Bank of Sharjah’s UAE operations report Dh379m 9-month net profit
Impairments of Lebanese subsidiary saw the Group net profits shrinking to Dh128 million
Dubai: Bank of Sharjah’s UAE operations reported a net profit of Dh379 million for the nine-month period of 2020 compared to Dh172 million in the same period last year.
Despite all challenging environments, the Group’s UAE operations demonstrated resilient performance underpinned by the robust fundamentals of the bank.
The bank’s consolidated net protifs for the nine months including the results of its Lebanese subsidary Emirates Lebanon Bank SAL (ELBank) stood at Dh128 million, compared to Dh172 million for the same period of 2019.
ELBank provisions
Decline in overall net profits of the period is attributed to unprecedented events in Lebanon stemming from political and economic turmoil since 17 October 2019. The Group has complied with Banque du Liban Circular No. 13129, dated 4 November 2019, calling for the increase by 20 per cent of the equity of Lebanese banks prior to 30 June 2020. The operating income before impairments of ELBank remained in line with last year’s comparable period results. However the Group has been compelled to retroactively register Expected Credit Loss (ECL) figures in the Q1 2020 financial results based on an extremely conservative assessment for determining and recognizing all ECLs during the first half of 2020.
In addition the Group also incresesed provision for the ECL in Q3 as a result of the massive explosion in Beirut on August 4, 2020. “This has created a distortion between the results in the first half of the year and what was booked internally in Q3 financials, with a resulting increase in the levels of the Group’s capital adequacy ratios,” the bank said in a statement.
Balance sheet
The Group’s balance sheet remains strong, with total assets standing at Dh34.77 billion compared to Dh31.75 billion at the year end 2019 reflecting an increase of 10 prer cent and total qquity of Dh3.27 billion compared to Dh3.13 billion at the close of 2019 reflecting an increase of 4 per cent.
Asset quality and other metrics remain healthy as a result of disciplined and focused approach to lending, recovery and funding. The Group continues to enjoy comfortable liquidity and a solid capital position with a customer deposit base of Dh23.25 billion at the close of the first 9 months of 2020 compared to Dh21.33 billion at the yearend 2019, reflecting an increase of 9 per cent for the period
The Group’s loans-to-deposits ratio stood at 84 per cent at the close of the 9-month period compared to 83 per cent at the close of 2019 and a cost-to-income ratio of 29 per cent compared to 57 at the year end.
While the non-performing loans ratio stood at 9 per cent, the bank continued to maintain strong capital adequacey ratio of 11.38 per cent and Tier 1 capital ratio of 10.22 per cent,