Sharjah bank posts Dh56m net

The National Bank of Sharjah (NBS), the first bank to conver itself from a conventional to a fully Islamic bank, has posted a drop in net profit from Dh76.30 million to Dh56.008 million in 2002.

The bank announced a 10 per cent cash dividend, which will absorb Dh36.7 million, and a 1:20 bonus issue for its shareholders, against a 20 per cent cash dividend and the same level of stock dividend announced in the previous year. NBS will also expand its branch network to 11 by adding two branches in Sharjah.

Discussing the bank's 2002 financial results, the general manager of NBS, Said Mohammed said that a big chunk of the fresh assets were booked in the last quarter and it would take time for the profits to accrue from them.

"Moreover, the cost of transformation and the deliberate slow-down in going in for fresh assets have also, to a good extent, been the reason for the drop in profit for 2002," he added.

Said said that the real picture will emerge next year when the bank announces a much better financial result.

The general manager said that the bank, while launching several Islamic products, will come out with Islamic real estate funds and Ijara to be primarily invested in the UAE, in order to cash in on the booming property market in the UAE.

He said that the bank was also working on an Islamic credit card with the Sharia committee. The card, which will be from Visa, may prove to be the first credit card to be launched in the UAE by an Islamic Bank.

NBS which became a fully Islamic bank from the second half of 2002, made a murabaha and leasing income of Dh62.733 million in 2002 against Dh1.943 million the bank has made in the previous year, when it was a conventional bank.

However, interest income during 2002 dropped to Dh44.182 million from Dh132.852 million because the bank was a conventional bank during the first half of 2002 which resulted in a drop of net interest from Dh79.239 million to Dh33.972 million in 2002.

While the total assets improved from Dh2.047 billion to Dh2.399 billion as of 2002 end, the shareholders' funds dropped from Dh692 million to Dh667 million during this period.