Dubai: Bank of Sharjah reported a net profit of Dh254 million in 2011, down 37 per cent from the Dh404 million earned in 2010.
Total provisions were up at Dh215 million compared to Dh80 million in 2010. As of December 31, 2011, the bank's collective impairment provisions were Dh561 million.
The bank's total assets reached Dh20.93 billion, an increase of 2 per cent over the Dh20.61 billion in 2010.
Rise in customer deposits
The increase in assets was mainly driven by an increase in customer deposits which reached Dh14.94 billion, up 4 per cent from the previous year's Dh14.37 billion.
The bank's loans and advances were marginally down at Dh12 billion from Dh12.1 billion. A sustained increase in deposits over loans and advances enhanced the bank's loans-to-deposits ratio.
"During 2011, the Bank of Sharjah demonstrated the underlying strength of its core business operations. In particular, the bank continued to increase its deposit base and enhance its liquidity position," Varouj Nerguizian, Executive Director and General Manager, said.
The bank continued to maintain high liquidity ratios. Net liquidity increased by 2 per cent to Dh4.78 billion from Dh4.68 billion.
The bank's equity stood at Dh4.19 billion, 4 per cent below Dh4.39 billion in 2010. The decline in equity was attributed to the share buyback in which the bank acquired its own shares worth Dh228 million.
Impact of unrest
The bank said the impact of political unrest across the Middle East and North Africa (Mena) last year negatively impacted the financial markets and economies.
The concerns of the Mena region were compounded further by sovereign debt crises in Europe that increased concerns over a global recovery.
In the context of a slower than hoped rebound in the UAE economy last year, Nerguizian expects macro economic factors will continue to weigh on banking results this year.
