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Bank Of Sharjah Reports 34 Percent Increase In Total Comprehensive Income

Bank of Sharjah’s most recent financial results have revealed a solid performance and continued growth, with total comprehensive income for the institution increasing by 34 percent and net profit rising by 14 percent. The continued expansion has been attributed to the sustained increase in the bank’s core activities, the strength of its balance sheet and the quality of its assets.

“The quality of the bank’s credit portfolio, the economic sectors that the institution is exposed to, and its customer base, adequate liquidity and quality of its assets have shielded it from the worst effects of the economic downturn,” said Mr. Nerguizian, Bank of Sharjah’s Executive Director and General Manager. “Bank of Sharjah has increased its general provisions to reach AED 130 million, in line with its conservative strategy adopted since inception. This is one that has spared the bank from exposures to any of the failed institutions,” he added.

As of September 30th, 2009, Bank of Sharjah’s total assets reached AED 17,451 million, an increase of 10 percent over the December 31st 2008 balance of AED 15,820 million and a 15 percent increase over the corresponding September 2008 figure of AED 15,175 million. The increase in total assets was mainly due to the greater activity in loans book and placements.

The bank’s equity grew by 5 percent even after the payment of AED 261 million cash dividends during the second quarter of this year on the 2008 profits, representing 15 percent of the capital prior to the 15.11 percent capital increase due to the bonus shares, also issued during the same period, on the 2008 profits.

Bank of Sharjah’s loans and advances reached AED 11,071 million for the period, an increase of 7 per cent in the loans and advances portfolio over the December 2008 figure of AED 10,340 million and a 15 per cent growth over the 2008 corresponding period balance of AED 9,616 million. This steady increase was indicative of the Bank’s policy of sustaining the growth witnessed during 2008, while managing liquidity without hampering growth and meeting the clients’ financing requirements.

Net liquidity for the period has remarkably improved by 30 percent to reach AED 2,834 million compared to the December 2008 figure of AED 2,177 million. This increase was mainly driven by the increase in deposits. Despite the fierce competition over deposits, Bank of Sharjah has successfully managed to substantially increase this aspect of its business. Total deposits have increased to AED 11,561 million; an impressive 23 percent increase over the corresponding September 2008 figure of AED 9,394 and a 14 percent increase over the December 2008 figure of AED 10,118 million.

The increase in deposits has helped the bank to close the gap between the loans and deposits, with the loans to deposits ratio falling to 0.96 from 1.02 as at December 31st, 2008.The improvement in the UAE’s financial markets during the year has added AED 73 million to the cumulative changes in fair value to the available for sale portfolio bringing the total comprehensive income for the period to AED 453 million, a 34 percent increase over the AED 337 million figure reported in the corresponding 2008 period. Net profit for the period ending September 30th, 2009 reached AED 388 million, a 14 percent increase over the corresponding September 30th, 2008 figure of AED 341 million. The bank’s improved performance during the period was mainly driven by the increase in net interest income.

The bank’s current period net interest income has soared by 72 percent. The surge was not only due to the increase in the loans book, as previously mentioned; but was also fuelled by the acquisition of the BNPI branch operations in Lebanon, which was procured through its subsidiary, Emirates Lebanon Bank SAL. As the acquisition took place during the last quarter of 2008, it did not impact on the corresponding 2008 results, but was responsible for the bank’s 82 percent increase in the general and administrative expenses, which reached AED 132 million compared to the AED 72 million figure for the same period of 2008.

Despite the 72 percent surge in net interest income, Bank of Sharjah’s increase in operating income was only 19 percent. This was the result of the 36 percent decrease in net commission and other income; which was mainly due to AED 18.6 million of property revaluation gains and AED 51.5 million of other income on non-recurring real estate transactions that took place during the corresponding period in 2008. The improved performance during the period was reflected in the earnings per share, which increased by 5percent to reach AED 19.2 fils when compared with the last year corresponding figure of AED 18.3 fils.

Bank of Sharjah’s continued strong performance was recognised during the quarter by Capital Intelligence; a leading international credit rating agency specialising in the emerging markets. The organisation has an in-depth knowledge and understating of the GCC region and reconfirmed its A- foreign currency long-term rating for the bank in its July 2009 report.

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