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NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 7 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Islamic Financing Receivables (continued) Ijara An agreement, whereby the Group (lessor) leases an asset to a customer (lessee), for a specific period and against certain rent installments. Ijara ends by transferring the ownership of the asset to the lessee at the end of the Ijara agreement pursuant to a sale undertaking granted by the Group. Mudaraba An agreement between two parties; wherein one of them provides the funds and is called Rab-Ul- Mal and the other provides efforts and expertise and is called the Mudarib and he is responsible for investing such funds in a specific enterprise or activity in return for a pre-agreed percentage of the Mudaraba income. In case of normal loss; the Rab-Ul-Mal would bear the loss of his funds while the Mudarib would bear the loss of his efforts. However, in case of default, negligence or violation of any of the terms and conditions of the Mudaraba agreement, only the Mudarib would bear the losses. The Group may act as Mudarib when accepting funds from depositors and as Rab-Ul-Mal when investing such funds on a Mudaraba basis. Wakala An agreement whereby the Group provides a certain sum of money to an agent who invests it according to specific conditions in return for a certain fee (a lump sum of money or a percentage of the amount invested). The agent is obliged to return the invested amount in case of default, negligence or violation of any of the terms and conditions of the Wakala. Revenue Recognition Revenue is recognised on the above Islamic products as follows: Murabaha The profit is quantifiable and contractually determined at the commencement of the contract. Profit is recognised on a time proportion basis over the life of the contract using an effective profit method on the balance outstanding. Istisna'a İstisna'a revenue and the associated profit margin (difference between the cash price to the customer and the bank's total Istisna'a cost) are accounted for on a time proportion basis. Ijara Income from ljara is recognised on an accrual basis over the period of the contract. Mudaraba Income on Mudaraba financing is recognised on distribution by the Mudarib, whereas the losses are charged to the consolidated income statement on their declaration by the Mudarib. NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 7 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Islamic Financing Receivables (continued) (ii) Revenue Recognition (continued) Wakala Estimated income from Wakala is recognised on a time proportion basis over the period, adjusted by actual income when received. Losses are accounted for on the date of declaration by the agent. (o) Inventory Properties acquired in settlement of debt are held as inventory and are stated at lower of cost or net realisable value. Directly attributable costs incurred in the acquisition of inventory is included as part of cost of the inventory. Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date. (p) Property, Equipment and Depreciation Property and equipment are stated at cost less accumulated depreciation and accumulated impairment if any. Historical cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset's carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Freehold land and fixed assets not commissioned are not depreciated. The estimated useful life of fixed assets for the Group is as follows: Freehold premises Freehold improvements Leasehold improvements Furniture, fixtures and office equipment Computer hardware and software Core banking software Motor vehicles 25-60 years 10 years 7 years 5 years 4-5 years 5-7 years 3-5 years Assets are depreciated on a straight-line basis over their estimated useful lives as given above. Fixed assets not commissioned are stated at cost. When commissioned, they are transferred to the appropriate property and equipment category and depreciated in accordance with the Group's policies. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the Group consolidated income statement. 43 EMIRATES NBD BANK PJSC - GROUP CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEAR ENDED 31 DECEMBER 2021 44 بنك الإمارات دبي الوطني Emirates NBD

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