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BANQUE SAUDI FRANSI CONSOLIDATED BALANCE SHEET As at December 31, 2008 and 2007 - page 19 / 51

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BANQUE SAUDI FRANSI

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2008 and 2007

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e) Credit risk exposure of investments

2008

2007

21,264,133

14,536,990

SAR’ 000

Saudi government bonds

2,984,992

4,468,561

3,460,898

3,370,598

27,710,023

22,376,149

Investment grade

Unrated

Total

Saudi government bonds comprise of Saudi government development bonds, treasury bills and floating rate notes. Investment grade includes investments having credit exposure equivalent to Standard and Poor’s rating of AAA to BBB. Unrated investments include local equities, foreign equities, Musharakah and Mudarabah SAR 3,323 million (2007: SAR 2,553 million).

f) Movement of allowance for impairment of investments:

375,000 35,000

- -

410,000

-

SAR’ 000 Provided during the year

  • -

    Held at amortised cost

  • -

    AFS

Balance at end of the year

2008

2007

During the year, the Bank has recorded a provision of SAR 375 million (2007: SAR Nil) against others investments held at amortised cost. Further, impairment charge of SAR 35 million (2007: Nil) has been assessed against local equities classified under AFS investments and accordingly, transferred from other reserve in shareholders’ equity to the consolidated statement of income.

Investments held as FVIS represent investments held for trading and include Islamic securities of SAR 181 million (2007: SAR 218 million). Other investments represent investments in international mutual funds.

Available for sale investments include Islamic securities (sukuk) of SAR 480 million (2007: SAR 252 million). Other AFS represents Musharaka investments of SAR 502 million (2007: SAR 1,000 million) and Mudarabah investments of SAR 2,821 million (2007: SAR 1,553 million) which are hedged and measured at fair value to the extent of the risk being hedged.

Saudi Istithmar mutual fund SAR 38 million (2007: SAR 89 million) and unquoted equity shares of SAR 68 million (2007: SAR 69 million) which are carried at cost as their fair value cannot be reliably measured, are also included under equities available for sale.

Unquoted investments include principally Saudi Government Bonds and notes of SAR 21,264 million (2007: SAR 14,537 million).

Investments include SAR 7,912 million (2007: SAR 4,459 million) which have been pledged under repurchase agreements with other banks and customers. The market values of such investments are SAR 8,086 million (2007: SAR 4,536 million).

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