Saudi Awwal Bank : Financial Statements for the period ended 30 September 2023

Saudi Awwal Bank

(formerly known as The Saudi British Bank)

Interim Condensed Consolidated Financial Statements

For the nine month period ended

30 September 2023

(Unaudited)

Saudi Awwal Bank (formerly known as The Saudi British Bank)

CONTENTS OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

			Page No.
Independent auditors' review report on the interim condended consolidated financial statements	1
Interim condensed consolidated statement of financial position	2
Interim condensed consolidated statement of income - Unaudited	3
Interim condensed consolidated statement of comprehensive income - Unaudited	4
Interim condensed consolidated statement of changes in equity - Unaudited	5
Interim condensed consolidated statement of cash flows - Unaudited	6
Notes to the interm condensed consolidated financial statements
1.		General	7
2.		Basis of preparation	8
3.		Basis of consolidation	8
4.	Accounting policies and impact of changes due to adoption of new standards	8
5.		Cash and balances with SAMA	10
6.		Due from banks and other financial institutions, net	10
7.		Investments, net	11
8.		Loans and advances, net	13
9.		Investment in an associate	14
10.	Goodwill and other intangibles	15
11.	Derivatives	15
12.	Customers' deposits	16
13.	Debt securities in issue	16
14.	Commitments and contingencies	16
15.	Basic and diluted earnings per share	17
16.	Zakat and income tax	17
17.	Cash and cash equivalents	18
18.	Operating segments	18
19.	Financial risk management	20
20.	Fair values of financial instruments	21
21.	Capital adequacy	23
22.	Dividend	24
23.	IBOR Transition (Interest Rate Benchmark Reforms)	24
24.	Discontinued operations	24
25.	Business Combination	24
26.	Comparative figures	26
27.	Subsequent event	26
28.	Board of Directors' approvals	26

Saudi Awwal Bank (formerly known as The Saudi British Bank)

Interim condensed consolidated statement of financial position

		As at 30	As at 31	As at 30
		September 2023	December 2022	September 2022
		Unaudited	Audited	Unaudited
			(Restated)	(Restated)
	Notes	SAR' 000	SAR' 000	SAR' 000
ASSETS
Cash and balances with Saudi Central Bank ("SAMA")	5	16,162,634	19,258,717	15,144,242
Due from banks and other financial institutions, net	6	3,144,734	5,871,533	2,085,021
Assets classified as held for sale		-	-	954,699
Positive fair value derivatives, net	11	3,821,349	2,538,074	2,624,196
Investments, net	7	88,796,497	86,363,159	78,785,835
Loans and advances, net	8	211,403,997	183,132,249	183,159,517
Investment in an associate	9	482,996	599,289	594,698
Other assets		2,320,382	2,228,977	2,378,130
Property, equipment and right of use assets, net		3,667,944	3,621,644	3,500,354
Goodwill and other intangibles, net	10, 25	10,677,584	10,790,482	10,872,355
Total assets		340,478,117	314,404,124	300,099,047
LIABILITIES AND EQUITY
Liabilities
Due to banks and other financial institutions		32,477,883	25,517,303	23,041,114
Customers' deposits	12	228,052,849	214,278,851	202,864,399
Negative fair value derivatives, net	11	3,293,823	1,907,436	1,825,581
Liabilities directly associated with assets classified
as held for sale		-	-	763,317
Debt securities in issue	13	5,073,832	5,114,836	5,048,727
Other liabilities		16,040,500	12,949,047	13,013,070
Total liabilities		284,938,887	259,767,473	246,556,208
Equity
Equity attributable to equity holders of the Bank
Share capital		20,547,945	20,547,945	20,547,945
Share premium		8,524,882	8,524,882	8,524,882
Statutory reserve		20,547,945	20,547,945	20,547,945
Other reserves		(1,949,005)	(1,182,348)	(1,142,828)
Retained earnings	25	7,867,463	6,198,227	4,964,052
Total equity attributable to equity holders of the Bank		55,539,230	54,636,651	53,441,996
Total equity attributable to non-controlling interest		-	-	100,843
Total equity		55,539,230	54,636,651	53,542,839
Total liabilities and equity		340,478,117	314,404,124	300,099,047

The accompanying notes 1 to 28 form an integral part of these interim condensed consolidated financial statements.

Lama Ghazzaoui	Tony Cripps
Chief Financial Officer	Managing Director & Authorized Member

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim Condensed Consolidated Financial Statements

2

Saudi Awwal Bank (formerly known as The Saudi British Bank)

Interim condensed consolidated statement of income - Unaudited

		For three month ended	For nine month ended
		30 September	30 September	30 September	30 September
		2023	2022	2023	2022
			(Restated)		(Restated)
	Notes	SAR'000	SAR'000	SAR'000	SAR'000
Continuing operations
Special commission income		4,458,330	2,521,263	12,348,371	6,123,706
Special commission expense		(1,879,772)	(536,427)	(4,708,438)	(1,006,957)
Net special commission income		2,578,558	1,984,836	7,639,933	5,116,749
Fee and commission income		865,749	693,760	2,424,349	2,072,538
Fee and commission expense	26	(514,764)	(473,054)	(1,520,401)	(1,348,460)
Net fee and commission income		350,985	220,706	903,948	724,078
Exchange income, net		257,229	207,269	671,203	566,640
Income from FVSI financial instruments		74,337	104,026	349,472	300,314
Dividend income		1,704	-	2,409	-
Losses on FVOCI debt instruments, net		-	-	(4,892)	-
Gains / (losses) on amortised cost investments, net		114	-	(14,929)	30,505
Other operating (expense) / income, net	25	(15,652)	98,336	(15,554)	131,349
Total operating income		3,247,275	2,615,173	9,531,590	6,869,635
Provision for expected credit losses, net	19 (a)	(144,379)	(37,514)	(511,867)	(233,192)
Operating expenses
Salaries and employee related expenses		(502,172)	(448,726)	(1,540,486)	(1,294,972)
Rent and premises related expenses		(19,540)	(10,163)	(51,018)	(32,387)
Depreciation and amortization		(192,122)	(116,332)	(419,295)	(347,889)
General and administrative expenses	26	(330,731)	(305,973)	(1,035,861)	(909,849)
Total operating expenses		(1,044,565)	(881,194)	(3,046,660)	(2,585,097)
Income from operating activities		2,058,331	1,696,465	5,973,063	4,051,346
Share in earnings of an associate	9	59,203	46,668	135,665	167,553
Net income for the period before Zakat and		2,117,534	1,743,133	6,108,728	4,218,899
income tax
Provision for Zakat and income tax	16	(287,206)	(231,042)	(963,982)	(597,232)
Net income for the period after Zakat and income		1,830,328	1,512,091	5,144,746	3,621,667
tax from continuing operations
Net loss from discontinued operations	24	-	(5,927)	-	(29,580)
Net income for the period after Zakat and income		1,830,328	1,506,164	5,144,746	3,592,087
tax
Attributable to:
Equity holders of the Bank		1,830,328	1,504,537	5,144,746	3,593,430
Non-controlling interest		-	1,627	-	(1,343)
Net income for the period after Zakat and income		1,830,328	1,506,164	5,144,746	3,592,087
tax
Basic and diluted earnings per share (in SAR)
from continuing operations attributable to equity		0.89	0.74	2.50	1.76
holders of the Bank	15
Basic and diluted losses per share (in SAR) from
discontinued operations attributable to equity		-	(0.01)	-	(0.01)
holders of the Bank	15
Basic and diluted earnings per share (in SAR)	15	0.89	0.73	2.50	1.75

The accompanying notes 1 to 28 form an integral part of these interim condensed consolidated financial statements.

Lama Ghazzaoui	Tony Cripps
Chief Financial Officer	Managing Director & Authorized Member

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim Condensed Consolidated Financial Statements

3

Saudi Awwal Bank (formerly known as The Saudi British Bank)

Interim condensed consolidated statement of comprehensive income - Unaudited

	For three month ended	For nine month ended
	30 September	30 September	30 September	30 September
	2023	2022	2023	2022
		(Restated)		(Restated)
	SAR'000	SAR'000	SAR'000	SAR'000
Net income for the period after Zakat and income tax	1,830,328	1,506,164	5,144,746	3,592,087
Other comprehensive (loss) / income for the period
Items that will not be reclassified to interim condensed
consolidated statement of income in subsequent periods
Net changes in fair value (FVOCI equity instruments)	(8,171)	-	37,750	-
Re-measurement of defined benefit liability	-	(7,094)	(26,726)	(39,157)
Items that will be reclassified to interim condensed consolidated
statement of income in subsequent periods
Debt instrument at FVOCI:
Net changes in fair value	(880,927)	(601,186)	(709,572)	(1,114,846)
Transfer to interim condensed consolidated statement of
income, net	-	-	4,892	-
Cash flow hedges:
Net changes in fair value	(48,904)	(14,274)	58,554	8,150
Transfer to interim condensed consolidated statement of	(15,737)	(1,357)	(121,968)	(12,168)
income, net
Total other comprehensive loss for the period	(953,739)	(623,911)	(757,070)	(1,158,021)
Total comprehensive income for the period	876,589	882,253	4,387,676	2,434,066
Attributable to:
Equity holders of the Bank:
Continuing operations	876,589	886,553	4,387,676	2,464,989
Discontinued operations	-	(5,927)	-	(29,580)
Non-controlling interest - discontinued operations	-	1,627	-	(1,343)
Total	876,589	882,253	4,387,676	2,434,066

The accompanying notes 1 to 28 form an integral part of these interim condensed consolidated financial statements.

Lama Ghazzaoui	Tony Cripps
Chief Financial Officer	Managing Director & Authorized Member

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim Condensed Consolidated Financial Statements

4

Saudi Awwal Bank (formerly known as The Saudi British Bank)

Interim condensed consolidated statement of changes in equity - Unaudited

For the nine month period ended

					Attributable to equity holders of the Bank			Non-
				Share	Share	Statutory		Other	Retained			controlling	Total equity
			Note	capital	premium	reserve		reserves	earnings	Total		interest
			SAR'000	SAR'000	SAR'000		SAR'000	SAR'000	SAR'000		SAR'000	SAR'000
	30 September 2023
	Balance at the beginning of the period			20,547,945	8,524,882	20,547,945		(1,182,348)	6,244,780	54,683,204	-	54,683,204
	Effect of restatement		25	-	-	-		-	(46,553)	(46,553)	-	(46,553)
	Restated balance at the beginning of the period			20,547,945	8,524,882	20,547,945		(1,182,348)	6,198,227	54,636,651	-	54,636,651
	Total comprehensive income / (loss) for the period
	Net income for the period after Zakat and income tax			-	-	-		-	5,144,746	5,144,746	-	5,144,746
	Net changes in fair value of cash flow hedges			-	-	-		58,554	-	58,554	-	58,554
	Net changes in fair value of FVOCI equity instruments			-	-	-		37,750	-	37,750	-	37,750
	Net changes in fair value of FVOCI debt instruments			-	-	-		(709,572)	-	(709,572)	-	(709,572)
	Re-measurement of defined benefit liability			-	-	-		(26,726)	-	(26,726)	-	(26,726)
	Transfer to interim condensed consolidated statement of income			-	-	-		(117,076)	-	(117,076)	-	(117,076)
				-	-	-		(757,070)	5,144,746	4,387,676	-	4,387,676
	Purchase of treasury shares			-	-	-		(37,414)	-	(37,414)	-	(37,414)
	Employee share plan reserve net charge and shares vested			-	-	-		27,827	-	27,827	-	27,827
	2023 interim dividend, net of Zakat and income tax		22	-	-	-		-	(1,992,689)	(1,992,689)	-	(1,992,689)
	2022 final dividend, net of Zakat and income tax		22	-	-	-		-	(1,482,821)	(1,482,821)	-	(1,482,821)
	Balance at the end of the period			20,547,945	8,524,882	20,547,945		(1,949,005)	7,867,463	55,539,230	-	55,539,230
					Attributable to equity holders of the Bank			Non-
				Share	Share	Statutory		Other	Retained			controlling	Total equity
			Note	capital	premium	reserve		reserves	earnings	Total		interest
			SAR'000	SAR'000	SAR'000		SAR'000	SAR'000	SAR'000		SAR'000	SAR'000
	30 September 2022
	Balance at the beginning of the period			20,547,945	8,524,882	20,547,945	(29,939)	3,335,498	52,926,331	102,186	53,028,517
	Total comprehensive income / (loss) for the period (restated)
	Net income / (loss) for the period after Zakat and income tax			-	-	-	-	3,593,430	3,593,430	(1,343)	3,592,087
	Net changes in fair value of cash flow hedges			-	-	-	8,150	-	8,150	-	8,150
	Net changes in fair value of FVOCI debt instruments			-	-	-	(1,114,846)	-	(1,114,846)	-	(1,114,846)
	Re-measurement of defined benefit liability			-	-	-	(39,157)	-	(39,157)	-	(39,157)
	Transfer to interim condensed consolidated statement of income			-	-	-	(12,168)	-	(12,168)	-	(12,168)
				-	-	-	(1,158,021)	3,593,430	2,435,409	(1,343)	2,434,066
	Employee share plan reserve net charge and shares vested			-	-	-	45,132	-	45,132	-	45,132
	2022 interim dividend, net of Zakat and income tax	22	-	-	-	-	(1,262,501)	(1,262,501)	-	(1,262,501)
	2021 final dividend, net of Zakat and income tax			-	-	-	-	(702,375)	(702,375)	-	(702,375)
	Balance at the end of the period			20,547,945	8,524,882	20,547,945 (1,142,828)	4,964,052	53,441,996	100,843	53,542,839

The accompanying notes 1 to 28 form an integral part of these interim condensed consolidated financial statements.

Lama Ghazzaoui	Tony Cripps
Chief Financial Officer	Managing Director & Authorized Member

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim Condensed Consolidated Financial Statements

5

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim condensed consolidated statement of cash flows - Unaudited For the nine month period ended

	Notes	30 September	30 September
	2023	2022
		SAR'000	SAR'000
			(Restated)
OPERATING ACTIVITIES
Net income for the period before Zakat and income tax, after loss from discontinued operations	6,108,728	4,192,939
Adjustments to reconcile net income before Zakat and income
tax to net cash from operating activities:
Amortisation of premium on investments not held as FVSI investments, net		(282,977)	20,042
Depreciation and amortization		419,295	347,889
Special commission expense on debt securities in issue		282,999	136,068
Special commission expense on lease liabilities		12,091	14,537
Losses / (gains) on amortised cost investments		14,929	(30,505)
Bargain purchase on acquisition of business	25	-	(108,600)
Income transferred to interim condensed consolidated statement of income		(117,076)	(12,168)
Share in earnings of an associate	9	(135,665)	(167,553)
Provision for expected credit losses, net	19 (a)	511,867	233,192
Employee share plan reserve		27,827	45,132
		6,842,018	4,670,973
Change in operating assets:
Statutory deposit with SAMA		(50,314)	(983,590)
Due from banks and other financial institutions		(118,662)	297,660
Investments held as FVSI		201,811	257,706
Loans and advances		(28,724,969)	(14,622,602)
Positive fair value derivatives		(1,224,721)	(1,514,351)
Other assets		(151,462)	36,217
Change in operating liabilities:
Due to banks and other financial institutions		6,960,580	8,377,448
Customers' deposits		13,773,998	16,103,787
Negative fair value derivatives		1,386,387	310,989
Other liabilities		3,013,088	2,226,389
		1,907,754	15,160,626
Zakat and income tax paid		(844,189)	(548,689)
Net cash generated from operating activities		1,063,565	14,611,937
INVESTING ACTIVITIES
Proceeds from sale and maturity of investments not held as FVSI		33,033,822	3,437,385
Purchase of investments not held as FVSI		(36,075,218)	(18,676,830)
Dividend received from an associate	9	251,958	156,214
Purchase of property, equipment and intangibles, net		(352,696)	(491,429)
Acquisition of business	25	-	(1,216,800)
Net cash used in investing activities		(3,142,134)	(16,791,460)
FINANCING ACTIVITIES
Special commission paid on debt securities in issue		(324,003)	(148,874)
Payment of lease liabilities		(91,104)	(67,808)
Dividends paid		(3,460,437)	(1,962,349)
Purchase of treasury shares		(37,414)	-
Net cash used in financing activities		(3,912,958)	(2,179,031)
Net change in cash and cash equivalents		(5,991,527)	(4,358,554)
Cash and cash equivalents at beginning of the period	17	11,808,078	8,543,548
Cash and cash equivalents at end of the period	17	5,816,551	4,184,994
Supplemental non cash information
Right of use assets		417,118	525,981
Lease liabilities		502,070	599,223
Assets classified as held for sale		-	954,699
Liabilities directly associated with assets classified as held for sale		-	763,317
Net changes in fair value and transfers to interim condensed consolidated statement of income	(757,070)	(1,158,021)

The accompanying notes 1 to 28 form an integral part of these interim condensed consolidated financial statements.

Lama Ghazzaoui	Tony Cripps
Chief Financial Officer	Managing Director & Authorized Member

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim Condensed Consolidated Financial Statements

6

Saudi Awwal Bank (formerly known as The Saudi British Bank) Notes to the interim condensed consolidated financial statements

For the nine month period ended 30 September 2023

1. General

Saudi Awwal Bank (formerly known as The Saudi British Bank) ('SAB') is a Saudi joint stock company incorporated in the Kingdom of Saudi Arabia and was established by a Royal Decree No. M/4 dated 12 Safar 1398H (21 January 1978). SAB formally commenced business on 26 Rajab 1398H (1 July 1978) by taking over of the operations of The British Bank of the Middle East in the Kingdom of Saudi Arabia. SAB operates under Commercial Registration No. 1010025779 dated 22 Dhul Qadah 1399H (13 October 1979) as a commercial bank through a network of 104 branches

(31 December 2022: 109 branches) in the Kingdom of Saudi Arabia. The address of SAB's head office is as follows:

Saudi Awwal Bank

7206 Prince Abdul Aziz Bin Musaid Bin Jalawi

4065 Al Murabba District.

12613 Riyadh

Kingdom of Saudi Arabia

During the period, the Group has changed its commercial name from "The Saudi British Bank" to "Saudi Awwal Bank" effective from 11 June 2023.

The objectives of SAB are to provide a range of banking services. SAB also provides Shariah-compliant products, which are approved and supervised by an independent Shari'ah Committee established by SAB.

SAB has 100% (31 December 2022: 100%) ownership interest in a subsidiary, Arabian Real Estate Company Limited ("ARECO"), a limited liability company incorporated in the Kingdom of Saudi Arabia under commercial registration No. 1010188350 dated 12 Jumada I 1424H (12 July 2003). ARECO is engaged in the real estate activities with own and leased property.

SAB has 100% (31 December 2022: 100%) directly held ownership interest in a subsidiary, SAB Markets Limited (formerly known as SABB Markets Limited) ("SAB Markets"), a limited liability company incorporated in the Cayman Islands under commercial registration No 323083 dated 21 Shaban 1438H (17 May 2017). SAB Markets is engaged in derivatives trading and repo activities.

SAB has 100% (31 December 2022: 100%) directly held ownership interest in a subsidiary, Alawwal Invest Company ("SAB Invest"), a closed joint stock company incorporated in the Kingdom of Saudi Arabia under commercial registration No.1010242378 dated 30 Dhul Hijjah 1428H (9 January 2008). SAB Invest was formed and licensed as a capital market institution in accordance with the CMA's Resolution No. 1 39 2007. SAB Invest's principal activity is to engage in security activities regulated by the CMA related to dealing, managing, arranging, advising, and taking custody of securities (see also note 25).

SAB has 100% (31 December 2022: 100%) directly held ownership interest in a subsidiary, Alawwal Real Estate Company ("AREC"), a limited liability company incorporated in the Kingdom of Saudi Arabia under commercial registration No. 1010250772 dated 21 Jumada I 1429H (26 May 2008). AREC is engaged in the real estate activities with own and leased property.

SAB has 49% (31 December 2022: 49%) directly held ownership interest in HSBC Saudi Arabia, an associate, a closed joint stock company incorporated in the Kingdom of Saudi Arabia under commercial registration No. 1010221555 dated 27 Jumada Al-Akhirah 1427H (23 July 2006). HSBC Saudi Arabia was formed and licensed as a capital market institution in accordance with the Resolution No. 37-05008 of the CMA dated 5 Dhul Hijjah 1426H corresponding to (5 January 2006). HSBC Saudi Arabia's principal activity is to engage in the full range of securities activities regulated by the CMA related to dealing, managing, arranging, advising, and taking custody of securities.

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim Condensed Consolidated Financial Statements

7

Saudi Awwal Bank (formerly known as The Saudi British Bank)

Notes to the interim condensed consolidated financial statements (continued)

For the nine month period ended 30 September 2023

SAB has participated in the following two structured entities for the purpose of effecting syndicated loan transactions in the Kingdom of Saudi Arabia and securing collateral rights over specific assets of the borrowers of those facilities under Islamic financing structures. These entities have no other business operations.

1. Saudi Kayan Assets Leasing Company.
2. Rabigh Asset Leasing Company.

SAB directly owns a 50% (31 December 2022: 50%) share in Saudi Kayan Assets Leasing Company and Rabigh Asset Leasing Company (the Company is currently under liquidation). Yanbu Asset Leasing Company was liquidated during the period where SAB was directly owning a 100% share. SAB does not consolidate these entities as it does not have the right to variable returns from its involvement with the entities or ability to affect those returns through its power over the entities excluding Yanbu Asset Leasing Company. The related underlying funding to the relevant borrowers is recorded on SAB's consolidated statement of financial position.

2. Basis of preparation

These interim condensed consolidated financial statements of the Group as at and for the period ended 30 September 2023 have been prepared in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting" as endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by the Saudi Organisation for Chartered and Professional Accountants ("SOCPA"). The interim condensed consolidated financial statements do not include all the statements and disclosures required in the annual consolidated financial statements and should be read in conjunction with Group's annual consolidated financial statements for the year ended 31 December 2022.

SAB presents its interim condensed consolidated statements of financial position in the order of liquidity.

These interim condensed consolidated financial statements are expressed in Saudi Arabian Riyals (SAR) and are rounded off to the nearest thousands, except where otherwise indicated.

3. Basis of consolidation

These interim condensed consolidated financial statements comprise the financial statements of SAB and its subsidiaries, as mentioned in note 1 (collectively referred to as "the Group"). The financial statements of the subsidiaries are prepared for the same reporting period as that of SAB, using consistent accounting policies.

Subsidiaries are entities which are directly or indirectly controlled by SAB. SAB controls an entity ("the Investee") over which it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are consolidated from the date on which control is transferred to SAB and cease to be consolidated from the date on which the control is transferred from SAB.

Intra-group transactions and balances have been eliminated in preparing these interim condensed consolidated financial statements.

The Group acts as a Fund Manager to a number of investment funds. Determining whether the Group controls such an investment fund usually focuses on the assessment of the aggregate economic interests of the Group in the Fund (comprising any carried interests and expected management fees) and the investors' rights to remove the Fund Manager. As a result, the Group has concluded that it acts as an agent for the investors in all cases, and therefore has not consolidated these funds.

4. Accounting policies and impact of changes due to adoption of new standards

The accounting policies used in the preparation of these interim condensed consolidated financial statements are consistent with those used in the preparation of the annual consolidated financial statements for the year ended 31 December 2022 unless otherwise stated.

Saudi Awwal Bank (formerly known as The Saudi British Bank) Interim Condensed Consolidated Financial Statements

8