introduces the “management

approach” to segment reporting. IFRS 8, which becomes

mandatory for the Group’s 2009 consolidated financial

statements, will require a change in the presentation and

disclosure of segment information based on the internal

reports that are regularly reviewed by the Group’s “chief

operating decision maker” in order to assess each segment’s

performance and to allocate resources to them. Currently

the Group presents segment information in respect of its

business and geographical segments (see note 35). This

standard will have no effect on the Group’s reported

total profit or loss or equity. The Group is currently in the

process of determining the potential effect of this standard

on the Group’s segment reporting.

Revised IAS 1 Presentation of Financial Statements (2007)

introduces the term “total comprehensive income,” which

represents changes in equity during a period other than

those changes resulting from transactions with owners in

their capacity as owners. Total comprehensive income may

be presented in either a single statement of comprehensive

income (effectively combining both the income statement

and all non-owner changes in equity in a single statement),

or in an income statement and a separate statement of

comprehensive income. Revised IAS 1, which becomes


statements, is expected to have a significant impact on the

presentation of the consolidated financial statements as

the Group plans to provide total comprehensive income in

a single statement of comprehensive income for its 2009

consolidated financial statements.

Revised IAS 23 Borrowing Costs removes the option

to expense borrowing costs and requires that an entity

capitalise borrowing costs directly attributable to the

acquisition, construction or production of a qualifying asset

as part of the cost of that asset. Revised IAS 23 will become


statements and will constitute a change in accounting

policy for the Group. In accordance with the transitional

requirements, the Group will apply the revised IAS 23

to qualifying assets for which capitalisation of borrowing

costs commences on or after the effective date.

Therefore there will be no impact on prior periods in the

Group’s 2009 consolidated financial statements.

Amended IAS 27 Consolidated and Separate Financial

Statements (2008) requires accounting for changes in

ownership interests in a subsidiary that occur without

loss of control, to be recognised as an equity transaction.

When the Group loses control of a subsidiary, any interest

retained in the former subsidiary will be measured at fair

value with the gain or loss recognised in profit or loss. The

amendments to IAS 27, which become mandatory for the

Group’s 2010 consolidated financial statements, are not

expected to have a significant impact on the consolidated

financial statements.

Amendments to IAS 32 and IAS 1 Presentation of Financial

Statements – Puttable Financial Instruments and Obligations

Arising on Liquidation require puttable instruments and

instruments that impose on the entity an obligation to

deliver to another party a pro rata share of the net assets

of the entity only on liquidation to be classified as equity

if certain conditions are met. The amendments, which

become mandatory for the Group’s 2009 consolidated

financial statements with retrospective application

required, are not expected to have any significant impact

on the consolidated financial statements.

The International Accounting Standards Board made

certain amendments to existing standards as part of its

first annual improvements project. The effective dates

for these amendments vary by standard and most will

be applicable to the Group’s 2009 consolidated financial

statements. The Group does not expect these amendments

to have any significant impact on the consolidated financial

statements.

Amendments to IAS 39 Financial Instruments: Recognition

and Measurement – Eligible Hedged Items clarifies the

application of existing principles that determine whether

specific risks or portions of cash flows are eligible for

designation in a hedging relationship. The amendments

will become mandatory for the Group’s 2010 consolidated

Foreign operations: the Group provides for staff terminal

benefits for its employees based overseas in accordance

with the applicable regulations.

(w) Directors’ remuneration In accordance with the Ministry of Economy and Commerce

interpretation of Article 119 of Federal Law No. 8 of 1984

(as amended), Directors’ remuneration has been treated as

an appropriation from equity.

(x) Fiduciary activities Assets held in trust or in a fiduciary capacity are not treated

as assets of the Group and, accordingly, are not included in

these consolidated financial statements.

(y) Financial guarantees Financial guarantees are contracts that require the Group

to make specified payments to reimburse the holder for

a loss it incurs because a specified party fails to meet its

obligation when due in accordance with the contractual

terms.

Financial guarantee contracts which were previously

asserted explicitly as insurance contracts continue to be

accounted as such under IFRS 4.

For other financial guarantee contracts, financial guarantees

are initially recognised at their fair value (which is the

premium received on issuance). The received premium

is amortised over the life of the financial guarantee. The

guarantee liability is subsequently carried at the higher

of this amortised amount and the present value of any

expected payment (when a payment under the guarantee

has become probable). The premium received on these

financial guarantees is included within other liabilities.

(z) Earnings per share The Group presents basic and diluted earnings per share

(EPS) data for its ordinary shares. Basic EPS is calculated

by dividing the profit or loss attributable to ordinary

shareholders of the Bank by the weighted average number

of ordinary shares outstanding during the year. Diluted EPS

is determined by adjusting the profit or loss attributable to

ordinary shareholders and the weighted average number

of ordinary shares outstanding for the effects of all dilutive

potential ordinary shares, which comprise subordinated

convertible notes and share options granted to staff.

(aa) Segment reporting A segment is a distinguishable component of the Group

that is engaged either in providing products or services

(business segment), or in providing products or services

within a particular economic environment (geographical

segment), which is subject to risks and rewards that are

different from those of other segments. The Group’s primary

format for segment reporting is based on business segments.

(ab) Lease payments Payments made under operating leases are recognised in

the consolidated income statement on a straight-line basis

over the term of the lease. Lease incentives received are

recognised as an integral part of the total lease expense,

over the term of the lease.

(ac) New standards and interpretations not yet adopted A number of new standards, amendments to standards and

interpretations are not yet effective for the year ended 31

December 2008, and have not been applied in preparing

these consolidated financial statements:

IFRIC 13 Customer Loyalty Programmes addresses the

accounting by entities that operate or otherwise participate

in customer loyalty programmes. IFRIC 13 becomes


statements and will be applicable retrospectively. The

Group is currently in the process of evaluating the potential

effect of this interpretation.

Amendment to IFRS 2 Share-based Payment – Vesting

Conditions and Cancellations clarifies the definition

of vesting conditions, introduces the concept of non-

vesting conditions, requires non-vesting conditions to

be reflected in grant-date fair value and provides the

accounting treatment for non-vesting conditions and

cancellations. The amendments to IFRS 2 will become


statements, with retrospective application. The Group is

currently in the process of evaluating the potential effect

of this amendment.

Revised IFRS 3 Business Combinations (2008) incorporates

the following changes that are likely to be relevant to the

Group’s operations:

The definition of a business has been broadened, •

which may result in more acquisitions being treated as

business combinations.

Contingent consideration will be measured at fair value, •

with subsequent changes in fair value recognised in

profit or loss.

Transaction costs, other than share and debt issue •

costs, will be expensed as incurred.

Notes to the consolidated financial statementsNotes to the consolidated financial statements


iii) Operational Risk Management Committee (ORMC):

The primary objective of ORMC is to steer and align

the operational risk management activities in the

bank. ORMC acts as the central point in co-ordinating

various efforts and initiatives that relate to operational

risk management including alignment with other

operational risk mitigating strategies such as Business

Continuity Management, Information Securities, Anti

Money Laundering, Process improvement, Internal

Audit. The ORMC is the main source of operational

risk management input for RMC.

A separate Risk Management Division (RMD), reporting

to the Risk Management Committee, assists in carrying

out the oversight responsibility of the Board. There are

three main independent functions of the RMD, which

are: (i) Credit Underwriting; (ii) Credit Administration

and (iii) Independent Portfolio Risk Management. The

Credit underwriting function deals with independent

underwriting of domestic, international and remedial

advances. There is clear segregation between the

credit approval and independent risk management,

with a middle office straddling between the two areas,

to provide logistical support from an administrative,

systems and compliance perspective.

All risk management policies are reviewed and

approved regularly by the relevant committee of the

Board and / or management to reflect changes in

market conditions, products and services offered.

(b) Credit risk Credit risk is the risk that a customer or counterparty to

a financial asset fails to meet its contractual obligations

and cause the Group to incur a financial loss. It arises

principally from the Group’s loans and advances, due from

banks and non-trading investments.

For risk management purposes, credit risk arising on trading

investments is managed independently, and reported as a

component of market risk exposure.

Management of credit risk

The Group’s credit risk management framework includes:

Establishment of authorisation structure and limits for •

the approval and renewal of credit facilities;

Reviewing and assessing credit exposures in accordance •

with authorisation structure and limits, prior to facilities

being committed to customers. Renewals and reviews

of facilities are subject to the same review process;

Diversification of lending and investment activities;•

Limiting concentrations of exposure to industry sectors, •

geographic locations and counterparties; and

Reviewing compliance, on an ongoing basis, with •

agreed exposure limits relating to counterparties,

industries and countries and reviewing limits in

accordance with risk management strategy and

market trends.

The RMC is responsible for sanctioning high value credits

and the Group Credit Committee is responsible for the

formulation of credit policies and processes in line with

growth, risk management and strategic objectives.

The Group uses an internal risk rating system to assess

the credit quality of borrowers and counterparties. Each

exposure in the Sovereign, Banks and Corporate asset

classes is assigned a rating. The risk rating system has 11

grades, further segregated into 24 notches. Grades 1-7 are

performing, Grade 8 is Other Loans Especially Mentioned

(OLEM) and Grades 9-11 are non – performing each with a

rating description.

For Sovereign and Banks, rating grades are mapped to •

Long-Term External Credit Assessment Agency Ratings.

For Corporate, these are mapped to an Internal Rating •

Based (IRB) expert system, tuned for GCC conditions.

Each grade in the rating system is linked to a statistical •

Probability of Default (PD).

The risk rating system plays a significant role in efficient use

of credit risk measurement and management including:

Risk based pricing and determination of Risk adjusted •

return on capital

Risk based monitoring (Frequency and intensity of •

monitoring)

Determining risk based delegation of powers at various •

sanction authority levels

Impairment testing•

In due course the rating is also designed towards •

estimation of regulatory capital as per Basel II

The rating system is subject to annual review and

verification process.

Retail lending business is governed by the product

programs vetted by the risk management department and

employs credit scoring technique to process small scale,

large volume credit decisions. The scores are combined

with management judgement to ensure effective ongoing

process of approval, review and enhancement.

financial statements, with retrospective application

required. The Group is currently in the process of evaluating

the potential effect of this amendment.

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

clarifies that:

net investment hedging can be applied only to foreign •

exchange differences arising between the functional

currency of a foreign operation and the parent entity’s

functional currency and only in an amount equal to or

less than the net assets of the foreign operation

the hedging instrument may be held by any entity •

within the group except the foreign operation that is

being hedged

on disposal of a hedged operation, the cumulative gain •

or loss on the hedging instrument that was determined

to be effective is reclassified to profit or loss.

The Interpretation allows an entity that uses the step-

by-step method of consolidation an accounting policy

choice to determine the cumulative currency translation

adjustment that is reclassified to profit or loss on disposal

of a net investment as if the direct method of consolidation

had been used. IFRIC 16, which becomes mandatory for

the Group’s 2009 consolidated financial statements, applies

prospectively to the Group’s existing hedge relationships

and net investments. The Group is currently in the process

of evaluating the potential effect of this Interpretation.

4 Financial risk management

(a) Introduction and overview The Group has exposure to the following risks from

financial instruments:

credit risk•

liquidity risk•

market risks•

operational risks•

This note presents information about the Group’s exposure

to each of the above risks, the Group’s objectives, policies

and processes for measuring and managing risk, and the

Group’s management of capital.

Risk management framework

The Board of Directors (the “Board”) has overall

responsibility for the establishment and oversight of

the Group’s risk management framework and they

are assisted by three board committees and three

management committees.

Board Committees:

a) Risk Management Committee (RMC), comprising

members from the Board, is responsible for

recommending and setting the Group’s risk strategy

and policy guidelines, and thereafter monitor and

adherence. The RMC is also set-up to monitor the

Group’s credit, operational and market risks, to take

credit decisions above management’s discretionary

powers and to set market risk limits under which the

Group’s management operates.

b) Remedial Advances Committee (RAC) identifies,

monitors and takes corrective action on impaired

credits including restructured loans of the Group. The

RAC reports to the RMC for impaired amounts that

exceed its delegation authority.

c) Audit Committee (AC) is responsible for monitoring

compliance with the Group’s risk management policies

and procedures, and for reviewing the adequacy of

the risk management framework. The Group AC is

assisted in these functions by the Audit and Compliance

Division

Management committees:

The Risk Management Committee is set up as follows:

i) Assets and Liabilities Committee (ALCO);

ii) Group Credit Committee (GCC); and

iii) Operational Risk Management Committee (ORMC).

The execution responsibilities are delegated to the

management committees, which are responsible for

implementing the risk management framework. The major

function of the three management committees is given

below:

i) Asset and Liability Committee (ALCO): The principle

aim of ALCO is to achieve sustainable and stable

profits within a framework of acceptable financial risks,

which includes liquidity risk, interest rate risk, foreign

exchange risk and capital management.

ii) Group Credit Committee (GCC) is responsible for

approving credit proposals under authority delegated

by the Board. Credit proposals exceeding the authority

of the GCC are referred to the RMC. The GCC also

recommends credit policy and strategy issues and

periodically monitors the credit portfolio of the Group.

The provisioning for the assets also forms part of the

GCC function. The GCC in turn delegates authority to

divisional credit committees.

Notes to the consolidated financial statementsNotes to the consolidated financial statements


Credit risk monitoring is performed at various levels:

Monitoring of risk quality (Obligor level): The Group i)

has a process for risk rating review relative to initial

rating grade bands. More frequent reviews are made

for the poorer credits and less frequent reviews for the

superior credits. The Group has a process of defining

and reporting all the potential problem account.

Monitoring of risk quality (Portfolio Level): Group ii)

monitors the existing portfolio based on the

economic sectors, industry, geography, ratings and

business lines. These portfolio reports are generated

periodically and senior management is informed of

the same.

Monitoring of past dues on principal and interest: iii)

All the past dues on principal and interest on loans

and advances portfolio of the Group are reported

periodically to the senior management. Measures to

realise the accounts are initiated and close follow up

is done.

Monitoring of excess over limits: Group has a policy iv)

of monitoring all excesses over limits. The monitoring

reports are submitted to the senior management and

processes are initiated to realise the accounts.

Monitoring of potential loss accounts (OLEM): This v)

category comprises of accounts where principal or

interest are past due for more than 30 days or accounts

which show some potential weakness in the borrower’s

financial position and credit worthiness, which requires

greater follow-up and monitoring.

In addition, the Group manages the credit exposure by

obtaining security where appropriate and limiting the duration

of exposure. In certain cases, the Group may also close out

transactions or assign them to other counterparties to mitigate

credit risk. Credit risk in respect of derivative financial

instruments is limited to those with positive fair values.

Regular audits of business units and Group credit processes

are undertaken by Internal Audit and Compliance Division.


4 Financial risk management (continued)

(b) Credit risk (continued)

Impairment:

The Group measures its exposure to credit risk by reference to the gross carrying amount of financial assets less amounts offset,

interest suspended and impairment losses, if any.

Due from Banks Loans and advances Non-trading investments 2008 2007 2008 2007 2008 2007 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

Individually impaired

Substandard - - 207,580 87,451 - -

Doubtful 1,157 1,369 1,101,640 936,109 20,055 20,055

Loss - - 1,673,829 1,757,232 - -

Gross amount 1,157 1,369 2,983,049 2,780,792 20,055 20,055

Interest suspended - - (1,911,304) (1,921,867) - -

Specific allowance

for impairment (1,157) (1,369) (701,698) (665,428) (16,712) (16,712)

Carrying amount - - 370,047 193,497 3,343 3,343

Past due but not impaired

Watch list - overdue

by less than 90 days*

Carrying amount - - 454,312 192,464 - -

Neither past due nor impaired 6,788,528 8,158,270 111,787,993 79,587,842 14,979,413 10,050,881

Collective allowance

for impairment - - (848,085) (244,703) - -

Carrying amount 6,788,528 8,158,270 111,764,267 79,729,100 14,982,756 10,054,224

* The Group’s policy is to classify loans and advances past due for more than 90 days as substandard, which comply with the

Central Bank of the UAE requirements.




The Group monitors concentrations of credit risk by industry sector, counterparty and geographic location. An analysis of

concentrations of credit risk at the reporting date is shown below:

Loans and advances

2008 2007 AED’000 AED’000

Carrying amount 111,764,267 79,729,100

Concentration by industry sector:

Agriculture 151,822 100,384

Energy 10,587,202 8,306,231

Manufacturing 7,214,596 4,789,738

Construction 7,347,252 3,789,815

Real estate 16,991,214 9,818,503

Trading 7,815,420 5,278,832

Transport 6,365,725 5,166,806

Banks 991,587 988,885

Other financial institutions 11,938,702 6,629,115

Services 8,960,480 4,973,929

Government 13,802,226 15,247,429

Personal loans for consumption 11,134,210 7,778,990

Personal loans others 11,503,240 9,094,990

Others 421,677 597,451

115,225,353 82,561,098

Less: allowance for impairment (1,549,782) (910,131)

Less: interest suspended (1,911,304) (1,921,867)

Net loans and advances 111,764,267 79,729,100



Impaired loans and advances and non-trading investments

Impaired loans and advances and non-trading investments

are financial assets for which the Group determines that it

is probable that it will be unable to collect all principal and

interest due according to the contractual terms of the loan

agreements. The Group financial assets that are neither

past due nor impaired mainly fall within the grade 3-4 in

accordance with the Group’s internal credit risk grading

system.

Allowances for impairment

The Group establishes an allowance for impairment

losses on assets carried at amortised cost or classified as

AFS that represents its estimate of incurred losses in its

loan portfolio. The main components of this allowance

are a specific loss component that relates to individually

significant exposures, and a collective loan loss allowance

for losses that have been incurred but not identified,

established for groups of homogeneous assets with similar

risk characteristics that are indicative of the debtor’s ability

to pay amounts due according to the contractual terms

on the basis of a credit risk evaluation or grading process

that considers asset type, industry, geographical location,

collateral type, past due status and other relevant factors.

Future cash flows in a group of financial assets that are

collectively evaluated for impairment are estimated on the

basis of historical loss experience for assets with credit risk

characteristics similar to those in the group.

Individually assessed loans are required to be classified

as impaired as soon as there is objective evidence

that an impairment loss has been incurred. Objective

evidence of impairment includes observable data such

as when contractual payment of principal or interest is

overdue or there is known difficulties in the cash flows of

counterparties, credit rating downgrades or original terms

of the contractual repayment are unable to be met.

Write-off policy

The Group writes off a loan or investment balance (and

any related allowances for impairment losses) when the

Remedial Advances Committee determines that the loans

or investments are uncollectible. This is determined after

all possible efforts of collecting the amounts have been

exhausted.

Collateral

The Group holds collateral against loans and advances in

the form of mortgage interests over property, other securities

over assets and guarantees. The Group accepts guarantees

mainly from well reputed local or international banks, well

established local or multinational large corporate and high

net-worth private individuals. Collateral generally is not held

against non-trading investments and due from banks, and no

such collateral was held at 31 December 2008 or 2007.

Management estimates the fair value of collaterals and other

security enhancements held against individually impaired

loans and advances to reasonably approximate AED 557

million (2007 : AED 477 million) as at the reporting date.



4 Financial risk management (continued) (b) Credit risk (continued)

Settlement risk

The Group’s activities may give rise to risk at the time of

settlement of transactions and trades. Settlement risk is the

risk of loss due to the failure of a counter party to honour

its obligations to deliver cash, securities or other assets as

contractually agreed.

Derivative related credit risk

Credit risk in respect of derivative financial instruments

arises from the potential for a counterparty to default on its

contractual obligations and is limited to the positive market

value of instruments that are favourable to the Group,

which are included in other assets. The positive market

value is also referred to as the “replacement cost” since it

is an estimate of what it would cost to replace transactions

at prevailing market rates if a counterparty defaults. The

majority of the Group’s derivative contracts are entered

into with other financial institutions.

Commitments and contingencies related credit risk

Credit risk arising from commitments and contingencies is

discussed in note 32.

(c) Liquidity risk

Liquidity or funding risk is the risk that the Group will

encounter difficulty in meeting obligations associated with

financial liabilities. Liquidity risk can be caused by market

disruptions or credit downgrades which may cause certain

sources of funding to dry up immediately.

Management of liquidity risk

The Group’s approach to managing liquidity risk is to

ensure that, management has diversified funding sources

and closely monitors liquidity to ensure adequate funding.

The Group maintains a portfolio of short-term liquid assets,

largely made up of short-term liquid trading investments,

and inter-bank placements. All liquidity policies and

procedures are subject to review and approval by ALCO.

Exposure to liquidity risk

The key measure used by the Group for measuring liquidity

risk is the ratio of net liquid assets, i.e., total assets by

maturity against total liabilities by maturity.

Details of the Group’s net liquid assets is summarised in

the table below by the maturity profile of the Group’s

assets and liabilities based on the contractual repayment

arrangements and does not take account of the effective

maturities as indicated by the Group’s deposit retention

history. The contractual maturities of assets and liabilities

have been determined on the basis of the remaining period

at the balance sheet date to the contractual maturity date.

The maturity profile is monitored by management to ensure

adequate liquidity is maintained.



Due from banks Non-trading investments 2008 2007 2008 2007 AED’000 AED’000 AED’000 AED’000

Carrying amount 6,788,528 8,158,270 14,982,756 10,054,224

Concentration by counter party:

Government - - 987,488 1,681,961

Supranational - - 451,454 537,909

Public sector - - 888,578 440,918

Banks 6,789,685 8,159,639 11,473,939 6,652,615

Corporate sector - - 1,198,009 757,533

6,789,685 8,159,639 14,999,468 10,070,936

Less: Allowance for impairment (1,157) (1,369) (16,712) (16,712)

Total carrying amount 6,788,528 8,158,270 14,982,756 10,054,224

The concentration by counter party for loans and advances is disclosed in note 10.

Due from banks Loans and advances Non-trading investments 2008 2007 2008 2007 2008 2007 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

Concentration by location:

UAE 3,579,261 1,317,543 83,376,441 52,436,013 3,855,136 1,578,638

Europe 2,264,421 5,025,003 13,600,063 15,206,557 7,490,460 6,197,767

Arab countries 472,365 1,059,716 13,866,763 11,443,996 1,797,667 1,303,097

USA 382,758 696,836 690,410 387,740 962,417 776,310

Asia 68,485 51,209 56,704 246,793 - 18,321

Others 21,238 7,963 173,886 8,001 877,076 180,091

6,788,528 8,158,270 111,764,267 79,729,100 14,982,756 10,054,224

Concentration by location for loans and advances and due from banks is measured based on the residential status of the borrower.

Concentration by location for non-trading investments is measured based on the location of the issuer of the security.




(c) Liquidity risk (continued)

The maturity profile of the assets and liabilities at 31 December 2007 was as follows:

Up to 3 months 1 to 3 3 to 5 over 5 Unspecified Total 3 months to 1 year years years years maturity AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

AssetsCash and balances withcentral banks 36,399,339 25,590,630 10,785,000 - - 23,709 -

Investments at fair valuethrough profit or loss 1,200,725 1,200,725 - - - - -

Due from banks 8,158,270 7,323,328 754,942 80,000 - - -

Loans and advances 79,729,100 25,997,011 9,531,236 8,902,373 9,114,876 26,183,604 -

Non-trading investments 10,054,224 413,529 317,619 1,967,746 1,269,604 6,085,726 -

Other assets 3,305,764 2,442,586 757,769 - 103,860 1,549 -

Premises and equipment 583,296 - - - - - 583,296

139,430,718 62,967,809 22,146,566 10,950,119 10,488,340 32,294,588 583,296

Liabilities and equityDue to banks 27,041,015 25,410,466 1,630,549 - - - -

Repurchase agreements

with banks 5,305,965 5,305,965 - - - - -

Euro commercial paper 105,912 105,912 - - - - -

Customers’ deposits 81,736,671 74,910,282 5,230,525 1,135,970 210,883 249,011 -

Medium-term borrowings 7,405,149 144,624 332,834 4,369,163 2,558,528 - -

Other liabilities 4,182,093 3,126,520 1,014,109 17,697 19,540 4,227 -

Subordinated

convertible notes 2,439,681 - - - - 2,439,681 -

Equity 11,214,232 - - - - - 11,214,232

139,430,718 109,003,769 8,208,017 5,522,830 2,788,951 2,692,919 11,214,232



The maturity profile of the assets and liabilities at 31 December 2008 was as follows:

Up to 3 months 1 to 3 3 to 5 over 5 Unspecified Total 3 months to 1 year years years years maturity AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

AssetsCash and balance with central banks 19,432,923 15,894,553 3,520,000 - - 18,370 -

Investments at fair valuethrough profit or loss 1,295,641 1,295,641 - - - - -

Due from banks 6,788,528 6,245,554 462,974 80,000 - - -

Loans and advances 111,764,267 35,395,625 13,631,242 11,732,199 15,528,506 35,476,695 -

Non-trading investments 14,982,756 947,515 1,125,622 3,682,827 1,906,956 7,319,836 -

Other assets 9,071,165 7,702,795 1,105,592 239,330 20,873 2,575 -

Premises and equipment 1,319,200 - - - - - 1,319,200

164,654,480 67,481,683 19,845,430 15,734,356 17,456,335 42,817,476 1,319,200

Liabilities and equityDue to banks 25,796,996 25,154,297 569,239 73,460 - - -

Repurchase agreementswith banks 4,535,345 4,535,345 - - - - -


Customers’ deposits 103,481,145 90,138,353 5,614,665 4,574,268 2,915,658 238,201 -

Medium-term borrowings 8,594,284 142,364 465,267 4,091,656 3,894,997 - -

Other liabilities 4,765,176 3,621,758 1,040,652 60,237 40,687 1,842 -

Subordinated

convertible notes 3,050,938 - - - - 3,050,938 -

Equity 14,356,599 - - - - - 14,356,599

164,654,480 123,666,114 7,689,823 8,799,621 6,851,342 3,290,981 14,356,599




(d) Market risks (continued)

The Group’s interest rate sensitivity position and interest rate gap position based on contractual re-pricing arrangements at

31 December 2008 was as follows:

Up to 3 months 1 to 3 3 to 5 over 5 Non interest Total 3 months to 1 year years years years bearing AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

AssetsCash and balances withcentral banks 19,432,923 8,955,074 3,520,000 - - 4,988 6,952,861

Investments at fair valuethrough profit or loss 1,295,641 1,084,286 - - - - 211,355

Due from banks 6,788,528 5,549,539 462,974 80,000 - - 696,015

Loans and advances 111,764,267 75,526,691 29,745,144 2,576,652 1,862,996 2,011,248 41,536

Non-trading investments 14,982,756 9,393,854 2,171,395 2,534,476 628,683 121,564 132,784

Other assets 9,071,165 3,667,592 - - - - 5,403,573

Premises and equipment 1,319,200 - - - - - 1,319,200

164,654,480 104,177,036 35,899,513 5,191,128 2,491,679 2,137,800 14,757,324

Liabilities and equityDue to banks 25,796,996 23,922,374 569,239 - - - 1,305,383


with banks 4,535,345 4,535,345 - - - - -


Customers’ deposits 103,481,145 74,445,852 4,567,300 4,108,317 2,894,005 - 17,465,671

Medium-term borrowings 8,594,284 6,605,302 114,136 - 1,874,846 - -

Other liabilities 4,765,176 - - - - - 4,765,176

Subordinatedconvertible notes 3,050,938 3,050,938 - - - - -

Equity 14,356,599 - - - - - 14,356,599

164,654,480 112,633,808 5,250,675 4,108,317 4,768,851 - 37,892,829

On balance sheet gap (8,456,772) 30,648,838 1,082,811 (2,277,172) 2,137,800 (23,135,505)

Off balance sheet gap (2,648,212) (2,399,738) 2,629,120 2,569,928 (151,098) -

Total interest rate sensitivity gap (11,104,984) 28,249,100 3,711,931 292,756 1,986,702 (23,135,505)

Cumulative interest rate sensitivity (11,104,984) 17,144,116 20,856,047 21,148,803 23,135,505 -



The previous table shows undiscounted cash flows on

the Group’s financial assets and liabilities on the basis of

their earliest possible contractual maturity. The Group’s

expected cash flows may vary from this analysis. For

example, demand deposits from customers are expected

to maintain a stable or increasing balance.

(d) Market risks Market risk is the risk that the Group’s income and / or

value of a financial instrument will fluctuate because of

changes in market prices such as interest rates, foreign

exchange rates and market prices of equity.

Management of market risks

The Board of Directors has set risk limits based on sensitivity

analysis and notional limits which are closely monitored by

the Risk Management Division, reported weekly to Senior

Management and discussed fortnightly by the Assets and

Liabilities Committee.

The Group separates its exposure to market risk between

trading and non-trading portfolios. Trading portfolios

include positions arising from market making and

proprietary position taking, together with financial assets

and liabilities that are managed on a fair value basis.

Interest rate risk

Interest rate risk arises from interest bearing financial

instruments and reflects the possibility that changes

in interest rates will adversely affect the value of the

financial instruments and the related income. The

Group manages this risk principally through monitoring

interest rate gaps and by matching the re-pricing profile

of assets and liabilities.

Overall interest rate risk positions are managed by using

derivative instruments to manage overall position arising

from the Group’s interest bearing financial instruments.

The use of derivatives to manage interest rate risk is

described in note 33.

The substantial portion of the Group’s assets and liabilities

are re-priced within one year. Accordingly there is a

limited exposure to interest rate risk.

The effective interest rate of a monetary financial

instrument is the rate that, when used in a present

value calculation, results in the carrying amount of the

instrument. The rate is an original effective interest

rate for a fixed rate instrument carried at amortised cost

and a current market rate for a floating instrument or an

instrument carried at fair value.



4 Financial Risk Management (continued)


Interest rate risk is also assessed by measuring the impact of reasonable possible change in interest rate movements. The Group

assumes a fluctuation in interest rates of 50 basis points (2007: 50 basis points) and estimates the following impact on the net profit

for the year and equity at that date:

Net profit Net profit for the year Equity for the year Equity AED’000 AED’000 AED’000 AED’000

2008 2008 2007 2007

Fluctuation in yield 115,678 108,953 152,270 146,555

The interest rate sensitivities set out above are illustrative only and employ simplified scenarios. They are based on AED 149,897

million (2007: AED 128,657 million) interest bearing assets and AED 126,761 million (2007: AED 98,203 million) interest bearing

liabilities. The sensitivity does not incorporate actions that could be taken by management to mitigate the effect of interest rate

movements.

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates and arises

from financial instruments denominated in a foreign currency. The Group’s functional currency is the UAE Dirham. The Board

of Directors has set limits on positions by currency. Positions are closely monitored and hedging strategies are used to ensure

positions are maintained within established limits. At 31 December, the Group had the following significant net exposures

denominated in foreign currencies:

Net spot Forward Total Total position position 2008 2007 (Short)/long (Short)/long (Short)/long (Short)/long AED’000 AED’000 AED’000 AED’000

Currency

US Dollar (12,321,990) 6,645,737 (5,676,253) (3,557,591)

UK Sterling Pound 7,573,373 (7,565,843) 7,530 (3,026)

Euro (2,949,477) 3,071,113 121,636 90,612

Kuwaiti Dinar 34,040 156,770 190,810 216,921

Omani Riyal 282,594 (4,679) 277,915 50,235

Saudi Riyal 48,045 505,363 553,408 102,389

The exchange rate of AED against US Dollar is pegged since November 1980 and the Group’s exposure to currency risk is limited

to that extent. Exposure to other foreign currencies is insignificant.

Equity price risk

Equity price risk arises from the change in fair values of equity investments. The Group manages this risk through diversification

of investments in terms of geographical distribution and industry concentration.



The Group’s interest rate sensitivity position and interest rate gap position based on a contractual re-pricing arrangement at

31 December 2007 was as follows:

Up to 3 months 1 to 3 3 to 5 over 5 Non interest Total 3 months to 1 year years years years bearing

AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

AssetsCash and balances withcentral banks 36,399,339 19,726,788 10,785,000 - - 4,994 5,882,557

Investments at fair value through profit or loss 1,200,725 821,162 - - - - 379,563

Due from banks 8,158,270 6,521,857 1,130,358 - - - 506,055

Loans and advances 79,729,100 73,598,460 4,114,937 495,280 654,720 836,086 29,617

Non-trading investments 10,054,224 7,327,564 830,120 1,549,710 19,257 240,660 86,913

Other assets 3,305,764 - - - - - 3,305,764

Premises and equipment 583,296 - - - - - 583,296

139,430,718 107,995,831 16,860,415 2,044,990 673,977 1,081,740 10,773,765

Liabilities and equityDue to banks 27,041,015 15,184,135 1,631,206 - - - 10,225,674


with banks 5,305,965 5,305,965 - - - - -


Customers’ deposits 81,736,671 59,627,689 5,305,254 1,042,469 155,564 - 15,605,695

Medium-term borrowings 7,405,149 4,627,542 - 218,206 2,559,401 - -

Other liabilities 4,182,093 - - - - - 4,182,093

Subordinated convertible notes 2,439,681 2,439,681 - - - - -

Equity 11,214,232 - - - - - 11,214,232

139,430,718 87,290,924 6,936,460 1,260,675 2,714,965 - 41,227,694

On balance sheet gap 20,704,907 9,923,955 784,315 (2,040,988) 1,081,740 (30,453,929)

Off balance sheet gap 8,898,043 (5,068,252) (1,927,387) (1,483,849) (418,555) -

Total interest rate sensitivity gap 29,602,950 4,855,703 (1,143,072) (3,524,837) 663,185 (30,453,929)

Cumulative interest rate sensitivity 29,602,950 34,458,653 33,315,581 29,790,744 30,453,929 -




(f) Capital management (continued)

The Group has set up a committee, namely, the Bank Equity Committee, to manage the investment of capital funds in

sovereign bonds and short term money market placements with either the Central Bank of the UAE or above investment grade

financial institutions.

In implementing current capital requirements, the Group calculates its risk asset ratio in accordance with capital adequacy

guidelines established by the Cetral Bank of the UAE prescribing the ratio of total capital to total risk-weighted assets. Further, the

Group also calculates its capital adequacy ratio in accordance with Basel II Accord which was adopted by the Central Bank of

the UAE with effect from 31 December 2008.

The Group’s regulatory capital adequacy ratios, set by the Central Bank of the UAE at a minimum level of 10%, is analysed into

two tiers as follows:

2008 2007

AED’000 AED’000

Tier 1 capital

Ordinary share capital 1,976,614 1,591,304


Statutory and special reserve 3,116,560 1,591,304

General reserve and share option scheme 6,826,677 7,148,899

Foreign currency translation reserve 19,183 34,183

Subordinated convertible notes - equity component 85,408 72,926

Total 14,988,910 11,238,616

Tier 2 capital

Fair value reserve (632,311) (24,384)

Qualifying subordinated liabilities 3,050,938 2,439,681

Total 2,418,627 2,415,297

Deductions from Tier 1 and Tier 2

Investments in associates (3,445) (3,342)

Total (3,445) (3,342)

Total capital base 17,404,092 13,650,571

Risk weighted assets:

On balance sheet 96,257,834 58,865,541

Off balance sheet 30,682,312 25,628,371

Risk weighted assets 126,940,146 84,493,912

Risk asset ratio 13.71% 16.16%


(e) Operational risks Operational risk is the risk of direct or indirect loss arising

from a wide variety of causes associated with the Group’s

processes, personnel, technology and infrastructure,

and from external factors other than credit, market

and liquidity risks such as those arising from legal and

regulatory requirements and generally accepted standards

of corporate behaviour. Operational risks arise from all of

the Group’s operations.

The Group’s objective is to manage operational risk so as

to balance the avoidance of financial losses and damage

to the Group’s reputation with overall cost effectiveness

and to avoid control procedures that restrict initiative

and creativity.

The Board has oversight responsibilities for operational

risk management in the Group. These responsibilities are

exercised through ORMC with an established framework

of policies and procedures to identify, assess, monitor,

control, manage and report risks. The ORMC employs

clear internal policies and procedures to reduce the

likelihood of any operational losses. Where appropriate,

risk is mitigated by way of insurance. The framework also

provides the interrelation with other risk categories.

Compliance with policies and procedures is supported by

periodic reviews undertaken by the Audit and Compliance

Division. The results of these reviews are discussed with

the management of the business unit to which they relate,

with summaries submitted to the Audit Committee and

senior management of the Group.

(f) Capital management The Group’s lead regulator, the Central Bank of the UAE,

sets and monitors regulatory capital requirements. The

overseas branches and subsidiaries are directly supervised

by their local regulators.

The Group’s objectives when managing capital are:

safeguard the Group’s ability to continue as a going •

concern and increase the returns for the shareholders;

and

comply with regulatory capital requirements set by the •

Central Bank of the UAE and the respective regulators

where the overseas units operate.

During 2008, the Group’s strategy, which was unchanged

from 2007, was to:

increase capital resources by way of issuing convertible •

subordinated notes that is treated as Tier 2 capital;

maintain a cash dividend payout ratio of 40% to •

increase capital through retention;

maintain capital adequacy ratios above the minimum •

specified by the Central Bank of the UAE and Basel

accord guidelines;

maintain the highest credit rating in the Middle •

East; and

efficiently allocate capital to various businesses.•



5 Use of estimates and judgements

In the process of applying the Group’s accounting

policies, management has made the following estimates

and judgements, which have the most significant effect

on the amounts recognised in the consolidated financial

statements.

Key sources of estimation uncertainty

(i) Impairment charge on loans and advances and

investments

Impairment losses are evaluated as described in

accounting policy 3(b) (ix).

The Group evaluates impairment on loans and

advances and investments on an ongoing basis and a

comprehensive review on a quarterly basis to assess

whether an impairment charge should be recognised

in the consolidated income statement. In particular,

considerable judgement by management is required

in the estimation of the amount and timing of future

cash flows when determining the level of impairment

charge required. In estimating these cash flows,

management makes judgements about counterparty’s

financial situation and other means of settlement and

the net realisable value of any underlying collateral.

Such estimates are based on assumptions about several

factors involving varying degrees of judgement and

uncertainty, and actual results may differ resulting in

future changes to such impairment charges.

(ii) Collective impairment charge on loans and advances

In addition to specific impairment charge against

individually impaired assets, the Group also maintains

a collective impairment allowance against portfolios of

loans and advances with similar economic characteristics

which have not been specifically identified as impaired.

In assessing the need for collective impairment charge,

management considers concentrations, credit quality,

portfolio size and economic factors. In order to estimate

the required allowance, assumptions are made to define

the way inherent losses are modelled and to determine

the required input parameters, based on historical and

current economic conditions.

(iii) Contingent liability arising from litigations

Due to the nature of its operations, the Group may be

involved in litigations arising in the ordinary course

of business. Provision for contingent liabilities arising

from litigations is based on the probability of outflow

of economic resources and reliability of estimating such

outflow. Such matters are subject to many uncertainties

and the outcome of individual matters is not predictable

with assurance.

(iv) Share option scheme

The fair value of the share option scheme is determined

by marking to model. The model inputs comprise the

share and exercise price, volatility, dividends, attrition

rate and risk-free interest rate.

Critical accounting judgements in applying the Group’s

accounting policies include:

(a) Financial asset and liability classification

The Group’s accounting policies provide scope for

financial assets and liabilities to be designated on

inception into different accounting categories in certain

circumstances:

In classifying financial assets as “fair value through profit

or loss”, “held for trading” or “available for sale”, the

Group has determined it meets the description as set

out in accounting policy 3(b) (iii, iv and v) respectively.

(b) Qualifying hedge relationships

In designating financial instruments as qualifying hedge

relationships, the Group has determined that it expects

the hedge to be highly effective over the life of the

hedging relationship.


(f) Capital management (continued)

The Group’s capital adequacy ratio as per effective regulatory framework, Basel II, at a minimum level of 8%, is analysed into two

tiers as follows:

Basel II Basel II

2008 2007 AED’000 AED’000

Tier 1 capital

Ordinary share capital 1,976,614 1,591,304


Statutory and special reserve 3,116,560 1,591,304

General reserve and share option scheme 6,826,677 7,148,899

Foreign currency translation reserve 19,183 34,183

Subordinated convertible notes - equity component 85,408 72,926

Total 14,988,910 11,238,616

Tier 2 capital

Fair value reserve (632,311) (24,384)

Qualifying subordinated liabilities 3,050,938 2,439,681

Allowance for collective impairment 848,085 244,703

Total 3,266,712 2,660,000

Deductions from capital

Investments in associates (3,445) (3,342)

Total capital base 18,252,177 13,895,274

Risk weighted assets:

Credit risk 109,483,157 75,193,414

Market risk 1,660,442 4,228,086

Operational risk 7,451,696 5,016,328

Risk weighted assets 118,595,295 84,437,828

Risk asset ratio 15.39% 16.46%

The Bank and its overseas branches and subsidiaries have complied with all externally imposed capital requirements for all

periods presented.



6 Fi

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6 Financial assets and liabilities

Fair value of financial instruments

All financial assets and liabilities are measured at amortised

cost except for derivatives, trading and non-trading

investments which are measured at fair value by reference

to published price quotations in an active market or from

prices quoted by counterparties or through use of valuation

techniques such as discounted cash flow method.

Fair value is the amount for which an asset could be

exchanged, or a liability settled, between knowledgeable

willing parties in an arm’s length transaction.

Consequently, differences can arise between book values

and the fair value estimates. Underlying the definition

of fair value is the presumption that the Group is a

going concern without any intention or requirement to

materially curtail the scale of its operation or to undertake

a transaction on adverse terms.

The fair values of due from banks, due to banks,

repurchase agreements and customers’ deposits, which

are predominantly short term in tenure and issued at

market rates, are considered to reasonably approximate

their book value.

The Group estimates that the fair value of its loans and

advances portfolio is not materially different from its book

value since majority of loans and advances carry floating

market rates of interest and are frequently re-priced. For

loans considered impaired, expected cash flows, including

anticipated realisation of collateral, were discounted using

an appropriate rate and considering the time of collection,

the net result of which is not materially different from the

carrying value.

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7 Cash and balances with central banks

2008 2007 AED’000 AED’000

Cash on hand 680,880 521,516

Balances with the Central Bank of the UAE

cash reserve deposits 4,499,734 2,916,333

certificates of deposits 12,080,000 30,135,000

other deposits and balances 764,279 1,606,346

Balances with other central banks

cash reserve deposits 116,194 385,811

other deposits and balances 1,291,836 834,333

19,432,923 36,399,339

Cash reserve deposits are not available for the day to day operations of the Group.

8 Investments at fair value through profit or loss

Investments held for trading

2008 2007 AED’000 AED’000

Managed portfolios 108,303 360,882

Debt instruments 1,183,335 821,162

1,291,638 1,182,044

Debt instrument under repurchase agreements included in trading investments as at 31 December 2008 amounted to nil (2007:

AED 182 million) (refer note 15).

Investments designated at fair value through profit or loss

2008 2007 AED’000 AED’000

Equity securities 4,003 18,681

1,295,641 1,200,725

6 Fi

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11 Non-trading investments

2008 2007 AED’000 AED’000

Available-for-sale investments

Unquoted investments 419,530 297,643

Less: allowance for impairment (16,712) (16,712)

402,818 280,931

Quoted investments 14,579,938 9,773,293

Total non-trading investments 14,982,756 10,054,224

Unquoted investments include unquoted equity securities amounting to AED 117,978 thousand (2007: 65,141 thousand) which

are carried at cost as their fair value cannot be reliably estimated.

Debt instruments under repurchase agreements included in quoted available for sale investments at 31 December 2008 amounted

to AED 5,269 million (2007: AED 5,124 million) (refer note 15).

12 Other assets

2008 2007 AED’000 AED’000

Interest receivable 1,105,898 1,228,348

Acceptances 1,094,262 994,975

Sundry debtors and other receivables 2,154,274 711,605

Deferred tax asset 28,356 19,211

Reverse repurchase agreement 3,667,593 -

Positive fair value of derivatives (note 33) 1,020,782 351,625

9,071,165 3,305,764

9 Due from banks

2008 2007 AED’000 AED’000

Current, call and notice deposits 715,367 632,314

Fixed deposits 6,073,161 7,525,956

6,788,528 8,158,270

10 Loans and advances

2008 2007 AED’000 AED’000

Gross loans and advances 115,225,353 82,561,098

Less: allowance for impairment (1,549,782) (910,131)

Less: interest suspended (1,911,304) (1,921,867)

Net loans and advances 111,764,267 79,729,100

An analysis of gross loans and advances by counter party at the reporting date is shown below:

2008 2007 AED’000 AED’000

Government sector 13,802,226 15,247,429

Public sector 26,269,441 13,353,112

Banking sector 991,587 988,885

Corporate / private sector 51,524,649 36,097,692

Personal / retail sector 22,637,450 16,873,980

Gross loans and advances 115,225,353 82,561,098

The movement in the allowance for impairment during the year is shown below:

2008 2007 AED’000 AED’000

At 1 January 910,131 917,624

Charge for the year

Collective provision 603,382 43,742

Specific provision 210,555 99,429

Recoveries (42,607) (38,870)

Write-backs during the year (74,449) (66,101)

Amounts written off (57,230) (45,693)

At 31 December 1,549,782 910,131



14 Due to banks

2008 2007 AED’000 AED’000

Banks

Current, call and notice deposits 1,104,647 9,909,713

Fixed deposits 16,945,933 12,245,243

18,050,580 22,154,956

Central banks

Current and call 570,396 969

Fixed deposits 7,176,020 4,885,090

7,746,416 4,886,059

25,796,996 27,041,015

15 Repurchase agreements with banks

The Group enters into repurchase agreements in the normal course of business by which it transfers recognised financial assets

directly to third parties.

The carrying amount of financial assets at the reporting date amounted to AED 5,269 million (2007: AED 5,306 million) (refer note

8 and 11) and their associated financial liabilities amounted to AED 4,535 million (2007: AED 5,306 million).

16 Euro commercial paper

The Bank established USD 2,000,000 thousand Euro-Commercial Paper Programme (the “ECP Programme”) for the issuance of

Euro-commercial paper under the agreement dated 13 September 2006 with CITIBANK, N.A.

The notes outstanding as at the reporting date are denominated in USD carrying interest rates of 3.40% per annum (2007: 5.41%).

The original maturity of these notes is 12 months.

17 Customers’ deposits

2008 2007 AED’000 AED’000

By account:

Current accounts 21,837,491 16,216,528

Savings accounts 2,860,341 2,117,568

Notice and time deposits 76,484,974 62,101,832

Certificates of deposit 2,298,339 1,300,743

103,481,145 81,736,671

13 Premises and equipment

Furniture, Land, Computer equipment, Capital building and systems and safes and work - in alterations equipment vehicles progress Total AED’000 AED’000 AED’000 AED’000 AED’000

Cost

Balance at 1 January 2007 520,211 181,739 120,707 40,607 863,264

Acquisitions 116,421 15,185 29,172 68,742 229,520

Transfer 1,320 16,257 970 (18,547) -

Disposals / write off (11,082) (4,977) (4,073) - (20,132)

Balance at 31 December 2007 626,870 208,204 146,776 90,802 1,072,652

Acquisitions 681,324 51,625 29,367 159,997 922,313

Transfer 98,801 40,364 4,705 (143,870) -

Disposals / write off (110,611) (14,774) (5,814) - (131,199)

Balance at 31 December 2008 1,296,384 285,419 175,034 106,929 1,863,766

Accumulated Depreciation

Balance at 1 January 2007 215,361 131,129 92,723 - 439,213

Charge for the year 26,855 22,775 18,362 - 67,992

Disposals (9,541) (4,497) (3,811) - (17,849)

Balance at 31 December 2007 232,675 149,407 107,274 - 489,356

Charge for the year 33,727 30,933 17,511 - 82,171

Disposals (5,337) (15,436) (6,188) - (26,961)

Balance at 31 December 2008 261,065 164,904 118,597 - 544,566

Carrying amounts

At 1 January 2007 304,850 50,610 27,984 40,607 424,051

At 31 December 2007 394,195 58,797 39,502 90,802 583,296

At 31 December 2008 1,035,319 120,515 56,437 106,929 1,319,200



18 Medium-term borrowings (continued)

The following notes are outstanding at 31 December:

Year of 2008 2007Currency Interest maturity AED’000 AED’000

JPY 3 M JPY LIBOR 2008 - 236,418

AUD 3 M AUD-BBSW 2008 - 64,278

AUD 3 M AUD-BBSW +1bps 2008 - 80,347

AUD 3 M AUD-BBSW 2008 - 96,416

CHF 3 M CHF LIBOR + 10bps 2009 281,187 257,213

JPY 0.05 per cent (fixed) 2009 142,364 112,580

JPY 0.22 per cent (fixed) 2009 40,676 32,166

USD 5.525 per cent (fixed) 2009 73,460 73,460

USD 3 M USD LIBOR+30bps 2010 3,122,050 3,122,050

JPY 3 M JPY LIBOR 2010 162,247 128,302

CHF 3 M CHF LIBOR + 10bps 2010 702,403 642,518

CHF 3 M CHF LIBOR + 10bps 2010 104,956 -

GBP 5.875 % (fixed) 2012 1,874,846 2,559,401

6,504,189 7,405,149

19 Other liabilities

2008 2007 AED’000 AED’000

Interest payable 627,505 681,803

Acceptances 1,094,262 994,975

Provision for staff terminal benefits 325,686 293,171

Accounts payable, sundry

creditors and other liabilities 1,869,410 1,878,001

Negative fair value of derivatives (note 33) 762,392 252,831

Overseas income tax 85,921 81,312

4,765,176 4,182,093

17 Customers’ deposits (continued)

2008 2007 AED’000 AED’000

By sector:

Government sector 47,077,932 31,273,703

Public sector 18,368,892 15,493,613

Corporate / private sector 18,269,720 19,426,286

Retail sector 19,764,601 15,543,069

103,481,145 81,736,671

Customers’ deposits include NBAD 3 Year 100% UAE Principal Protected Notes issued during 2007 having a nominal value of

AED 713 million (2007: AED 713 million). These notes are 100% principal protected at maturity by the Bank and are linked to

Standard & Poor’s International Finance Corporation Global Index for the United Arab Emirates. The Bank has purchased call

options to cover this exposure.

Government deposits include special deposits received from Ministry of Finance maturing within 3 to 5 years which are exempt

from the calculation of cash reserve requirement of Central bank and carry an interest rate represented by the higher of 4% or 5

year US treasury rate plus a fixed margin.

18 Medium-term borrowings

2008 2007 AED’000 AED’000

Club loan and other facilities 2,090,095 -

Medium term notes 6,504,189 7,405,149

8,594,284 7,405,149

During the year, the Bank established a USD 550 million Club loan facility repayable within five years carrying interest rate linked to

LIBOR plus a fixed margin (2007:Nil).



20 Subordinated convertible notes (continued)

15 March 2006 issue:

In accordance with the prospectus of AED 2.5 billion subordinated convertible notes due on 15 March 2016, some of the note

holders exercised the option to convert these notes into the ordinary shares of the Bank on 15 March 2008 (second anniversary).

The nominal value of notes converted amounted to AED 1,388,475 thousand resulting in an increase in Bank’s share capital of

AED 55,874 thousand, an increase in special reserve of AED 1,332,601 thousand and a decrease in the equity component of AED

40,502 thousand.

The above mentioned convertible notes are presented in the consolidated balance sheet as follows:

2008 2007 AED’000 AED’000

Proceeds from issue of convertible notes 2,500,000 2,500,000

Less: amount classified as equity (72,926) (72,926)

Carrying amount of liability component on

initial recognition 2,427,074 2,427,074

Add: cumulative accreted interest 16,089 12,607

Less: converted liability component (1,347,973) -

Carrying amount of liability component 1,095,190 2,439,681

The Bank has the option to redeem these notes on the fifth anniversary and on a quarterly basis thereafter.

Interest on these notes is calculated on an effective yield basis by applying the effective interest rate for an equivalent non-

convertible notes to the liability component of the convertible notes. The effective interest rate as at 31 December 2008 was

4.695% (2007: 5.3069%).

As a result of the issue of bonus shares, the conversion price has been revised to AED 23.18 per share and communicated to Abu

Dhabi Exchange on 14 April 2008.

28 February 2008 issue:

Further, during the year, the Bank issued AED 2 billion subordinated convertible notes due on 28 February 2018 in accordance

with the approval of the Extraordinary General Meeting held on 5 September 2007. The notes bear an interest rate equal to 3

month EBOR less 0.25% paid quarterly.

19 Other liabilities (continued)

The movement in the provision for employees’ staff terminal benefits was as follows:

2008 2007 AED’000 AED’000

Balance at 1 January 293,171 255,758

Provided during the year 57,975 52,919

Paid during the year (25,460) (15,506)

Balance at 31 December 325,686 293,171

The Group has provided for the overseas income tax in accordance with management’s estimate of the total amount payable

based on tax rates enacted or substantially enacted as at the reporting date. Where appropriate the Group has made payments of

tax on account in respect of these estimated liabilities.

The overseas income tax charge for the year is calculated based upon the adjusted net profit for the year. The movement in the

provision was as follows:

2008 2007 AED’000 AED’000

At 1 January 81,312 76,136

Charge for the year (note 30) 80,943 68,590

Overseas income tax paid, net of recoveries (76,334) (63,414)

At 31 December 85,921 81,312

20 Subordinated convertible notes

2008 2007 AED’000 AED’000

Liability component

15 March 2006 issue 1,095,190 2,439,681

28 February 2008 issue 1,955,748 -

3,050,938 2,439,681

Equity component

15 March 2006 issue 72,926 72,926

28 February 2008 issue 52,984 -

Less: conversion of 15 March 2006 issue (40,502) -

85,408 72,926



21 Capital and reserves (continued)

Special reserve

Transfers to the special reserve are made in accordance with Union Law No. 10 of 1980 and Article 56 of the Bank’s Articles of

Association under which not less than 10% of the annual net profit is to be transferred to this reserve until it equals 50% of the

paid-up share capital. The special reserve is not available for distribution to the shareholders.

Dividends

The following cash dividend was paid by the Group during the year ended 31 December:

2008 2007 AED’000 AED’000

Cash dividend AED 0.4 per ordinary

share (2007: AED 0.4) 658,871 489,632

20% bonus shares (2007: 30% bonus shares) issued 329,436 367,224

Proposed dividends:

On 2 February 2009, a cash dividend of AED 0.2 per ordinary share and bonus shares of 40% (2007: AED 0.4 cash dividend per

ordinary share and 20% bonus share) was proposed by the Board of Directors in respect of 2008 which is subject to the approval

of the shareholders at the Annual General Meeting.

Other reserves

Other reserves include the following:

(i) General reserve

The general reserve is available for distribution to the shareholders at the recommendation of the Board of Directors to the

shareholders.

(ii) Fair value reserve

The fair value reserve includes the cumulative net change in the fair value of non-trading investments, until the investment is

derecognised or impaired, and cash flow hedge reserve.

2008 2007 AED’000 AED’000

Revaluation reserve – non-trading investment

At 1 January (126,752) (199,817)

Increase in unrealised losses during the year (778,040) (20,201)

Net realised losses recognised in the

consolidated income statement during the year 57,927 93,266

At 31 December (846,865) (126,752)

20 Subordinated convertible notes (continued)

28 February 2008 issue: (continued)

These convertible notes are presented in the consolidated balance sheet as follows:

2008 2007 AED’000 AED’000

Proceeds from issue of convertible notes 2,000,000 -

Less: amount classified as equity (52,984) -

Carrying amount of liability component on

initial recognition 1,947,016 -

Add: cumulative accreted interest 8,732 -

Carrying amount of liability component 1,955,748 -

Interest on these notes is calculated on an effective yield basis by applying the effective interest rate for an equivalent non-

convertible notes to the liability component of the convertible notes. The effective interest rate as at 31 December 2008 was

4.31% (2007: nil).

At the option of the holder, the notes may be converted into ordinary shares of the Bank at any time during the period beginning

from 28 May 2008 and ending on first call date being 28 February 2013 at the conversion price of AED 25.45 per ordinary

share (subsequent to the issue of bonus shares). The Bank has the option to redeem these notes on the first call date being

28 February 2013.

The subordinated convertible notes form part of Tier II capital of the Bank.

Fair value:

The carrying amount of the liability component of the convertible notes reflects its current fair value based on discounted cash

flows.

21 Capital and reserves

Share capital

The authorised share capital of the Bank comprise 2,000 million ordinary shares of AED 1 each (2007: 2,000 million shares of

AED 1 each). The issued and fully paid share capital at 31 December 2008 is comprised of 1,976,614 thousand ordinary shares

of AED 1 each (2007:1,591,304 thousand ordinary shares of AED 1 each).

Statutory reserve

The UAE Commercial Companies Law No. (8) of 1984 (as amended) and Article 56 of the Bank’s Articles of Association require

that 10% of the annual net profit to be transferred to a statutory reserve until it equals 50% of the paid-up share capital. The

statutory reserve is not available for distribution to the shareholders.



24 Interest expense

2008 2007 AED’000 AED’000

Due to banks 866,376 661,060

Repurchase agreements with banks 153,736 350,646

Euro commercial paper 3,908 30,073

Customers’ deposits 2,201,310 3,057,757

Certificates of deposit 110,801 67,477

Medium-term borrowings 332,112 362,100

Subordinated convertible notes 107,362 150,056

3,775,605 4,679,169

25 Net fee and commission income

2008 2007 AED’000 AED’000

Fee and commission income

Letters of credit 116,446 89,789

Letters of guarantee 147,292 118,506

Brokerage income, net 71,292 94,523

Initial Public Offerings (IPO) 62,796 3,734

Asset management and investment services 146,331 163,802

Risk participation fees 40,448 24,883

Retail and corporate lending fees 428,002 237,171

Low credit balance fees 13,789 44,118

Commission on transfers 32,326 29,575

Others 154,225 126,294

Total fee and commission income 1,212,947 932,395

Fee and commission expense

Brokerage commission 9,383 1,842

Handling charges 5,570 3,925

Credit card charges 49,028 33,492

Other commission 17,659 7,859

Total fee and commission expense 81,640 47,118

Net fee and commission income 1,131,307 885,277

Asset management and investment service fees include fees earned by the Group on trust and fiduciary activities where the Group

holds or invests assets on behalf of its customers.


21 Capital and reserves (continued)

2008 2007 AED’000 AED’000

Hedging reserve – cash flow hedge

At 1 January 102,368 (10,332)

Changes in fair value 112,186 112,700

At 31 December 214,554 102,368

Total at 31 December (632,311) (24,384)

The cash flow hedges are primarily against the medium term notes. The period when the cash flows are expected to occur and

when they are expected to affect profit or loss is same that of the medium term borrowings (see note 4c).

(iii) Foreign currency translation reserve

Foreign currency translation reserve represents the exchange differences arising from retranslating the opening net assets.

22 Share option scheme

The Bank introduced during the year a share based payment scheme (the “Scheme”) for selected employees which would vest

over three years and can be exercised within the three years thereafter.

During the year, 14,653 thousand share options (31 December 2007: Nil) were granted to employees.

23 Interest income

2008 2007 AED’000 AED’000

Due from central banks 588,327 977,477

Due from other banks 506,463 890,760

Held for trading investments 61,176 17,004

Non-trading investments 640,653 647,492

Loans and advances to customers 5,586,551 4,551,393

7,383,170 7,084,126


29 Impairment charge, net

2008 2007 AED’000 AED’000

Collective provision for loans and advances (note 10) 603,382 43,742

Specific provision for loans and advances (note 10) 210,555 99,429

Write back of provisions for loans and advances (note 10) (74,449) (66,101)

Recovery of loan loss provisions (note 10) (42,607) (38,870)

Write-off of impaired loans

and advances to consolidated income statement 7,025 5,261

Recovery of loans previously written off (965) (1,771)

Provisions for investment 3,251 -

Write off of intangible asset 10,888 -

717,080 41,690

30 Overseas income tax expense

In addition to adjustments relating to deferred taxation, the charge for the year is calculated based upon the adjusted net profit for

the year at rates of tax applicable in respective overseas locations.

The charge to the consolidated income statement for the year was as follows:

2008 2007 AED’000 AED’000

Charge for the year (note 19) 80,943 68,590

Adjustments relating to deferred taxation (8,892) (4,182)

72,051 64,408

31 Cash and cash equivalents

Cash and cash equivalents included in the consolidated statement of cash flows comprise the following amounts maturing within

three months of the date of the acquisition / placement:

2008 2007 AED’000 AED’000

Cash and balances with central banks 10,827,410 22,379,160

Due from banks 4,772,145 1,966,157

Cash and cash equivalents 15,599,555 24,345,317

26 Net (loss) / gain on investments

2008 2007 AED’000 AED’000

Net realised / unrealised (losses) / gains on investments

at fair value through profit or loss and derivatives (201,649) 103,435

Net gain from sale of non-trading investments 2,484 13,595

Dividend income 5,943 1,637

(193,222) 118,667

27 Net foreign exchange gain

2008 2007 AED’000 AED’000

Trading and retranslation gain 314,346 164,331

Dealings with customers 109,693 54,659

424,039 218,990

28 General, administration and other operating expenses

2008 2007 AED’000 AED’000

Staff costs 900,907 620,191

Other general and administration expenses 463,025 328,014

Depreciation 82,171 67,992

Donations and charity 47,313 38,172

1,493,416 1,054,369



33 Derivative financial instruments

In the ordinary course of business the Group enters into

various types of transactions that involve derivative

financial instruments. Derivative financial instruments

include forwards, futures, swaps and options.

Forwards and futures contracts are commitments to either

purchase or sell foreign currencies, commodities or financial

instruments at a specified future date for a specified price.

Swaps are the agreements between the Group and other

parties to exchange future cash flows based upon agreed

notional amounts. Swaps most commonly used by the

Group are interest rate swaps and credit default swaps.

Options are contractual agreements that convey the right,

but not the obligation, to either buy or sell a specific

amount of a commodity or financial instrument at a fixed

price either at fixed future date or at any time within a

specified period.

Derivatives are measured at fair value by reference

to published price quotations in an active market or

counterparty prices or valuation techniques such as

discounted cash flows.

The table below shows the positive and negative fair values

of derivative financial instruments, which are equivalent

to their fair values, together with the notional amounts

analysed by the term to maturity. The notional amount is

the amount of a derivative’s underlying, reference rate or

index and is the basis upon which changes in the value of

derivatives are measured. The notional amounts indicate

the volume of transactions outstanding at year end and are

neither indicative of the market risk nor credit risk.

32 Commitments and contingencies

2008 2007 AED’000 AED’000

Letters of credit 27,266,572 23,127,711

Letters of guarantee 40,606,815 32,753,194

Undrawn commitments to extend credit 34,286,914 20,413,092

Financial guarantees 5,344,025 4,086,518

107,504,326 80,380,515

Capital and operating lease commitments at the reporting date is shown below:

2008 2007 AED’000 AED’000

Commitments for future capital expenditure 69,968 83,044

Commitments for future operating lease payments for premises 87,521 17,577

157,489 100,621

Total commitments and contingencies 107,661,815 80,481,136

Letters of credit and guarantee commit the Group to make payments on behalf of customers contingent upon the production of

documents or the failure of the customer to perform under the terms of the contract.

Commitments to extend credit represent contractual commitments to extend loans and revolving credits. Commitments generally

have fixed expiration dates or other termination clauses and may require a payment of a fee. Since commitments may expire

without being drawn upon, the total contracted amounts do not necessarily represent future cash requirements.

Undrawn loan commitments, as at the reporting date, maturing after one year amounted to AED 14,626 million

(2007: AED 2,643 million).

Commitments for operating lease payments falling due in more than one year amounted to AED 74. 6 million

(2007: AED 6.9 million).



33 D

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33 D

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34 Related parties (Continued)

Compensation of directors and key management personnel

2008 2007 AED’000 AED’000

Key management compensation

Short term employment benefits 35,289 23,916

Post employment benefits 1,128 581

Termination benefits 920 799

Directors’ remuneration 743 3,710

Terms and conditions

Interest rates earned on loans and advances extended to related parties during the year have ranged from 3.20% to 18.00% per

annum (2007: 5% to 15% per annum).

Interest rates incurred on customers’ deposits placed by related parties during the year have ranged from nil (non-interest bearing

accounts) to 5.75% per annum (2007: nil to 5.05% per annum).

Fees and commissions earned on transactions with related parties during the year have ranged from 0.50% to 1.00% per annum

(2007: 0.50% to 1% per annum).

Collaterals against lending to related parties range from being unsecured to fully secure.

Balances

Balances with related parties at the reporting date are shown below:

Directors and key Major 2008 2007 management shareholder Others Total Total AED’000 AED’000 AED’000 AED’000 AED’000

Loans and advances 1,062,128 - 1,386,884 2,449,012 2,415,462

Customers’ deposits 367,610 232,722 6,903,690 7,504,022 14,959,810

Contingent liabilities 893,348 - 84,549 977,897 967,146

Others comprise Government of Abu Dhabi entities.

33 Derivative financial instruments (continued)

The positive / negative fair value in respect of derivatives

represents the gain / loss respectively, arising on fair

valuation of the hedging instrument. These amounts

are not indicative of any current or future losses, as a

similar positive / negative amount has been adjusted to

the carrying value of the hedged loans and advances and

non-trading investments.

Derivatives held for trading

The Group uses derivatives, not designated in a qualifying

hedge relationship, to manage its exposure to foreign

currency, interest rate and credit risks. The instruments

used mainly include interest rate and currency swaps and

forward contracts. The fair values of those derivatives are

shown in the table above.

Derivatives held as fair value hedge

The Group uses interest rate swaps, to hedge against the

changes in fair value arising from specifically identified

interest bearing assets such as loans and advances and

non-trading investments. The Group uses forward foreign

exchange contracts and currency swaps to hedge against

specifically identified currency risks.

Derivatives held as cash flow hedge

The Group uses cross-currency interest rate swaps to

hedge the foreign currency and interest rate risk arising

from its issuance of Euro medium term floating rate notes in

foreign currencies. The Group has substantially matched

the critical terms of the cross-currency swaps and the Euro

medium term floating rate notes.

34 Related parties

Identity of related parties

Related parties comprise major shareholders, directors and

key management of the Group and their related concerns.

The terms of these transactions are approved by the Group’s

management and are made on terms agreed by the Board

of Directors or management.

Parent and ultimate controlling party

Pursuant to the provisions of Law No. 16 of 2006 concerning

establishment of Abu Dhabi Investment Council (the

“Council”), the erstwhile parent transferred its shareholding

to the Council with effect from 1 February 2007.

The ultimate controlling party is the government of

Abu Dhabi.



35 Segmental Information (continued)

Segmental information for the year ended 31 December 2008 was as follows:

Head Domestic Int’l Investment office support Banking Banking Banking functions/other Total AED’000 AED’000 AED’000 AED’000 AED’000

(a) Income statement:

Operating income 2,711,636 985,391 965,349 638,906 5,301,282

Profit from operations

before impairment

charge and taxation 2,156,966 694,074 801,253 155,573 3,807,866

Net impairment charge

on financial assets (77,314) (72,452) (13,926) (553,388) (717,080)

profit from operations

before taxation 2,079,652 621,622 787,327 (397,815) 3,090,786

Overseas taxation - (78,966) - 6,915 (72,051)

Net profit for the year 3,018,735

(b) Assets:

Segment total assets 75,507,454 36,609,945 76,561,282 22,147,288 210,825,969

Inter segment balances (46,171,489)

164,654,480

Segment capital expenditure 85,405 59,932 9,513 767,463 922,313

Segment depreciation 21,415 22,571 4,057 34,128 82,171

(c) Liabilities:

Segment liabilities 73,478,481 35,906,334 75,814,563 11,269,992 196,469,370


150,297,881

34 Related parties (continued)

Transactions

Transactions carried out during the year with related parties are shown below:

Directors and key Major 2008 2007 management shareholder Others Total Total AED’000 AED’000 AED’000 AED’000 AED’000

Fee and commission income 13,033 - 781 13,814 4,909

Interest income 35,600 - 124,855 160,455 152,713

Interest expense 10,400 20,323 208,413 239,136 126,840

35 Segmental Information

Segment information is presented in respect of the Group’s

business and geographical segments. The primary format,

business segments, is based on the Group’s management and

internal reporting structure.

Segment capital expenditure is the total cost incurred during

the year to acquire premises and equipment.

Primary segmental information:

The Group is organised into the following four major business

segments, which form the basis on which the primary segment

information is reported:

Domestic Banking•

Includes loans and advances, investments, deposits, and

other transactions and balances with corporate and retail

customers.

International Banking •

Includes loans and advances, investments, deposits, and

other transactions and balances with corporate and retail

customers outside the UAE.

Investment Banking •

Includes investments, corporate finance, brokerage and

asset management activities. Undertakes borrowings

issue of debt securities, use of derivates for risk

management purposes, and investing in liquid assets

such as short term placement.

Head Office Support Functions / others•

Includes certain loans and advances, deposits, investments

and manages the Group’s capital, certain corporate costs

and start up costs of new units. Cost – sharing agreements

are used to allocate central costs to business segments

on a reasonable basis. The assets and reportable profit

or loss of the Global private banking business are not

reported separately due to insignificance.

Transactions between segments, and between branches

within a segment, are conducted at estimated market rates

on an arm’s length basis. Interest is charged or credited to

branches and business segments either at contracted or

pool rates, both of which approximate the replacement cost

of funds.



The Group is based primarily on its business segments. Further, the Group operates in two geographical markets, the UAE and

Overseas. The geographical analysis has been based primarily upon the location of reporting branches and subsidiaries.

United Arab Emirates Overseas Total 2008 2007 2008 2007 2008 2007 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

Net profit for the year 2,783,331 2,348,085 235,404 157,052 3,018,735 2,505,137

Total assets 144,176,197 118,911,435 27,003,337 41,412,274 171,179,534 160,323,709

Inter segment balances (6,525,054) (20,892,991)

164,654,480 139,430,718

36 Earnings per share

Earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average

number of ordinary shares in issue during the year as set out below:

2008 2007

Basic earnings per share:

Net profit for the year attributable to equity shareholders (AED ‘000) 3,018,735 2,505,137

Weighted average number of ordinary shares:Ordinary shares as at 1 January (‘000s) 1,591,304 1,224,080 Effect of bonus shares issued during 2007 (‘000s) - 367,224Effect of bonus shares issued during 2008 (‘000s) 329,436 329,436Effect of conversion of subordinated debt (‘000s) 44,393 -

Weighted average number of ordinary shares (‘000s) 1,965,133 1,920,740

Basic earnings per share (AED) 1.54 1.30

Diluted earnings per share:Net profit for the year attributable to equity shareholders (AED ‘000) 3,018,735 2,505,137Add: Interest on subordinated convertible notes (AED ‘000) 107,362 150,056

Add: Expenses on share option scheme (AED ‘000) 7,214 -

shareholders for diluted earnings per share (AED ‘000) 3,133,311 2,655,193 Weighted average number of ordinary shares (‘000s) 1,965,133 1,920,740Effect of dilutive potential ordinary shares issued (‘000s) 113,835 100,604Effect of share option scheme (‘000s) 6,905 - Weighted average number of ordinary shares in issue for diluted earnings per share (‘000s) 2,085,873 2,021,344 Diluted earnings per share (AED) 1.50 1.31

35 Segmental Information (continued)

Segmental information for the year ended 31 December 2007 was as follows:

Head Domestic Int’l Investment office support Banking Banking Banking functions/other Total AED’000 AED’000 AED’000 AED’000 AED’000

(a) Income statement:

Operating income 1,843,003 722,076 671,116 429,409 3,665,604


before impairment

charge and taxation 1,456,150 481,607 556,658 116,820 2,611,235

Net impairment charge

on financial assets (1,905) (57,354) (1,196) 18,765 (41,690)


before taxation 1,454,245 424,253 555,462 135,585 2,569,545

Overseas taxation - (70,160) - 5,752 (64,408)

Net profit for the year 2,505,137

(b) Assets:

Segment total assets 55,448,529 34,192,641 56,112,214 17,378,964 163,132,348


139,430,718

Segment capital expenditure 9,756 34,262 3,294 182,208 229,520

Segment depreciation 20,876 18,595 5,701 22,820 67,992

(c) Liabilities:

Segment liabilities 49,803,359 34,141,083 55,568,931 12,404,743 151,918,116


128,216,486



The effect of potential ordinary shares is antidilutive on the

earning per share for the year 2007, therefore the basic earning

per share is presented in the consolidated income statement.

37 Fiduciary activities

The Group held assets in trust or in a fiduciary capacity for its

customers at 31 December 2008 amounting to AED 6,325

million (2007: AED 12,675 million). Furthermore, the Group

provides custodian services for some of its customers.

The underlying assets held in a custodial or fiduciary

capacity are excluded from the consolidated financial

statements of the Group.

38 Special Purpose Entities

The Group has created Special Purpose Entities (SPEs)

with defined objectives to carry on fund management

and investment activities on behalf of customers.

The equity and investments managed by the SPEs

are not controlled by the Group and the Group does

not obtain benefits from the SPEs’ operations, apart

from commissions and fee income. In addition, the

Group does not provide any guarantees or assume any

liabilities of these entities. Consequently, the SPEs’

assets, liabilities and results of operations are not

included in the consolidated financial statements of the

Group. The SPEs are as follows:

Shareholders holding more than 5% of NBAD shares as at 31 December 2008

-- Abu Dhabi Investment Council (ADIC) 70.48%

Ownership of NBAD shares by Nationality

Foreign ownership is restricted to 25% of the total shares listed on the Abu Dhabi Securities Exchange. As of 31 December 2008,

foreign ownership in NBAD shares amounted to 1.18%.

Market Capitalisation (Price @ AED 8.86) 31 Dec 2008 AED 17.5bn (US$ 4.8bn)

Diluted EPS Dec 2008 1.50

PE Ratio (on Diluted EPS) Dec 2008 5.9

Price / Book Dec 2008 1.2

Dividend Yield (AED 0.3 / share) 2008 3.4%

Dividend Cover (Payout %) 2008 5.1x (20%)

Country of Holding HoldingLegal name Activities incorporation 2008 2007

NBAD Fund Managers

(Guernsey) Limited Fund management Bailiwick of Guernsey 100% 100%

NBAD Global Growth

Fund PCC Limited Fund management Bailiwick of Guernsey 100% 100%

NBAD Private Equity 1 Fund management Cayman Islands 58% 58%

NBAD Nominees Limited Dormant England 100% 100%

39 Comparative figures

Comparative figures have been reclassified to conform with the presentation for the current year.

Notes to the consolidated financial statements Major Shareholders

109

Group Network


Branches - UAE

Das IslandTelephone: 02 - 8731099Telefax: 02 - 8731448 P.O. Box: 46175, Abu Dhabi

Liwa Telephone: 02 - 8822388Telefax: 02 - 8822188 P.O. Box: 50419, Western Area, Abu Dhabi

Madinat Zayed Telephone: 02 - 8846146Telefax: 02 - 8846496 P.O. Box: 50019, Madinat Zayed, Abu Dhabi

Government Complex*Telephone: 02 - 8945428Telefax: 02 - 8846981P.O. Box: 50019, Madinat Zayed, Abu Dhabi

Al Mirfaa Telephone: 02 - 8836506Telefax: 02 - 8836313 P.O. Box: 77110, Abu Dhabi

Paris GalleryTelephone: 02 - 6651215Telefax: 02 - 6650563P.O. Box: 110818, Khalidiya Center, Abu Dhabi

Al Ruwais Telephone: 02 - 8776343 Telefax: 02 - 8776453 P.O. Box: 11875, Al Ruwais, Abu Dhabi

Al MuroorTelephone: 02 - 4485833Telefax: 02 - 4484181P.O. Box: 2712, Abu Dhabi

Mussafah Telephone: 02 - 5029500Telefax: 02 - 5559997P.O. Box: 8351, Abu Dhabi

NPCC*Telephone: 02 - 5549282 Telefax: 02 - 5549193 P.O. Box: 8351, Abu Dhabi

Mussafah Municipality*Telephone: 02 - 5540300 Telefax: 02 - 5549193P.O. Box: 8351, Abu Dhabi

Industrial City of Abu Dhabi Telephone: 02 - 5501125Telefax: 02 - 5501262 P.O. Box: 90855, Mussafah, Abu Dhabi

Al Salam StreetTelephone: 02 - 4103900Telefax: 02 - 6446050P.O. Box: 7749, Abu Dhabi

Al ShahamaTelephone: 02 - 5632411Telefax: 02 - 5633508P.O. Box: 76142, Al Shahama, Abu Dhabi

New Al ShahamaTelephone: 02 - 5635695Telefax: 02 - 5630806 P.O. Box: 77455, Al Shahama, Abu Dhabi

Shahama Municipality*Telephone: 02 - 5631385Telefax: 02 - 5631409P.O. Box: 77455, Al Shahama, Abu Dhabi

Abu Dhabi National Exhibition CentreTelephone: 02 - 4494996Telefax: 02 - 4493788P.O. Box: 94959, Abu Dhabi

Marina MallTelephone: 02 - 6816002Telefax: 02 - 6816018P.O. Box: 35835, Abu Dhabi

Mina Road Telephone: 02 - 6767665Telefax: 02 - 6714143P.O. Box: 48089, Abu Dhabi

Al EtihadTelephone: 02 - 4104953Telefax: 02 - 6417812P.O. Box: 31818, Abu Dhabi

Emirates PalaceTelephone: 02 - 6908900 Telefax: 02 - 6908908P.O. Box: 40039, Abu Dhabi

Petroleum Institute*Telephone: 02 - 6075365Telefax: 02 - 6075385P.O. Box: 26380, Abu Dhabi

Abu Dhabi

Main BranchTelephone: 02 - 6111111Telefax: 02 - 6275738P.O.Box: 2993, Abu Dhabi

ADIA*Telephone: 02 - 4105168Telefax: 02 - 6212157P.O. Box: 2993, Abu Dhabi

Khalidiya Telephone: 02 - 4106000 Telefax: 02 - 6667480 P.O. Box: 46175, Abu Dhabi

ADCO* Telephone: 02 - 6672642 Telefax: 02 - 6653057 P.O. Box: 46175, Abu Dhabi

ADMA* Telephone: 02 - 6263225 Telefax: 02 - 6263295 P.O.Box: 46175, Abu Dhabi

ADNOC* Telephone: 02 - 6669143 Telefax: 02 - 6679869 P.O.Box: 46175, Abu Dhabi

Abu Dhabi Municipality* Telephone: 02 - 6744750 Telefax: 02 - 6767136 P.O. Box: 46175, Abu Dhabi

ZADCO* Telephone: 02 - 6768821Telefax: 02 - 6768851 P.O. Box: 46175, Abu Dhabi

Hilton* Telephone: 02 - 6812280 Telefax: 02 - 6667480 P.O. Box: 46175, Abu Dhabi

Abu Dhabi Municipality – Al Karama* Telephone: 02 - 4450712Telefax: 02 - 4450568P.O. Box: 46175, Abu Dhabi.

Abu Dhabi Food Control Authority* Telephone: 02 - 4468559 Telefax: 02 - 4460184 P.O. Box: 46175, Abu Dhabi

Abu Dhabi International Airport Telephone: 02 - 5075400 Telefax: 02 - 5757593 P.O. Box: 5279, Abu Dhabi

Sheikh Rashed Bin Saeed Al Maktoum RoadTelephone: 02 - 6416800 Telefax: 02 - 6416677 P.O. Box: 46727, Abu Dhabi

Abu Dhabi Mall Telephone: 02 - 6452200 Telefax: 02 - 6452424 P.O. Box: 7021, Abu Dhabi

Arabian Gulf Road Telephone: 02 - 4478878 Telefax: 02 - 4478344 P.O. Box: 71230, Abu Dhabi

Baniyas Telephone: 02 - 5833755 Telefax: 02 - 5833359 P.O. Box: 11700, Baniyas

Abu Dhabi Municipality – Al Wathba*Telephone: 02 - 5831720Telefax: 02 - 5831740P.O. Box: 11700, Abu Dhabi

Bateen Telephone: 02 - 6668792Telefax: 02 - 6663925 P.O. Box: 7644, Abu Dhabi

Between The Two Bridges Telephone: 02 - 5589446Telefax: 02 - 5589447 P.O. Box: 26380, Abu Dhabi

Corniche Telephone: 02 - 6919777Telefax: 02 - 6819122 P.O. Box: 3699, Bel-Ghailam Tower, Corniche Rd. Abu Dhabi

Delma Island Telephone: 02 - 8781240 Telefax: 02 - 8781331 P.O. Box: 50670, Delma, Abu Dhabi

Government Complex (TAMM, Delma)*Telephone: 02 - 8945528Telefax: 02 - 8945570P.O. Box: 50670, TAMM Center, Delma, Abu Dhabi

Branches - UAE

*Denotes cash offices*Denotes cash offices


JumeirahTelephone: 04 - 3445050Telefax: 04 - 3499012P.O.Box: 333314, Jumeriah, Area 1, Dubai

Dubai Internet CityTelephone: 04 - 4370777Telefax: 04 - 4370772P.O. Box: 502720, Dubai

Mall of the EmiratesTelephone: 04 - 3413888 Telefax: 04 - 3413889P.O. Box: 211875, Dubai

Dubai Health Care CityTelephone: 04 - 4245600Telefax: 04 - 4298350P.O. Box: 505115, Dubai

Dubai MallTelephone: 04 - 3398207Telefax: 04 - 3398463P.O. Box: 73700, Dubai

Fujairah

FujairahTelephone: 09 - 2222633Telefax: 09 - 2227241P.O. Box: 79, Fujairah

Dibba Al HisnTelephone: 09 - 2440677Telefax: 09 - 2440688P.O. Box: 149900 – Dibba Al Hisn, Fujairah

Dibba (Muhallab)Telephone: 09 - 2444223Telefax: 09 - 2442217P.O. Box: 11500, Dibba, Fujairah

QidfaaTelephone: 09 - 2361010 Telefax: 09 - 2361001P.O. Box: 1227, Qidfaa, Fujairah

Ras Al Khaimah

Al NakheelTelephone: 07 - 2056800Telefax: 07 - 2281305 P.O. Box: 5744, Al Nakheel, Ras Al Khaimah

Ras Al Khaimah Telephone: 07 - 2334333 Telefax: 07 - 2330950 P.O.Box: 350, Ras Al Khaimah

Sharjah

Al Bourj AvenueTelephone: 06 - 5695500Telefax: 06 - 5695511P.O. Box: 20606, Sharjah

SharjahTelephone: 06 - 5721111Telefax: 06 - 5721100 P.O. Box: 1109, Sharjah

Al Falah Camp *Telephone: 06 - 5385143Telefax: 06 - 5583455 P.O. Box: 1109, Sharjah

Al DhaidTelephone: 06 - 8822929Telefax: 06 - 8826006 P.O. Box: 13443, Al Dhaid, Sharjah

Al MadamTelephone: 06 - 8861212Telefax: 06 - 8861813P.O. Box: 48100, Al Madam, Sharjah

Khorfakkan Telephone: 09 - 2385250Telefax: 09 - 2383735 P.O. Box: 10092, Khorfakkan, Sharjah

KalbaTelephone: 09 - 2772112Telefax: 09 - 2772712P.O. Box: 11979, Kalba, Sharjah

Sharjah Industrial AreaTelephone: 06 - 5353530Telefax: 06 - 5353113P.O. Box: 33777, Sharjah

Umm Al Quwain

Umm Al QuwainTelephone: 06 - 7660033Telefax: 06 - 7667577P.O.Box: 733, Umm Al Quwain

Abu Dhabi Chamber of Commerce & IndustryTelephone: 02 - 6177460Telefax: 02 - 6275738P.O. Box: 662, Abu Dhabi

Al Silaa BranchTelephone: 02 - 8721979Telefax: 02 - 8721959P.O. Box: 50019, Abu Dhabi

Al Ain

Al Ain Clock TowerTelephone: 03 -7642400Telefax: 03 - 7668150P.O.Box: 1138, Al Ain

Al Ain Aud El ToubahTelephone: 03 - 7011300Telefax: 03 - 7511616P.O.Box: 17822, Al Ain

Al Nada Ladies*Telephone: 03 - 7518300Telefax: 03 - 7661551P.O. Box: 17822, Al Ain

Al Ain Cement*Telephone: 03 - 7828060Telefax: 03 - 7517911P.O. Box: 17822, Al Ain

Al Ain International Airport* Telephone: 03 - 7855511Telefax: 03 - 7855588P.O. Box: 17822, Al Ain

Al Ain Defence*Telephone: 03 - 7688824 Telefax: 03 - 7688879P.O. Box: 17822, Al Ain

Al SanaiyaTelephone: 03 - 7213222Telefax: 03 - 7212155 P.O. Box: 19771, Al Ain

Sweihan Telephone: 03 - 7347919Telefax: 03 - 7347414P.O. Box: 10033, Sweihan, Abu Dhabi

Al HayerTelephone: 03 - 7322400 Telefax: 03 - 7322500 P.O. Box: 17087, Al Hayer, Al Ain

Al MaqamTelephone: 03 - 7684313Telefax: 03 - 7684451P.O. Box: 85313, Al Maqam, Al Ain

Al Ain MallTelephone: 03 - 7519900Telefax: 03 - 7513636P.O. Box: 59212, Al Ain

Al Ain Civic CenterTelephone: 03 - 7625414Telefax: 03 - 7624425P.O. Box: 86777, Al Ain

Al WaganTelephone: 03 - 7351886Telefax: 03 - 7351451P.O. Box: 21844, Al Ain

Ajman

AjmanTelephone: 06 - 7422996Telefax: 06 - 7425750P.O. Box: 988, Ajman

Dubai

DeiraTelephone: 04 - 7033770Telefax: 04 - 2243777 P.O. Box: 4436, Deira, Dubai

Dubai SideTelephone: 04 - 3599111Telefax: 04 - 3517388P.O. Box: 2372, Dubai

Jebel AliTelephone: 04 - 8116700Telefax: 04 - 8815181P.O. Box: 17177, Jebel Ali Area, Dubai

Sheikh Zayed RoadTelephone: 04 - 7071111Telefax: 04 - 3430527P.O. Box: 33317, Dubai

Al Qusais Telephone: 04 - 7058500Telefax: 04 - 2581613P.O.Box: 48111, Dubai

Branches - UAEBranches - UAE



Port Said BranchTelephone: +2066 3384400Telefax: +2066 3384431Telex: 63242 PORZAB UN / 63018 PSHIP UNSwift: NBAD EG CA PSDAddress: El Salam Tower, Sultan Mahmoud St,Tahr El Bahar No. 4, Port Said, Egypt.

Mansoura BranchTelephone: +2050 2281200Telefax: +2050 2281215Telex: 21219 MNZAB UNSwift: NBAD EG CA MNSAddress: 242 Al Guesh Street, P.O.Box: 350, Mansoura, Egypt.

Hurghada BranchTelephone No: +2065 3412100Telefax No. : +2065 3412111 Swift: NBAD EG CA HRGAddress: West Side Touristic Center Shop 1/3,Al Mashaia Area, Hurghada, Red Sea, Egypt.

Sharm El Sheikh BranchTelephone: +2069 3621950 Telefax: +2069 3621960Swift: NABD EG CA SHKAddress: Golden Center, Unit No. 19 - Ground Floor,Al Salam Street - Na ama Bay, Sharm El Sheikh,South Sinai, Egypt.

Sharm El Sheik - Cash Office*Telephone: +2069 3621970Telefax: +2069 3621973Address: Sanafir Hotel, Unit No. 2, Na ama Bay, Sharm El Sheikh South Sinai - Red Sea, Egypt.

Al Akkad BranchTelephone: +202 24137844 Telefax: +202 24137843 Switch: 0020-2-22752236 or 22752382Swift: NBAD EG CA AAKDAddress: 36 Al Akkad Street, Nasr City, Cairo, Egypt.

San Stefano BranchTelephone: +20-3-4690017 / 29 Telefax: +20-3-4690028Address: San Stefano Grand Plaza, Alexandria, Egypt.

Luxor BranchTelephone: +2095 2399830Telefax: +2095 2399839Swift: NBAD EG CA LUXAddress: Khaled Ibn Al Waleed Street,Sonesta St. George Hotel, Luxor, Egypt.

Dandy Mall BranchTelephone: +202 38282960Telefax: +202 38282957Swift: NBAD EG CA OCTAddress: K.M. 28 Cairo Alex. Desert Road, Unit No. 23,Dandy Mall directly before Toll Station, Giza, Egypt.

Assiut BranchTelephone: +2088 2422800 Telefax: +2088 2422811Swift: NBAD EG CA ASUAddress: 32A, Tanzeam 40 Awaed El Gomhoria Street,Assiut, Upper Egypt.

Tanta BranchTelephone: +2040 3385800Telefax: +2040 3385811 Swift: NBAD EG CA TNTAddress: 22 El Geish Street, Al Sarayah Tower, Tanta, Gharbia – Egypt.

El Obour BranchTelephone: +202 24137866 Telefax: +202 24137865 SWIFT: NBAD EG CA OBRAddress: Unit No. 1 & 2, City Club Wall, Cairo Ismailya Desert Road, El Obour City, El Qalubia, Egypt.

Damietta BranchTelephone: +20-57 392201 / 392000 Telefax: +20-57 392222Address: 173 Saad Zaghloul Street, Damietta, Egypt.

El Choueifat BranchTelephone: +202 27683282 Telefax: +202 27683281 Telex: NBAD EG CA CHFAddress: El Choueifat School - Main Gate,New Fifth Urban Community (Kattameya),New Cairo, Egypt.

Hurghada Cash Office-Titanic Beach Hotel*Telephone: +2065 3461420 / 29Telefax: +2065 3461430 / 33Address: LTI Titanic Beach Hotel– South Magawish – KM 17,Sahl Hashish Road,Hurghada, Red Sea, Egypt.

Bahrain

Bahrain – Full Commercial BranchTelephone: +973 17 560870Telefax: +973 17 583281Telex: 8982 BAZABI BNSwift: NBAD BH BM BRAAddress: Building No. 2611, Road No 2833, Al Seef District 428, P.O. Box: 5886, Manama, Kingdom of Bahrain

Egypt

Regional Office - Cairo - EgyptTelephone: +202 37475102 / 37475000/37475305 Telefax: +20 2 37475295Telex: 93822/3 BNZAB UNSwift: NBAD EG CA XXXAddress: Nile Tower Building (18th Floor),21 Charles de Gaulle St . Cairo, Egypt

6th October City (Main Branch)Telephone: +20 2 38282900 Telefax: +20 2 38282921Telex: 20250Swift: BIC NBAD EG CA OCTAddress: 52, H. AL Mahwar Al Markazy,Banks District, 6th October City, Egypt

Elite Banking Unit - Giza BranchTelephone: +202 37475000 / 37475300Telefax: +202 37475296Telex: 93822/3 BNZAB UNSwift: NBAD EG CA GZAAddress: Nile Tower – 1st & 3 rd Floors,21 Charles de Gaulle St . Cairo, Egypt

Talaat Harb BranchTelephone: +202 27683240Telefax: +202 27683243 Telex: 92310/21220 BNZABSwift: NBAD EG CA THBAddress: 22, Kasr El Nil Street,Talaat Harb, Cairo, Egypt.

Mohandessin BranchTelephone: +202 38282945Telefax: +202 38282944 Telex: 20138 BNZAB UNSwift: NBAD EG CA MHDAddress: 35 Mohie El Din Abu El Ezz Street,El Mohandessin, Giza, Cairo, Egypt.

Heliopolis BranchTelephone: +20 2 24137800Telefax: +20 2 24137825Telex: 22226 UNSwift: NBAD EG CA HLPAddress: 13A, Ramsis Street, From Salah Salem Road,Heliopolis, Cairo, Egypt

City Stars Heliopolis*Telephone: +20 2 24137852Telefax: +20 2 24137849Swift: NBAD EG CA HLP (through Heliopolis branch)Address: Unit No. 148, City Stars Mall,Nasr City, Cairo, Egypt

Maadi BranchTelephone: +20 2 27683200Telefax: +20 2 27683216Telex: 20047 UN Swift: NBAD EG CA MADAddress: Crossing of Roads 151/152 (near Horreya Square) Maadi, Cairo, Egypt

Maadi City Center BranchTelephone: +202 27683237 Telefax: +202 27683236Swift: NBAD EG CA MADAddress: Maadi City Center, Ring Road,Medinat El Mirage 11435 – Unit No.27,Katameya Road, Cairo, Egypt.

Alexandria Salah Salem BranchTelephone: +203 4196070Telefax: +203 4196068Telex: 54366 ALZAB UNSwift: NBAD EG CA ALXAddress: 28, Salah Salem Street, Alexandria, Egypt.

Alexandria Sporting BranchTelephone: +203 4196000 Telefax: +203 4196026 Telex: 54211 ALZAB UNSwift: NBAD EG CA SPTAddress: 243 El Horreya Street, Sporting,Alexandria, Egypt.

Alexandria City Center BranchTelephone: +203 4196048Telefax : +203 4196047Swift: NBAD EG CA SPTAddress: City Centre, Alexandria, Egypt.

Branches - OverseasBranches - Overseas



Amarat Branch

Telephone: + 249 183 569656 / 604 / 640

Telefax: + 249 183 569625

Swift: NBAD SD KH AMR

Address: Street 15, Block 9/10, Plot No. 50/1

P O Box: 15141, Amarat, Khartoum, Republic of Sudan

United Kingdom

London BranchTelephone: +44 207 3933600Telefax: +44 207 3933636Telex: 290475 MASRAF G / 896867 NBAD WE GSwift: NBAD GB 2L Address: One Knightsbridge, London SW1X 7 LY, U.K

Subsidiaries

United States of America

Abu Dhabi International Bank Inc.Telephone: +1 202 8427900Telefax: +1 202 8427955Telex: 197655/6/7 ADIB WSHSwift: ADIB US 33Address: 1020, 19th Street, N.W., Suite 500,Washington D.C. 20036, U.S.A.

Netherlands Antilles

Curacao OfficeAddress: W.F.G. (Jombi) Mensing 36, P.O. Box: 3141, Curacao, Netherlands Antilles

Switzerland

NBAD Private Bank (Suisse) SATelephone: +41 22 7075000Telefax: +41 22 7075010Address: Quai de l’lle 5, P.O. Box: 5055,CH-1211 Geneva 11, Switzerland

Jersey Channel Islands

NBAD Trust Company (Jersey) LimitedTelephone: +44 1534 609000Telefax: +44 1534 6093333Address: C/O Mourant Private Wealth, 22 Grenville Street,St. Helier, Jersey JE4 8PX, P.O. Box: 87, Jersey, Channel Islands

United Arab Emirates

Abu Dhabi National Leasing LLCTelephone: +971 2 6111629Telefax: +971 2 6269111P.O. Box: 4 Address: One NBAD Tower, Sheikh Khalifa Street,Abu Dhabi, United Arab Emirates

Abu Dhabi National Islamic Finance Pvt. JSCTelephone: +971 2 4104444Telefax: +971 2 6222597Address: P.O. Box 40057, Abu Dhabi, United Arab Emirates

Abu Dhabi Financial Services CompanyTelephone: +971 2 6161600Telefax: +971 2 6273285P.O. Box: 28400, Abu Dhabi, United Arab Emirates

France

Paris BranchTelephone: +33 1 53230280Telefax: +33 1 47208160Telex: 642710 ABUDHBD / 642712 ABUDHBKSwift: NBAD FR PPGuichet: 1798900001Address: 125, Avenue des Champs Elysees, 75008,Paris, France

Kuwait

Kuwait BranchTelephone: +965 2477173Telefax: +965 2495196Swift: NBAD KW KWP.O. Box: 2620, Safat, 13027Address: Al Bahar Tower, Ahmed Al Jaber Street,Sharq, Kuwait

Libya

Libya Rep. OfficeTelephone: + 218 213362283Telefax: + 218 213362284P.O Box: 259Address: Al Fateh Tower, 15th Floor,Office No. 152,Tripoli, Libya.

Oman

Oman Main BranchTelephone: + 968 24761000Telefax: +968 24798929 / 24761010 (Direct – RM Oman)Address: Commercial Business District (CBD), Building # 320, Way # 4010, Block No.140, P.O. BOX 303, Muscat, Postal Code 100, Sultanate of Oman.

Al Khoudh BranchTelephone: +968 24545901 / 902Telefax: +968 24545904Address: Al Khoudh Commercial St. - Building No. 356,P.O. Box: 1092, Postal Code 132,Al Khoudh, Sultanate of Oman

Sohar BranchTelephone: + 968 26851800 / 803 Telefax: + 968 26845644Address: Al Waqaiba – Banks Area,P.O. Box No 25 – Postal Code 321,AL Tarif, Sultanate of Oman.

Salalah BranchTelephone: +968 23207600Telefax: +968 23207620Address: Haffa House, P.O.Box 2715, Postal Code 211,Central Salalah, Sultanate of Oman

Al Khuwair BranchTelephone: +968 4476707 / 6702 Telefax: +968 24482329Address: Al Khuwair – Ice-Skating Building,Next to Zawawi Mosque,P O Box: 458 - Postal Code 130,Al Khuwair, Sultanate of Oman.

Al Qurum BranchTelephone: + 968 24662200/ 2206 Telefax: + 968 24563935Address: Al Qurum – ROP Parking Area, P O Box: 988 - Postal Code 116,Sultanate of Oman.

Nizwa Branch

Telephone: + 968 25414700 / 702

Telefax: + 968 25414720

Address: Opposite Firq Roundabout,

P O Box: 895 - Postal Code 611,

Nizwa, Sultanate of Oman.

Sudan

Sudan Regional OfficeTelephone: +249 183 787203Telefax: +249 183 761170 Address: P.O.Box 12147, Taka Building, Atbara Street, Khartoum, Republic of Sudan

Khartoum BranchTelephone: +249 183 778517 Telefax: +249 183 774892Swift: NBAD SD KHAddress: P.O. Box 2465, Taka Building, Atbara Street, Khartoum, Republic of Sudan

Khartoum North*Telephone: +249 185 343833Telefax: +249 185 343227P. O. Box: 1138, Postal Code: 13311Swift: NBAD SD KHAddress: Sinaat Street, Khartoum North,Republic of Sudan

Branches - Overseas / SubsidiariesBranches - Overseas

*Denotes cash offices

2008 - Fab€¦ · buoyant hydrocarbon receipts with Abu Dhabi accounting for over 90% of...

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