Bank of Sharjah on Monday said its 9-month profit inched up one per cent to Dh218 million on increased net interest income.

The Bank continued to enhance its balance sheet structure with total assets increasing by 5 per cent as of September 30, 2012. The increase in assets was underpinned by the growth in customer deposits, which increased by 4 per cent during the period. Net income for the nine month period reached Dh218 million, 1 per cent above the corresponding 2011 figure. The increase in net income was driven by the 5 per cent 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 Dh21,888 million, 5 per cent above the December 31, 2011, figure of Dh20,934 million. The Bank continued to increase its deposits base which reached Dh15,539 million as of September 30, 2012, 4 per cent over the December 31, 2011, figure of Dh14,940 million.

Loans and advances reached Dh12,352 million, 3 per cent above the December 31, 2011, figure of Dh12,039 million. 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 Dh4,122 million as of September 30, 2012, with a slight decline of 2 per cent from the December 31, 2011, figure of Dh4,199 million. 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 Dh118 million 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 Dh664 million.

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, 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 per cent, special emphasis has been given to liquidity which reached Dh5 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.