Question

Required:
1. Provide a brief overview of the UAE Stock Exchanges.
2. Select one listed company in the UAE and prepare a report that covers at least the followings:
a) Nature of the industry in which the company is operating in, including the business model.
b) Corporate governance mechanism practiced by the company.
c) Regulatory and applicable financial reporting framework.
d) Review of financial performance using financial ratios.
3. Attach the relevant pages of financial statements from the annual report as appendix

Answer 1

Brief Overview of UAE Stock Exchanges:

UAE Stocks Exchange established in United Arab Emirates - Country in the Middle East. UAE Stock Exchanges comprising of three giant stock markets:

• Dubai Financial Market- Dubai Stock Market found in the year of 2006 and its office located in Dubai. In the very short period, DFM gained popularity and now many sector associated with it. As of 2014, there are 67 companies listed on DFM. Most of them are UAE-based companies and a few others are dual listings for companies based in other MENA region countries. Foreign companies are from the following countries: Kuwait, Bahrain, Oman, and Sudan. Many companies allow foreigners to own their shares.
• Abu Dhabi Security Exchange – ADX formed in the November 15 2000 to trade shares of UAE Companies. ADX is a market for trading securities; including shares issued by public joint stock companies, debt instruments issued by governments or corporations, exchange traded funds, and any other financial instruments approved by the UAE Securities and Commodities Authority (SCA)
• NASDAQ Dubai - The exchange launched on 26 September 2005 and currently it has 28 current Susuk Listings that made it third largest venue in Sukuk Listings. Basically The Exchange formed for international trades. The 2/3 shareholding in NASDAQ Dubai is DFM Stock Exchange.

2) The company we are covering here is Al Salam Bank- listed company of Dubai Financial Market Stock Exchange.

A) Business Model & Nature

Al Salam Bank-Bahrain B.S.C (ASBB) was established on 19 January 2006 in the Kingdom of Bahrain with paid-up capital of BD 120 million (US$ 318 million) and was the largest Initial Public Offering (IPO) in the Kingdom’s history with subscriptions reaching over BD 2.7 billion (US$ 7 billion). The Business model of Al Salam Bank is defined as follow:

• Give loans, earn interest (revenue).
• Accept deposits, pay interest (cost).
• Earned interest minus paid interest is profit.
• Distribution of mutual funds.
• Distribution if insurance schemes.
• Offering wealth management services.
• Treasury operations (buying/selling debt securities).

B) Corporate Governance Practice

The Bank is committed to fulfilling its obligations as a good corporate citizen in the communities in which it operates. We endeavor to support the Bahrain Government in its efforts to enhance the quality of life of the people of the Kingdom of Bahrain. Al Salam Bank-Bahrain underscore this commitment to our community by supporting initiatives that add value to the Island’s housing, education and health infrastructure, as well as encouraging future economic growth and prosperity through supporting entrepreneurship and the development of our youth. During the year, charitable donations were made to medical facilities and other charities that care for the less fortunate and supported cultural initiatives in order to preserve the traditions of the Kingdom for generations.

C) Regulatory & Applicable Framework

The principal governmental and regulatory policies that govern the banking sector are:

• UAE Federal Law No. 10 of 1980 concerning the Central Bank;
• the Monetary System and the Organisation of Banking (the Banking Law);
• UAE Federal Law No. 18 of 1993, as amended (the Commercial Code);
• UAE Federal Law No. 6 of 1985 concerning Islamic banks, financial establishments and investment companies (the Islamic Banking Law); and
• various circulars, notices and resolutions issued by the board of governors of the UAE Central Bank, from time to time.

D) Review of Financial Performance

Particular	Year 2019( in BD)	Year 2018( in BD)	Effect
Net Operating Income	54	57	-5.26 Decrease
Net Profit	21	19	10.53 Increase
Total Asset	2038	1710	19.18 Increase
Total Equity	315	305	3.28 Increase
Cost to Income Ratio	56%	49%	7% Increase

Financial Statements