Bank of Sharjah profit rises

Hits Dh272m in Q3; lender focuses on consolidating balance sheet structure

By Abdul Basit – Chief Reporter

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Published: Fri 31 Oct 2014, 11:07 PM

Last updated: Tue 7 Apr 2015, 10:45 PM

Dubai: Bank of Sharjah on Thursday declared that its net profit for the first three quarters of the year increased to Dh272 million compared to Dh263 million for the same period last year.

The ultimate result of Bank of Sharjah’s strategy, specifically with regards to profit growth, is expected to materialise by year-end. — KT file photo

During the third quarter of 2014, the bank pursued its growth strategy based on consolidating its balance sheet structure by increasing its loan portfolio and gradually off-loading expensive deposits while simultaneously maintaining strong liquidity ratios, the bank said in a statement.

The ultimate result of the bank’s strategy, specifically with regards to profit growth, is expected to materialise by year-end.

Loans and advances reached Dh13,820 million, seven per cent above the corresponding September 30, 2013 figure of Dh12,970 million, and five per cent more than the December 31, 2013 balance of Dh13,135 million.

Total assets reached Dh24,285 million, a slight decrease of one per cent over the corresponding September 30, 2013 figure of Dh24,415 million. When compared to the December 31, 2013 figure of Dh24,973 million, total assets declined by three per cent. This was mainly driven by the seven per cent decrease in customer deposits, from Dh18,374 million on December 31, 2013, to Dh17,029 million as of September 30, 2014, in line with the bank’s policy of discouraging expensive deposits to boost interest margins and subsequently ensure growth in net profit. Moreover, when compared to the same period of last year, customer deposits decreased by four per cent from Dh17,826 million.

This resulted in a reduction of net liquidity between September 2013 and 2014, although at Dh5.7 billion, representing more than 33 per cent of customer deposits, it remains substantially high in comparison with industry levels.

Shareholders’ equity at the end of the third quarter stood at Dh4,420 million, five per cent above the balance for the corresponding period of 2013 and two per cent higher when compared to the December 31, 2013 figure of Dh4,353 million.

The bank enjoys a strong capital adequacy ratio of 22.36 per cent as of September 30, 2014, significantly above the required regulatory ratio.

Total operating income for the nine months ending September 30, 2014, decreased by 16 per cent compared to the corresponding period of 2013, mainly due to reduced non-interest income, a result of the revaluation losses on the investment portfolio resulting from the decline in the UAE stock markets.

Conversely, net impairment charges on financial assets for the third quarter of 2014 declined by 65 per cent, as a result of the improved economic environment and the overall performance of the credit portfolio.

Ahmed Al Noman, chairman of Bank of Sharjah said that the board is satisfied with the interim results. The generally improved market sentiment will lift further by year-end the valuation of assets and recoveries and is expected to boost overall profitability.


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