Bank of Sharjah announces financial results for nine months ending September 30, 2012

Net income for the nine month period reached Dhs218m, 1% above the corresponding 2011 figure.

The increase in net income was driven by the 5% increase in net interest income as the Bank capitalised on its core banking activity, and managed to reduce the cost of funding, mainly on customer deposits, despite the increase in deposits.

As of September 30, 2012, total assets stood at Dhs21,888m, 5% above the December 31, 2011, figure of Dhs20,934m. The Bank continued to increase its deposits base which reached Dhs15,539m as of September 30, 2012, 4% over the December 31, 2011, figure of Dhs14,940m.

Loans and advances reached Dhs12,352m, 3% above the December 31, 2011, figure of Dhs12,039m. The loans-to-deposits ratio further improved during the period to 0.79 in September 2012 from 0.81 in December 2011.

Shareholders' equity stood at Dhs4,122m as of September 30, 2012, with a slight decline of 2% from the December 31, 2011, figure of Dhs4,199m. This was mainly caused by the additional shares acquired through the share buyback at the beginning of the year.

In light of the continued challenging economic environment, the Bank pursued its prudent policy of raising further general provisions. During the nine months ending September 30, 2012, the Bank set aside Dhs118m of such provisions, similar to last year's amount. As such, the Bank's collective impairment provision balance as of September 30, 2012, stood at Dhs664m.

In line with the Bank's expansion strategy to further avail its services to existing and prospective customers throughout the country, the Bank has expanded its Private Banking Wealth Management (PBWM) division in collaboration with Commerzbank International S.A. The initiative widens and diversifies the reach of the Bank's financial services by catering to a niche market of discerning customers.

During this period, Capital Intelligence, the international credit rating agency, reaffirmed Bank of Sharjah's Long-term Issuer Default Rating at 'A-' with a stable outlook. The firm attributed the Bank's individual rating to its good management, strong capital adequacy, sound asset quality, and good operating profitability.

Commenting on the results, Mr. Varouj Nerguizian, the Bank's Executive Director and General Manager, said, "The third quarter of 2012 affirmed the continuation of positive developments on the economical scene of the UAE. The Real Estate sector showed selective signs of revival; the Hotel and Tourism industry witnessed high digit occupancy rates and it is highly probable that the fourth quarter might show more consistency in these acquired achievements."

"Although the Bank continues to allocate high amounts towards general provisions, the year-end may hold positive developments in the valuation of certain assets and some of its strategic equity portfolio holdings which may result in better earnings than currently declared. While the balance sheet grew at 5%, special emphasis has been given to liquidity which reached Dhs5 Billion, i.e. one third of our deposit base. Even though this high liquidity is weighing negatively on our profitability, due to the current low level of interbank rates, it positions Bank of Sharjah to take full advantage of the expected movement in banking relationships as a result of the enforcement of the new regulatory measures from October 1, 2012," he added.

"Bank of Sharjah also considers that the cooperation agreement with Commerzbank Luxembourg in the area of Private Banking and Wealth Management will give the Bank - after the success and proven track record of its model in corporate and investment banking - the impetus and thrust well deserved at the dawn of its 40th anniversary," he concluded.