Bank of Sharjah profit drops

Bank of Sharjah said its net profit in the first quarter of 2012 decreased by 26 per cent from Dh81 million to Dh60 million following the additional allocation to collective impairment provisions.

During the first quarter of 2012, net interest income increased by 10 per cent compared to the corresponding period of 2011. This increase was driven by the decrease in the cost of funding, mainly on customer deposits, despite the 5 per cent increase in deposits.

Furthermore, non-interest income for the quarter increased by 34 per cent compared to the corresponding period of 2011. This was driven by gains on the traded investments portfolio, as a result of the improvement witnessed by the UAE stock markets during the quarter.

As a result, total income for first quarter of 2012 increased by 15 per cent compared to the corresponding period of 2011, reaching Dh175 million compared to Dh153 million.

Total assets reached Dh21.5 billion, an increase of 4 per cent over the corresponding March 31, 2011, figure of Dh20.666 billion.

The Bank continued to increase its deposits base which reached Dh15.466 billion as of March 31, 2012, an increase of 5 per cent over the corresponding March 31, 2011 figure of Dh14.765 billion, reflecting depositors' confidence in the Bank.

Loans and advances declined by 3 per cent and reached Dh12.321 billion when compared to the corresponding March 31, 2011, figure of Dh12.704 billion.

Loans-to-deposits ratio further improved during the period to 0.80 in March 2012 from 0.86 in March 2011.

The above thereby led to a 17 per cent increase in the Bank's net liquidity, that stood at stood at Dh5,118 million versus Dh4,377 million as of March 31, 2011.

Shareholder's equity at the end of the first quarter stood at Dh3.973 billion, a 5 per cent decline compared to the December 31, 2011, figure of Dh4.199 billion. This was mainly caused by the 2011 dividend appropriation.

During the quarter, the Bank has fully subscribed to the 50 per cent capital increase of its subsidiary, Emirates Lebanon Bank, raising the equity of the EL Bank to $262 million, and its stake to 67.33 per cent from 51 per cent.

Varouj Nerguizian, the Bank's Executive Director and General Manager, said: "In a challenging environment the Bank considered it prudent to raise further general provisions to meet the unexpected starting from the first quarter of the year rather than waiting for year-end results. As of March 31, 2012 the Bank's collective impairment provisions reached Dh607 million. Comprehensive income stood at Dh64 million versus Dh71 a mere decline of 10 per cent reaffirming the sustainability of the Bank's business model despite a difficult environment and stricter regulation."

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