Dubai: Sharjah’s Invest Bank will dip into its reserves to offset the Dh2.2 billion in accumulated losses sustained by it.
It is picking up Dh450.68 million each from the “special” and “legal” reserves, and these would bring down the accumulated losses to 41.3 per cent of issued capital.
At the end of last year, the percentage was at a steep 70 per cent.
In 2019, the bank had booked credit-related net provisions of Dh634 million, which swelled the overall loss tally to Dh2.2 billion.
“Due to weak governance and credit underwriting and monitoring practices experienced by the Bank in the past, compounded by a subdued economic environment, the Bank had to book hefty provisions,” Invest Bank said in a statement on Abu Dhabi Securities.
Between 2016-18, it had booked provisions of Dh2.6 billion, which resulted in accumulated losses reaching Dh1.6 billion in 2018 – or 102 per cent of issued capital.
It was then that the Bank entered into an agreement with Sharjah Government, for the injection of new capital. This resulted in a doubling of the issued capital to Dh3.2 billion last year.
Invest Bank had a profit before credit impairment of Dh55 million for 2019.