Bank of Sharjah results revealed consistent performance for the period ending September 30th, 2010. Total assets crossed the AED 20 billion threshold for the first time since inception. The growth is attributed to the Bank's proven strategy, the quality of its assets, and the strength of its balance sheet.
As of September 30th, 2010 total assets reached AED 20,095 million an increase of 15% over the corresponding September 30th, 2009 figure of AED 17,451 million. The increase over the December 31st, 2009 figure of AED 18,062 million was a significant 11%. This growth was driven by the growth in deposits.
Bank of Sharjah has successfully managed to substantially increase its deposits portfolio. Total deposits reached AED 13,709 million as of September 30th, 2010. A significant 19% increase over the corresponding September 30th, 2009 figure of AED 11,561 million, revealing customers' confidence in our institution. Also, when compared to the December 31st, 2009 figure of AED 12,113 million, the increase in deposits was a prominent 13%.
The Bank's loans and advances reached AED 12,107 million for the period, an increase of 9 % over the corresponding September 30th, 2009 figure of AED 11,071 million. The increase over the December 31st, 2009 figure of AED 11,450 million was 6%.
The significant increase in deposits over the loans and advances lead to improvement to the loans and advances to deposits ratio which fell from a high of 0.96 in September 2009 to 0.88 as of September 2010.
The bank's equity grew by 5 % to reach AED 4,231 million compared to the September 30th, 2009 figure of AED 4,035 million. The increase over the December 31st, 2009 figure of AED 4,097 million was also a marginal 3%.
Net liquidity for the period stood at AED 3,874 million, in comparison to the corresponding September 30th, 2009 figure of AED 2,834 million, a surge of 37%. When compared to the December 31st, 2009 figure of AED 2,912 million, the increase was also a salient 33% of AED 962 million.
Net interest income for the period ending September 30th, 2010 marginally dropped by 4% (around AED 16 million) to reach AED 414 million compared with AED 430 million for the corresponding 2009 period. This is the burden of financial stability associated with maintaining high levels of liquidity placed in money market instruments at historically low interbank interest rates.
The drop in net interest income was compensated by the increase in commissions and other income which lead to the 4% increase in net operating income to AED 544 million versus AED 525 million for the corresponding 2009 period.
All the above events contributed to the marginal 1% increase in net income during the current period, which reached AED 393 million versus AED 388 million for the same corresponding period of 2009.
The revived concerns over the global recovery have left their impact on the worldwide and local financial markets. Even though the U.A.E financial markets have rallied during the second half of September 2010, the gains realized during this period did not reverse the losses sustained since September of last year. This lead to the current year 17% decline in total comprehensive income as a result of the AED 3 million losses on the available for sale investments portfolio versus a gain of AED 73 million in the corresponding September 2009 period.
On July 29th, 2010 Bank of Sharjah, managed to successfully close a US$150 million club term-loan facility with a group of mandated lead arrangers, which exceeded by 50 per cent the initial target amount of US$100 million. The first term loan to a GCC-based bank since the start of the global financial crisis is testament to Bank of Sharjah's financial strength and reputation and highlights lenders' confidence in the bank.
During the last week, the bank has finalized the sale of a 30% equity stake in Emirates Lebanon Bank S.A.L to EL Capital FZC. Through this transaction the bank managed to offload a significant stake of its investment while retaining a controlling 51% interest in its Lebanese subsidiary.
The bank is also planning to open a new branch in Dubai Media City to cover this dynamic area of Dubai, in addition to catering to the needs of its clients in the media sector. Also, as part of it plans to grow its Private Banking and Wealth Management division the bank has acquired new offices in a prime area of Dubai, where also the risk departments will be relocated.
Commenting on the results Mr. Nerguizian, the Executive Director and General Manager, said "Bank of Sharjah is on course to meet its budgeted results". Adding "With the Real Estate problem in the country entering the proper recognition cycle, the rest of the economic sectors are decoupling and entering a growth momentum. The challenge for the coming year will no longer be providing for impaired assets, but rather the ability for banks to meet the needs of those customers who can create value and generate profits for themselves and their banks as well".
