THE ROAD TO TRANSFORMATION 2 0 2 1 A N N U A L R E P O R TOne Page

CONTENTS 02 Group Mission Statement 04 AUB Operating Divisions 06 Financial Highlights 12 Board of Directors’ Report 16 Board of Directors 20 Chairman’s Statement 22 Group Chief Executive Officer’s Statement 46 Group Business and Risk Review 53 Group Management Organization Structure 54 Group Management 57 Contact Details 58 Consolidated Financial Statements 121 Supplementary Financial Information 122 Pillar III Disclosures – Basel IIIOne Page

REDEFINING THE FUTURE OF BANKING THROUGH DIGITAL TRANSFORMATION, EMBRACING STATE-OF-THE- ART TECHNOLOGY, PROVIDING PERFORMANCE EXCELLENCE IN EVERY PART OF THE CUSTOMER JOURNEY.

B A H R A I N K U W A I T U A E U K E G Y P T I R A Q O M A N L I B Y A

Ahli United Bank – Annual Report 2021 01

GROUP MISSION STATEMENTOne Page

OBJECTIVES

■ To maximise shareholder value on a sustainable basis.

■ To maintain the highest international standards of corporate governance and regulatory compliance

■ To maintain solid capital adequacy and liquidity ratios.

■ To treat clients fairly and be their preferred banking partner.

■ To ensure technological, digital and data competitiveness across all functions

■ To entrench a disciplined risk and cost management culture.

■ To develop a cross-cultural meritocratic management structure.

■ To optimise staff development through business driven training and profit related incentive.

■ To contribute to the social, economic and environmental advancement of our host countries.

To create an unrivalled ability to meet customer needs, provide fulfilment and development for our staff and deliver outstanding shareholder value

GROUP MISSION STATEMENTOne Page

02 Ahli United Bank – Annual Report 2021

VALUE ADDED TIME = NPAT

REMOTE CLIENT CONNECTIVITY

QUALIFIED STAFF

VALUE ADDED TIME

AUTOMATION & STP

DATA QUALITY & QUANTUM

USER FRIENDLY DATA ACCESS

ACTIONABLE DATA

NPAT

STAFF TIME RELEASE

Ahli United Bank – Annual Report 2021 03

AUB OPERATING DIVISIONS

CORPORATE BANKING

This division covers all the Bank’s capital-intensive activities in risk asset generation and funding regionally and internationally.

• Corporate and Trade Finance

• Commercial Property Finance

• Residential Property Finance

• Acquisition and Structured Finance

• Correspondent Banking

• Shari’a Compliant BankingOne Page

PRIVATE BANKING & WEALTH MANAGEMENT

This division generally includes all the low capital-intensive sectors of the business, offering wealth management services to individuals and institutions based on performance and a balanced product mix.

• Private Banking and Asset Management

• Real Estate Fund Management

• Shari’a Compliant Banking

RETAIL BANKING

This division covers both conventional and Shari’a Compliant individual customers’ deposits, loans, overdrafts, credit cards and residential mortgages.

TREASURY AND INVESTMENTS

This division provides money market, trading and treasury services and is also responsible for the management of the Group’s funding.

• Money Market Services

• Foreign Exchange Services

• Hedging and Trading Solutions

• Structured Products

• Investment Management

• Shari’a Compliant Treasury Products

RISK MANAGEMENT

This division is responsible for the identification, assessment and ongoing control of all material risks that could affect the Group’s business & operations.

• Risk Management

• Legal

• Compliance

AUDIT

This division is an integral part of the control environment of the Group. The role of audit is to understand the key risks of the Bank and examine and evaluate the adequacy and effectiveness of the system of risk management and internal control in order to identify legal, regulatory or policy shortcomings.

SUPPORT SERVICES

These divisions provide back end banking services to support ongoing business activities of the Group, as well as supporting the Group’s expansion through mergers and acquisitions.

• Finance

• Strategic Development

• Information Technology

• Operations

• Services

• Human Resources

04 Ahli United Bank – Annual Report 2021

As a premier regional bank present in 8 countries in the Middle East and United

Kingdom, we provide our clients with international growth opportunities. Our

network is constantly growing, and today we are proud to manage subsidiaries and associates across 8 countries through a

network of 157 branches and 3,294 team members.

Ahli United Bank – Annual Report 2021 05

N E T P R O F I T U S $ ’ 0 0 0 s

607,244 L O A N S A N D A D VA N C E S U S $ ’ 0 0 0 s

22,075,148 T O TA L A S S E T S U S $ ’ 0 0 0 s

41,913,370 S H A R E H O L D E R S ’ E Q U I T Y U S $ ’ 0 0 0 s

4,469,704

Ahli United Bank is well on course to achieving its growth and regional expansion objectives through the combined resources of experienced staff, solid capital and advanced technologies

8 COUNTRIES 157 BRANCHES 3,294 EMPLOYEES

FINANCIAL HIGHLIGHTS

06 Ahli United Bank – Annual Report 2021

Ownership in Group Entities

AUB: UNITED KINGDOM

100%

AUB (DIFC): UAE

100%

AUB: KUWAIT

74.9%

UBCI: LIBYA

40% CBIQ: IRAQ

80.3%

AUB: EGYPT

95.7% AUB: BAHRAIN

100% AHIL BANK: OMAN 35%

Ahli United Bank – Annual Report 2021 07

Net Profit US$’000

Total Assets US$’000

2 0 1 6

2 0 1 8

2 0 2 0

2 0 1 7

2 0 1 9

2 0 2 1

5 7 0 ,6

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607,244 41,913,370

FINANCIAL HIGHLIGHTS (Continued)

08 Ahli United Bank – Annual Report 2021

Loans and Advances US$’000

Shareholder’s Equity US$’000

2 0 1 6

2 0 1 8

2 0 2 0

2 0 1 7

2 0 1 9

2 0 2 1

3 ,5

0 0 ,8

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3 ,9

0 8 ,7

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4 2 ,3

6 0

2 2 ,0

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4 8

22,075,148 4,469,704

FINANCIAL HIGHLIGHTS (Continued)

Ahli United Bank – Annual Report 2021 09

AHLI UNITED BANK B.S.C.

US $ ‘000s Dec 2021 Dec 2020 Dec 2019 Dec 2018 Dec 2017 Dec 2016

Net profit* 607,244 452,244 730,501 697,534 618,715 570,640

Total assets 41,913,370 40,071,167 40,280,051 35,507,577 33,241,885 31,322,484

Loans and advances 22,075,148 20,719,878 20,742,360 19,503,961 19,498,702 18,606,883

Total liabilities 35,995,405 35,034,809 34,918,522 30,535,569 28,353,731 26,782,982

Shareholders’ equity 4,469,704 4,001,640 4,265,527 3,908,701 3,815,622 3,500,827

Non-controlling interest 448,261 434,718 496,002 463,307 472,532 438,675

Return on average assets (ROAA) 1.6% 1.2% 2.1% 2.2% 2.1% 1.8%

Return on average equity (ROAE) 13.8% 10.4% 17.7% 18.1% 16.5% 15.6%

Cost to income ratio 29.5% 29.3% 28.6% 27.1% 28.8% 27.6%

Financial leverage 7.3 7.9 7.3 7.0 6.6 6.8

Risk assets ratio 17.0% 16.1% 16.4% 16.9% 17.0% 17.1%

Net interest margin 2.24% 2.06% 2.62% 2.88% 2.79% 2.56%

Earnings per share (US cents) 5.6 4.1 6.9 6.6 5.8 5.4

* Attributable to Bank’s equity shareholders

PRINCIPAL SUBSIDIARIES KUWAIT: AHLI UNITED BANK K.S.C.P.

KD ‘000s Dec 2021 Dec 2020 Dec 2019 Dec 2018 Dec 2017 Dec 2016

Net profit* 31,221 29,729 55,017 51,255 44,463 40,348

Total assets 4,573,435 4,369,998 4,351,404 3,913,653 3,665,579 3,692,161

Financing receivables 3,342,148 3,113,685 3,018,755 2,799,906 2,672,832 2,706,054

Total liabilities 3,925,780 3,866,795 3,835,246 3,422,251 3,197,991 3,246,473

Shareholders’ equity 466,995 442,563 455,518 430,762 406,948 385,048

Return on average assets 0.7% 0.7% 1.4% 1.4% 1.2% 1.0%

Return on average equity 6.9% 6.6% 12.7% 12.4% 11.4% 11.0%

Cost to income ratio 39.1% 36.6% 37.3% 30.6% 32.0% 30.5%

Financial leverage 8.4 8.7 8.4 7.9 7.9 8.4

Risk assets ratio 18.2% 15.7% 16.0% 16.6% 18.0% 18.2%

Earnings per share (KD – fils) 11.5 12.3 24.1 22.3 19.2 18.8

* Attributable to Bank’s equity shareholders

UNITED KINGDOM: AHLI UNITED BANK (UK) PLC

US $ ‘000s Dec 2021 Dec 2020 Dec 2019 Dec 2018 Dec 2017 Dec 2016

Net profit 18,893 25,752 40,814 35,185 39,102 32,782

Total assets 2,998,843 2,828,031 3,210,261 2,909,856 2,785,254 2,580,972

Loans and advances 1,602,103 1,735,370 1,670,090 1,451,715 1,370,409 1,170,198

Total liabilities 2,674,599 2,549,641 2,911,244 2,621,474 2,493,406 2,288,573

Shareholders’ equity 324,244 278,390 299,017 288,382 291,848 292,399

Return on average assets 0.6% 0.8% 1.4% 1.2% 1.5% 1.2%

Return on average equity 6.6% 9.0% 14.4% 12.8% 13.8% 11.3%

Cost to income ratio 58.4% 43.6% 35.3% 44.7% 39.0% 40.9%

Financial leverage 8.2 9.2 9.7 9.1 8.5 7.8

Risk assets ratio 22.5% 19.2% 20.4% 23.6% 24.0% 25.7%

Earnings per share (US cents) 9.4 12.9 20.4 17.6 19.5 16.4

FINANCIAL HIGHLIGHTS (Continued)

10 Ahli United Bank – Annual Report 2021

EGYPT: AHLI UNITED BANK (EGYPT) S.A.E

EGP ‘000s Dec 2021 Dec 2020 Dec 2019 Dec 2018 Dec 2017 Dec 2016

Net profit * 1,175,628 1,217,264 1,284,708 1,462,981 1,205,027 2,389,921

Total assets 64,462,686 56,362,418 47,288,176 51,488,260 46,989,288 42,354,094

Loans and advances 36,716,271 29,698,946 26,261,571 22,983,062 21,871,149 19,376,811

Total liabilities 55,288,633 48,155,980 39,626,232 44,423,636 40,477,096 37,163,103

Shareholders’ equity 9,174,053 8,206,438 7,661,944 7,064,624 6,512,192 5,177,254

Return on average assets 2.0% 2.4% 2.6% 2.9% 2.9% 7.5%

Return on average equity 13.9% 15.9% 18.8% 22.4% 22.0% 75.1%

Cost to income ratio 32.1% 28.0% 28.5% 19.3% 19.7% 9.8%

Financial leverage 6.0 5.9 5.2 6.3 6.2 7.2

Risk assets ratio 17.8% 19.6% 18.3% 17.0% 18.1% 13.6%

Earnings per share (EGP) 3.5 3.6 3.9 4.6 3.7 7.7

* Attributable to Bank’s equity shareholders

PRINCIPAL SUBSIDIARIES (Continued)

IRAQ: COMMERCIAL BANK OF IRAQ P.S.C.

IQD Millions Dec 2021 Dec 2020 Dec 2019 Dec 2018 Dec 2017 Dec 2016

Net profit 13,009 35,457 6,554 10,864 10,050 7,578

Total assets 512,312 616,949 449,596 443,946 460,616 423,819

Loans and advances 27,136 18,841 11,447 11,933 10,789 9,904

Total liabilities 197,769 309,195 177,364 159,987 168,808 141,878

Shareholders’ equity 314,543 307,755 272,232 283,958 291,809 281,941

Return on average assets 2.0% 7.4% 1.5% 2.4% 2.3% 1.7%

Return on average equity 4.2% 13.0% 2.3% 3.8% 3.5% 2.7%

Cost to income ratio 61.6% 29.4% 64.1% 45.6% 52.9% 48.9%

Financial leverage 0.6 1.0 0.7 0.6 0.6 0.5

Risk assets ratio * 98.9% 73.7% 529.2% 657.6% 594.1% 728.8%

Earnings per share (IQD – Fils) 52.0 141.8 26.2 43.5 40.2 30.3

*Under BASEL III from 2020.

PRINCIPAL ASSOCIATE OMAN: AHLI BANK S.A.O.G.

OMR ‘000s Dec 2021 Dec 2020 Dec 2019 Dec 2018 Dec 2017 Dec 2016

Net profit 27,606 23,968 31,015 28,786 26,667 29,552

Total assets 3,052,556 2,702,477 2,518,527 2,290,414 2,014,582 1,899,654

Loans and advances 2,401,979 2,218,897 2,054,986 1,870,677 1,634,458 1,522,106

Total liabilities 2,625,559 2,314,127 2,129,332 1,931,410 1,709,755 1,656,706

Shareholders’ equity 302,997 264,350 265,195 255,004 254,827 242,948

Return on average assets 1.0% 0.9% 1.3% 1.3% 1.4% 1.6%

Return on average equity 9.7% 9.1% 11.9% 11.3% 10.7% 12.6%

Cost to income ratio 43.2% 42.1% 39.6% 37.4% 35.3% 35.9%

Financial leverage 8.7 8.8 8.0 7.6 6.7 6.8

Risk assets ratio 16.7% 15.7% 16.9% 17.5% 16.7% 15.0%

Earnings per share (Baiza) 9.7 8.9 13.6 15.2 16.1 17.7

FINANCIAL HIGHLIGHTS (Continued)

Ahli United Bank – Annual Report 2021 11

BOARD OF DIRECTORS’ REPORT

The Directors of Ahli United Bank B.S.C. (“AUB” or the “Bank”) are pleased to submit the accompanying consolidated Financial Statements for the year ended 31 December 2021.

GENERAL OPERATING ENVIRONMENT

During 2021, the global economy continued to gradually recover from the lows of 2020 caused by the sudden onset of Covid-19 and its far-reaching implications. As per the World Bank statistics, the global economy recorded a growth of 5.5% in 2021 as compared to a decline of 3.4% in 2020. The revival was made possible by an increasing rate and coverage of vaccination programmes which resulted in a relaxation of pandemic-related lockdowns and led to a pick up in domestic commercial activities and international trade as well as to an improvement in consumer and business sentiment.

As per estimates by the World Bank, the Middle East and North Africa (MENA) region registered a 3.1% growth in 2021 as compared to a 4.0% decline in 2020. The regional growth was supported by an increase in average global oil prices, lower-than-expected oil production cuts by the OPEC+ members and the gradual opening of economies.

The global growth is projected to decelerate to 4.1% in 2022, as per the World Bank, reflecting further COVID-19 concerns due to the rapid spread of Omicron or potentially other new contagious virus variants, declining fiscal support by governments and continuing supply chain disruptions. In contrast to developed economies, output in developing economies will continue to remain below the pre-pandemic level in the coming years. The divergence in economic prospects across countries remains a major concern. These economic divergences are a consequence of large disparities in vaccine availability/roll-outs and in the composition and resilience of these economies.

The MENA region is however projected to grow at an improved rate of 4.4% in 2022 reflecting stronger near-term prospects for oil exporters with reduced disruptions from the pandemic and oil production cuts. Regional growth remains vulnerable to the gradual withdrawal of fiscal support and to the recurrence of COVID-19 outbreaks of any large or sustainable magnitude.

PERFORMANCE OVERVIEW

Against the backdrop of these still evolving and challenging market conditions, AUB achieved a robust performance in 2021 versus 2020 in terms of both financial and operational results.  The key highlights of the AUB Group’s consolidated financial performance for 2021 are given below:

• Consolidated net profit, attributable to the Bank’s equity shareholders, of US$ 607.2 million was achieved showing an increase of 34.3% versus US$ 452.2 million in 2020 mainly driven by credit growth aided by the progressive opening of economies and effective balance-sheet management.

• Total operating income was sustained over the US$ 1 billion mark at US$ 1,108.9 million in 2021 (2020: US$ 1,111.9 million) despite the sharp continuing drop in absolute benchmark interest rates.

• Net interest income for 2021 was US$ 871.8 million (2020: US$ 799.4 million), an increase of 9.1%, primarily due to asset growth

and reduction in funding costs driven by more favorable liquidity conditions.

• Following the exceptional level of pre-cautionary provisions raised in year 2020, AUB re-assessed its Stage 1 and Stage 2 ECL gross provisions on performing loans and advances in accordance with IFRS-9, including change in Significant Increase in Credit Risk (SICR) outlook, given the improved direction of macro-economic variables. Accordingly, a net provision charge of US$ 122.3 million covering Stages 1 to 3 exposures was raised for 2021 (2020: US$ 254.9 million). Effective and focused risk management actions resulted in the credit impaired loans and advances ratio improving to 2.4% (31 December 2020: 2.6%). Specific provision coverage on impaired loans was maintained at a very solid 83.1% level (31 December 2020: 85.9%). Provision coverage levels are calculated on a cash provision basis, excluding the value of the significant non-cash (real estate and securities) collateral available against non-performing loans.

• The cost to income ratio was sustained at 29.5% (2020: 29.3%) reflecting the consistent application of AUB’s disciplined intelligent spend approach. Major efforts are underway to further enhance operational efficiencies and to offset increasing inflationary pressures through the progressive roll-out of digitization initiatives as part of the AUB Group’s overall transformation plan.

• AUB Group’s total assets increased by 4.6% to US$ 41.9 billion at 31 December 2021 (31 December 2020: US$ 40.1 billion) demonstrating balanced balance sheet growth. The loans and advances portfolio grew by US$ 1.4 billion (+6.5%) to US$ 22.1 billion (31 December 2020: US$ 20.7 billion) with a key focus on enhancing the core earnings through a prudent and diversified build-up of the loan book across the Group. The non-trading investments portfolio also increased (+3.3%) to US$ 9.9 billion (31 December 2020: US$ 9.6 billion).

• The funding base was further diversified and elongated during 2021 through a number of measures:

– US$ 600 million 5-year Senior Sukuk Issue (increased from US$ 500 million at launch) was raised and listed on the London Stock Exchange.

– New bilateral term borrowings of US$ 350 million was raised with a residual tenor of up to 2 years.

– Customer deposits were stable at US$ 25.2 billion as of 31  December 2021 (31 December 2020: US$ 25.2 billion) with Current and Saving Accounts (CASA) increasing to US$ 9.4 billion as on 31 December 2021 (31 December 2020: US$ 8.2 billion). Overall, CASA pool as a percentage of customers’ deposits of US$ 25.2 billion increased to 37.3% as of 31 December 2021 (31 December 2020: 32.7%).

– Repo borrowing increased to US$ 3.8 billion at 31 December 2021 (Dec 2020: US$ 3.6 billion) with 92% in elongated evergreen facilities with up to 18 months’ contractual notice period (2020: 83%).

• Given its improved profitability, AUB generated a higher Return on Average Assets of 1.6% (2020:  1.2%) and a Return on Average Equity of 13.8% (2020: 10.4%).

12 Ahli United Bank – Annual Report 2021

STRATEGIC & CORPORATE DEVELOPMENTS

• During December 2021, the AUB Board of Directors, in coordination with Kuwait Finance House K.S.C.P (“KFH”) and regulatory authorities, agreed to the update of financial and legal due diligence studies, and the resumption of all connected procedures related to the earlier suspended acquisition transaction due to Covid-19 considerations. The currently ongoing work includes assessment of the viability and valuation of the deal in terms of the final share exchange ratio. AUB has re-appointed the specialized professional advisors previously appointed to provide AUB with the necessary financial (KPMG), tax (KPMG) and legal studies (Linklaters).

• AUB Group successfully concluded a perpetual Tier-1 Sukuk-2021 Issue for US$ 600 million, for Ahli United Bank K.S.C.P., its Kuwait subsidiary, following the recall and full redemption of its earlier issued US$ 200 million perpetual Tier-1 Sukuk-2016 Issue. The 2021 issue was significantly oversubscribed and attracted strong and diversified investor demand.

RECOGNITION

AUB Group received a number of prestigious banking awards during the year which include the following:

Awards Provider Name of the Awards

Euromoney • Best Bank in Bahrain – 2021

The Banker • Bank of The Year – Bahrain – 2021

EMEA Finance • Best Local Bank in Bahrain – 2021

• Most Innovative Bank in the Middle East – 2021

CFI • Best Global Network GCC Bank – 2021

Global Finance • Best Bank in Bahrain – 2021

• Best FX provider in Bahrain – 2022

• Best Private Bank in Bahrain – 2022

• Best Trade Finance Provider – 2022

• Best Bank for Export Finance, Globally – 2022

• Best SME Bank in Bahrain – 2022

Best Digital Banks 2021 awards

• Best SME Banking – 2021

• Best Integrated Corporate Banking Site – 2021

• Best Online Treasury Services – 2021

• Best in Social Media Marketing & Services – 2021

• Most Innovative Digital Bank – 2021

The Banker and Professional Wealth Management (PWM) • Private Bank of the Year, Bahrain – 2021

Private Banker International • Best Private Bank of Islamic Services – 2021

BOARD OF DIRECTORS’ REPORT (Continued)

Ahli United Bank – Annual Report 2021 13

DIRECTORS’ AND EXECUTIVE MANAGEMENT’S REMUNERATION

First: Board of directors’ remuneration details: (Amounts stated in Bahraini Dinars)

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CONSOLIDATED FINANCIAL

STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31st December 2021

CONTENTS OF THE CONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 1One Page

CONSOLIDATED STATEMENT OF INCOME 2

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 3

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 4

CONSOLIDATED STATEMENT OF CASH FLOWS 5

1 Incorporation and registration 6

2 Basis of preparation 6

3 Accounting policies 8

4 New and amended standards and interpretations 19

5 Accounting judgements estimates and assumptions 23One Page

6 Classification of assets and liabilities 24

7 Cash and other liquid assets 25

8 Securities purchased under agreements to resell 25

9 Placements 25

10 Trading securities 25

11 Investment securities 25

12 Loans and advances 27

13 Other assets 29

14 Post retirement benefits 29

15 Deposits 33

16 Securities sold under agreements to repurchase 33

17 Other liabilities 34One Page

18 Senior term financing 34

19 Share capital 34

20 Reserves 35

21 Dividends 35

22 Net interest income 36

23 Fee and commission income 36

24 Trading income 37

25 Foreign exchange income 37

26 Other income 37

27 Provision for expected credit losses 38

28 Taxation and zakat 38

29 Segmental information 39

30 Risk management 41

31 Geographical distribution of assets 52

32 Maturities of assets and liabilities 53

33 Interest rate risk 55

34 Derivatives and foreign exchange instruments 56

35 Credit-related financial instruments 61

36 Contingent liabilities 61

37 Capital adequacy 62

38 Fiduciary activities 62

39 Related party transactions 63

40 Fair value of financial instruments 64

41 Earnings per share 66

42 Principal subsidiaries 66One Page

43 Non-controlling interest 67

44 Average consolidated statement of financial position 68

45 Shariah compliant assets and liabilities 68

46 Comparatives 69

SUPPLEMENTARY DISCLOSURES TO THE CONSOLIDATED FINANCIAL INFORMATION 70

31st December 2021 GULF INTERNATIONAL BANK B.S.C.

A member firm of Ernst & Young Global Limited

Ernst & Young — Middle East P.O. Box 140 East Tower — 10th floor Bahrain World Trade Center Manama Kingdom of BahrainOne Page

Tel: +973 1753 5455 Fax: +973 1753 5405manama@bh.ey.com www.ey.com/mena C.R. no. 29977-1

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF GULF INTERNATIONAL BANK B.S.C. Report on the Audit of the Consolidated Financial Statements Opinion We have audited the accompanying consolidated financial statements of Gulf International Bank B.S.C. (the “Bank”) and its subsidiaries (together the “Group”), which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2021, and its consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) as modified by the Central Bank of Bahrain (“CBB”). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (“ISA”). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”) together with the ethical requirements that are relevant to our audit of the financial statements in the Kingdom of Bahrain, and we have fulfilled our other ethical responsibilities in accordance with these requirements and IESBA. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended 31 December 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF GULF INTERNATIONAL BANK B.S.C. (continued)

Report on the Audit of the Consolidated Financial Statements (continued)

Key audit matters (continued)

1. Impairment of loans and advances under IFRS 9

Key audit matter How the key audit matter was addressed in the audit

The Group exercises significant judgment using subjective assumptions over both when and how much to record as loan impairment, and estimation of the amount of the Expected Credit Losses (“ECL”) for loans and advances.

The COVID-19 pandemic has impacted management determination of the ECL. This has resulted in an increased level of uncertainty associated with management judgement, which may result in outputs significantly different from the future credit losses and staging of the customers.

Loans and advances form a major portion of the Group’s assets, and due to the significance of the judgments used in classifying loans and advances into various stages stipulated in IFRS 9 and determining related ECL requirements, this audit area is considered a key audit risk.

As at 31 December 2021, the Group’s gross loans and advances amounted to US$ 11,952.6 million and the related impairment provisions amounted to US$ 295.1 million, comprising of US$ 128.7 million of provision against Stage 1 and 2 exposures and US$ 166.4 million against exposures classified under Stage 3.

The accounting policies relating to estimating ECL are presented in the accounting policies, and the associated credit risk disclosure is presented in Note 30 to the consolidated financial statements.

• We gained an understanding of the Group’s key credit processes comprising granting, booking, monitoring and provisioning, including an understanding of the design and operating effectiveness of relevant controls over the ECL model, including model build and approval, ongoing monitoring/validation, model governance and mathematical accuracy.

• We read the Group’s IFRS 9 based impairment provisioning policy and compared it with the requirements of IFRS 9 as well as relevant regulatory guidelines and pronouncements.

• We assessed the soundness of the Group’s loan grading processes.

Stage 1 and Stage 2 Provisions:

• For ECL against exposures classified as Stage 1 and Stage 2, we obtained an understanding of the Group’s provisioning methodology, the underlying assumptions and the sufficiency of the data used by management.

• We obtained an understanding of the Group’s internal rating model for loans and advances. We have read the annual external validation report on the internal rating model to assess the appropriateness of the rating model.

• We checked the appropriateness of the Group’s determination of significant increase in credit risk and the resultant basis for classification of exposures into various stages.

• For forward looking assumptions used by the Group in its ECL calculations, we held discussions with management and corroborated the assumptions using publicly available information. We also assessed the reasonableness of changes made to the economic scenarios to reflect the effect of COVID-19.

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF GULF INTERNATIONAL BANK B.S.C. (continued)

Report on the Audit of the Consolidated Financial Statements (continued)

Key audit matters (continued)

1. Impairment of loans and advances under IFRS 9 (continued)

Key audit matter How the key audit matter was addressed in the audit

• For a sample of exposures, we checked the appropriateness of the Group’s staging.

• For Probability of Default (“PD”) used in the ECL calculations we checked the Through the Cycle (“TTC”) PDs with internal historical data and checked the appropriateness of conversion of the TTC PDs to Point in Time PDs.

• We checked the appropriateness of the Loss Given Default used by the Group’s management in the ECL calculations.

• For a sample of exposures, we checked the appropriateness of determining Exposure at Default, including the consideration of repayments in the cash flows and the resultant arithmetical calculations.

• We checked the completeness of loans and advances and credit related contingent items included in the ECL calculations as of 31 December 2021.

• We involved Financial Services Risk Management and Information System specialists to verify the appropriateness of the model.

• We considered the adequacy of the disclosures in the consolidated financial statements in accordance with IFRS 9. Refer to the accounting policies, accounting judgements, estimates and assumptions, disclosures of loans and advances and credit risk management in notes 3, 5, 12 and 30 respectively to the consolidated financial statements.

• We assessed the basis of determination of the management overlays considering the impact of the COVID-19 global pandemic against the requirements of the Group’s ECL policy.

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF GULF INTERNATIONAL BANK B.S.C. (continued)

Report on the Audit of the Consolidated Financial Statements (continued)

Key audit matters (continued)

1. Impairment of loans and advances under IFRS 9 (continued)

Key audit matter How the key audit matter was addressed in the audit

Stage 3 (Specific) Provisions:

• For a sample of exposures determined to be individually impaired, we obtained an understanding of the latest developments in the counterparty’s situation and examined management’s estimate of future cash flows and checked the resultant provision calculations.

• For each exposure in the sample selected, we re-performed the provision calculation by considering the appropriateness of the management assumptions used and where possible benchmarked the provision held to that across the industry.

Other information included in the Group’s 2021 Annual Report Other information consists of the information included in the Group’s 2021 Annual Report, other than the consolidated financial statements and our auditor’s report thereon. The Board of Directors is responsible for the other information. Prior to the date of this auditor’s report, we obtained the Chairman’s Statement which will form part of the annual report, and the remaining sections of the annual report are expected to be made available to us after that date.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of the auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.