Investor Presentaiton

NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 6 CHANGES IN ACCOUNTING POLICIES (CONTINUED) IBOR TRANSITION (INTEREST RATE BENCHMARK REFORMS) (CONTINUED) NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 7 SIGNIFICANT ACCOUNTING POLICIES The Group will continue to apply the Phase 1 amendments to IFRS 9 until the uncertainty arising from the interest rate benchmark reform with respect to the timing and the amount of the underlying cash flows to which the Group is exposed to ends. The Group expects this uncertainty will continue until the Group's contracts that reference IBORS are amended to specify the date on which the interest rate benchmark will be replaced. As a result of the Phase 2 amendments in 2021: When the contractual terms of non-derivative financial instruments have been amended as a direct consequence of the interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis (i.e. the basis immediately preceding the change), the Group changes the basis for determining the contractual cash flows prospectively by revising the effective interest rate updated to reflect the change in an interest rate benchmark from IBOR to Risk Free Rate (RFR) without adjusting the carrying amount. If additional changes are made, which are not economically equivalent, the applicable requirements of IFRS 9 are applied to the additional changes. When changes are made to the hedging instruments, hedged item and hedged risk, as a result of the interest rate benchmark reform which are economically equivalent, the Group updates the hedge documentation without discontinuing the hedging relationship. The Group is primarily exposed to GBP and USD LIBOR which are subject to the interest rate benchmark reform. The exposures arise on derivatives and non-derivative financial assets and liabilities. The Group has cash flow and fair value relationships affected by the interest rate benchmark reform. Hedged items include issued GBP and USD fixed rate debt and advances to and deposits from customers linked to USD and GBP LIBOR. Hedging instruments include IBOR-linked interest rate swaps and cross- currency swap. For risks arising from interest rate benchmark reform please refer note 46 (w). Summary of transition The table below shows the Group's exposure at the year end to significant IBORS subject to reform that have yet to transition to RFRs. These exposures will remain outstanding until the IBOR ceases and will therefore transition in future. The table below excludes the exposures that will expire before the transition. 31 December 2021 in AED Million LIBOR USD (1 month) LIBOR USD (3 months) LIBOR USD (6 months) LIBOR USD (12 months) LIBOR GBP (1 month) LIBOR GBP (3 months) LIBOR GBP (6 months) Cross Currency swaps Cross Currency USD Cross Currency GBP Non-derivative financial assets-carrying value Non-derivative financial liabilities-carrying value 10,535 276 25,380 7,765 20,294 35 Derivatives Nominal amount 16,035 255,289 18,465 63 76 147 5,620 113 245 20,431 2,978 The Group has consistently applied the following accounting policies to all periods presented in these Group consolidated financial statements, except for the changes explained in Note 6. (a) Principles of Consolidation (i) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The list of the Group's subsidiary companies is shown in Note 37. Basis of Consolidation The Group consolidated financial statements comprise the financial statements of the Bank and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the Group consolidated financial statements are prepared for the same reporting date as the Bank with the exception of Emirates NBD Capital PSC, an insignificant subsidiary, whose year-end is 31 March and hence the Group uses their reviewed 12 months accounts as at 31 December. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra- group transactions are eliminated. Business combinations are accounted for by applying the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date, fair value of assets transferred by group, liability incurred, and equity interest issued by the group in exchange for control of the acquiree. Identifiable assets acquired and liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. During the year 2021, the Group started offering SONIA linked contracts as a replacement of GBP LIBOR. GBP LIBOR discontinued from 1 January 2022. USD LIBOR will discontinue from 30 June 2023. 23 EMIRATES NBD BANK PJSC - GROUP CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEAR ENDED 31 DECEMBER 2021 24 بنك الإمارات دبي الوطني Emirates NBD

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