Bank of Sharjah’s results for the first quarter of 2012 have revealed the strength of its balance sheet, soundness of its assets quality, and continued growth with total income and operating profit before impairment charges increasing both by 15%.

During the first quarter of 2012, net interest income increased by 10% compared to the same corresponding period of 2011. This increase was driven by the decrease in the cost of funding, mainly on customer deposits, despite the 5% increase in deposits.

Furthermore, Non-interest income for the quarter increased by 34% compared to the corresponding period of 2011. This was driven by gains on the traded investments portfolio, as a result of the improvement witnessed by the U.A.E stock markets during the quarter.

As a result, total income for first quarter of 2012 increased by 15% compared to the same corresponding period of 2011 and reached AED 175 million compared to AED 153 million. Net profit decreased from AED 81 million to AED 60 million by 26% following the additional allocation to collective impairment provisions. However, it remains in line with the average of 2011.

Bank of Sharjah continued to strengthen the structure of its balance sheet and enhance its liquidity position. Total assets reached AED 21,504 million, an increase of 4% over the corresponding March 31, 2011 figure of AED 20,666 million.

The Bank continued to increase its deposits base which reached AED 15,466 million as of March 31, 2012, an increase of 5% over the corresponding March 31, 2011 figure of AED 14,765 million, reflecting depositors’ confidence in the Bank.

Loans and advances declined by 3% and reached AED 12,321 million when compared to the corresponding March 31, 2011, figure of AED 12,704 million.

Loans-to-deposits ratio further improved during the period to 0.80 in March 2012 from 0.86 in March 2011.

The above thereby led to a 17% increase in the Bank’s net liquidity, that stood at stood at AED 5,118 million versus AED 4,377 million as of March 31, 2011.

Shareholder’s equity at the end of the first quarter stood at AED 3,973 million, a 5% decline compared to the December 31, 2011, figure of AED 4,199 million. This was mainly caused by the 2011 dividend appropriation.

During the quarter, the Bank has fully subscribed to the 50% capital increase of its subsidiary, Emirates Lebanon Bank S.A.L (EL Bank), raising the equity of the EL Bank to USD 262 million, and its stake to 67.33 % from 51%.

During April 2012, Fitch Ratings reaffirmed Bank of Sharjah’s Long-term Issuer Default Rating at ‘BBB+’ with a stable outlook.

Looking outwardly, the Bank has signed a cooperation agreement with Commerzbank International S.A. to set up a new Private Banking Wealth Management (PBWM) division. This is in line with the Bank’s strategy to expand and diversify the reach of its financial services in order to maintain its growth momentum.

Commenting on the results, Mr. Varouj Nerguizian, the Bank’s Executive Director and General Manager, said: “In a challenging environment the Bank considered it prudent to raise further general provisions to meet the unexpected starting from the first quarter of the year rather than waiting for year-end results. As of March 31, 2012 the Bank’s collective impairment provisions reached AED 607 million. Comprehensive income stood at AED 64 million versus AED 71 a mere decline of 10% reaffirming the sustainability of the Bank’s business model despite a difficult environment and stricter regulation”.

Review report and interim financial information for the period ended 31 March 2012.