Sharjah

The bank of Sharjah yesterday reported a net profit of Dh125 million for the first half of 2012, down 18 per cent compared to Dh152 million reported in the corresponding period last year.

The bank capitalised on its core activity and increased net interest income by five per cent. This was achieved by reducing the cost of funding, mainly on customer deposits, despite the increase in deposits. Also, net fees and commissions income increased by seven per cent.

The bank’s non-interest income declined by 31 per cent – despite the seven per cent improvement in the commission and fees income during the period which was reflected in the overall five per cent slump in total income, the bank said in a statement.

The bank’s deposits base increased one per cent to Dh15.03 billion from Dh14.94 billion as on December 31, 2011. Loans and advances reached Dh12.04 billion compared to Dh12.03 billion reported as of December 31, 2011. Loans-to-deposits ratio further improved during the period to 0.80 in June 2012 from 0.81 in December 2011.

Shareholders’ equity at the end of the first half stood at Dh4.01 billion, a four per cent decline compared to the December 31, 2011 figure of Dh4.19 billion. This was mainly caused by the additional shares acquired through the share buyback during the first quarter of the year, in addition to the dividend distribution on the 2011 profits.

The bank pursued its prudent policy of raising further general provisions. During the second quarter of 2012, the bank has set aside Dh30 million of such provisions, bringing the charge for the period ending June 2012 to Dh91 million, similar to the 2011 corresponding period. As such, the bank’s collective impairment provision balance as of June 30, 2012 stood at Dh636 million.

“To properly secure customers’ and investors’ best interests, the Bank has adopted a prudent and conservative policy of allocating additional general provisions. While this policy curbs the Bank’s short-term profitability, it will ensure the Bank’s long term sustainability and potential,” said Varouj Nerguizian, the bank’s Executive Director and General Manager,