Bank of Sharjah Group reported on Tuesday a pre-provision net profit of Dh175 million for the third quarter.
“Despite Covid-19, the bank performed exceptionally well and delivered positive results that under hyperinflation accounting moved from P&L directly to equity. From the Board of Directors’ perspective, protecting shareholders’ equity is the most important responsibility,” said Sheikh Mohammed bin Saud Al Qasimi, Chairman of Bank of Sharjah.
“Despite all challenging environments, the group’s UAE operations demonstrated resilient performance underpinned by the robust fundamentals of the bank,” he said in a statement.
The bank said upon application of Dh1.475 billion as 'hyperinflation effect' linked to operations of its Lebanese subsidiary Emirates Lebanon Bank (ELBank), the group recognised a net loss of Dh 1.3 billion and a total comprehensive loss of Dh1.252 billion against a positive equity component of Dh1.866 billion.
“The group’s balance sheet remains strong, with total assets standing at Dh38.50 billion, up 7.0 per cent against Dh36.14 billion as of 31 December 2020, and total equity of Dh3.77 billion against Dh3.16 billion as of 31 December 2020, reflecting an increase of 19 per cent,” said the bank statement.
The bank said it continues to enjoy “a high asset quality and other robust metrics that remain healthy as a result of strict adherence to maintaining a disciplined and focused approach to lending, recovery and funding.” Liquidity and capital positions are comfortable with customer deposit base increasing 6.0 per cent to Dh25.17 billion from Dh23.67 billion. Loans-to-deposits ratio stood at 81 per cent against 82 per cent as of 31 December 2020, and cost-to-income ratio at 50 per cent against 29 per cent as of 30 September 2020.
The bank said its operations in Lebanon, through its subsidiary ELBank, continued to witness unprecedented events stemming from political and economic turmoil, since 17 October 2019. “The group has complied with Banque du Liban Circular No. 13129, dated 4 November 2019, calling for the increase by 20 per cent of the equity of Lebanese banks prior to 30 June 2020. The operating income before impairments and application of hyperinflationary accounting standards of ELBank remains in line with last year’s comparable results.”
The net effect of hyperinflation on the consolidated equity for the period ended September 30, 2021, was positive and amounted to Dh391 million, representing the difference between Dh1.475 billion negative variation on the P&L figures and Dh1.866 billion positive variation on total equity, said the statement.
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