Bank of Sharjah’s First Half net profit reaches AED195 Million
Bank of Sharjah’s remarkable performance for the first half was driven by the robust growth in its core banking activities, despite the decline in the UAE financial markets during this period. The growth in the bank’s commercial activity was attributed to the continued expansion of the UAE economy.
For the period ending June 30, 2008, Bank of Sharjah generated net profits of AED195 million, an increase of 27 per cent compared with AED 153 million for the same period of last year. Moreover, it registered an additional profit of AED 117 million in shareholder’s equity due to cumulative changes in the fair value of investments. The bank’s total profits of AED 312 million represent 116 per cent increase over the corresponding June 2007 figure of AED 144 million.
During the first half, the bank strengthened its balance sheet which grew by 18 per cent to reach AED 12.7 billion compared with AED 10.8 billion on December 31, 2007, as a result of the increase in loans and advances, deposits, and equity.
Assets growth was mainly driven by the increase in loans and advances. Loans and advances reached AED 6.9 billion growing by 29 per cent over December 31, 2007, and 48 per cent per cent over June 30, 2007 (AED 4.6 billion).
Customer deposits reached AED 7.2 billion compared with AED 6.3 billion as at December 31, 2007 representing a healthy growth of 14 per cent. However, the growth in deposits compared with June 30, 2007 figure of AED 4.5 billion was a significant 59 per cent. This outstanding growth demonstrates the success of the bank’s strategy of attracting retail as well as institutional deposits.
During the first half, the bank’s equity grew substantially by 64 per cent to reach AED 3.7 billion from AED 2.3 billion on December 31, 2007, as a result of the bond conversion. The bank has successfully converted 97.5 per cent of its AED 500 million outstanding bonds issue. The conversion has added AED 1.46 billion to the bank’s equity, due to the AED 2 premium received on each bond reflecting investors’ confidence in the bank’s strategy and positive future outlook.
As of June 30, 2008, the Bank’s book value per share increased by 36 per cent to AED 2.16 from AED 1.59 as of December 31, 2007 after appropriation of the dividends paid during the period.
The solid growth in the balance sheet was reflected in the bank’s improved profitability. Net income for the period reached AED 195 million representing a 27per cent increase over last year’s figure of AED 153 million. Core banking income was AED 215 million registering a 26 per cent increase over last year’s figure of AED 171 million, as a result of the sustained growth in the bank’s commercial activity.
As a result of the volatility and decline in the UAE financial markets, the bank’s revaluation loss for the period was AED 23 million. This loss was mitigated by the AED 117 million fair value gain on available-for-sale investments that is reported in equity, in addition to another AED 55 million of gain realised on investment property and other investments that was reported in other income.
Net interest income for the period registered a significant increase of 34 per cent growth to reach AED 148 million up from AED 110 million for the same period of last year. This increase resulted from the healthy growth of 48 per cent in loans and advances, and 59 per cent in customer deposits over June 2007 figures.