Investor Presentaiton

INDEPENDENT AUDITORS' REPORT (CONTINUED) To the Shareholders of Emirates NBD Bank PJSC (continued) Key audit matters (continued) Key audit matter Our audit approach Loan loss impairments - Estimation uncertainty with respect to expected credit losses for loan and advances to customers (continued) The material portion of the non-retail portfolio of loans key management and committee meetings that form part and advances is assessed individually for the significant of the approval process for loan impairment allowances. increase in credit risk (SICR) or credit impairment and the related measurement of ECL. This requires We evaluated key assumptions such as thresholds used management to capture all qualitative and quantitative to determine SICR and forward-looking macroeconomic reasonable and supportable forward-looking scenarios including the related weighting. information while assessing SICR, or while assessing credit-impaired criteria for the exposure. Management For loans tested collectively, we evaluated controls over judgement may also be involved in manual staging the modelling process, including model inputs, monitoring, movements in accordance with the Bank's policies and validation and approval. We challenged key assumptions, the requirements of IFRS 9 Financial Instruments. inspected the calculation methodology and traced a sample back to source data. The measurement of ECL amounts for retail and non- retail exposures classified as Stage 1 and Stage 2 are We tested the IT application used in the credit impairment carried out by the models with limited manual process and verified the integrity of data used as input to intervention. It is important that models (PD, LGD, EAD the models including the transfer of data between source and macroeconomic adjustments) are valid throughout systems and the impairment models. We evaluated the reporting period and are subject to a validation system-based and manual controls over the recognition process by an independent reviewer. and measurement of impairment allowances. We evaluated other post model adjustments and management overlays in order to assess the reasonableness of these adjustments. We further assessed the reasonableness of forward-looking information incorporated into the impairment calculations by involving our specialists to challenge the multiple economic scenarios chosen and weighting applied to capture non-linear losses. The Bank performed an independent validation of the PD and LGD models including macro-economic model during the reporting period. We considered the process of this independent validation of the models and its impact on the results of the impairment estimate. Finally, we have updated our assessment of the methodology and framework designed and implemented by the Bank as to whether the impairment models outcomes and stage allocations appear reasonable and reflective of the forecasts used by the Bank to determine future economic conditions at the reporting date. INDEPENDENT AUDITORS' REPORT (CONTINUED) To the Shareholders of Emirates NBD Bank PJSC (continued) Key audit matters (continued) Key audit matter IT systems and controls over financial reporting Our audit approach We identified IT systems and controls over financial We obtained an understanding of the applications reporting as an area of focus due to the extensive relevant to financial reporting and the infrastructure volume and variety of transactions which are processed supporting these applications. daily by the Bank and rely on the effective operation of automated. Moreover, the Bank completed the We tested IT general controls relevant to the identified migration of its core banking systems and consolidated automated controls and Information Produced by the multiple systems into a single core banking platform Entity (IPEs) covering access security, program changes, during the reporting period. There is a risk that data center and network operations. automated accounting procedures and related internal controls are not accurately designed and operating We examined certain Information Produced by the effectively. In particular, the incorporated relevant Entity (IPES) used in the financial reports from relevant controls are essential to address the potential risk for applications and key controls over their report logics as fraud and error as a result of change to applications or well as preparation and maintenance. underlying data. Key audit matter Concentration of related party balances Related party assets as at 31 December 2021 are disclosed in Note 39 to these consolidated financial statements with the description of the accounting policy disclosed in Note 7. We focused on this area as significant management judgement is required to determine the disclosures required under IFRS 7 Financial Instruments: Disclosures and IAS 24 Related Party Disclosures with regards to significant credit risk concentrations and related party disclosures. We performed testing on the key automated controls on significant IT systems relevant to business processes. We tested the interfaces between the identified systems in order to determine if information is being transmitted in an accurate and complete manner. . Our audit approach . . IFRS 7 requires that specific information be disclosed for each type of risk arising from financial instruments. These include qualitative disclosures around how exposures arise and how they are. measured and managed, summary quantitative data about an entity's exposure to each type of risk, and ⚫ information about an entity's credit risk exposure, including significant credit risk concentrations. In addition, for government-controlled entities such as Emirates NBD Bank PJSC, disclosure is required under IAS 24 Related Party Disclosures of a qualitative or quantitative indication of the extent of transactions with the government or related entities. Our audit procedures included: Obtaining from those charged with governance and management information identifying all known related parties. Evaluating and testing of key controls over the identification and monitoring of related party transactions. Evaluating and testing of key controls over the initial recording and monitoring of loans. Reviewing minutes of board meetings and management meetings to determine if there were any related party transactions of which we were previously unaware. Confirming the balance in writing from the relevant related party. Vouching individual related party transactions on a sample basis to supporting documentation. Evaluating the adequacy of the disclosures by assessing whether a reasonable user of the consolidated financial statements could understand the exposure of the Bank to concentration and related risks, and by considering the ability of such a user to reasonably estimate the extent of transactions with the parent of the majority shareholder, including the income arising from the balance due from them, based on the disclosures provided. 5 EMIRATES NBD BANK PJSC - GROUP CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEAR ENDED 31 DECEMBER 2021 9 بنك الإمارات دبي الوطني Emirates NBD