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Sat 30 Apr 2011 12:13 PM

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Bank of Sharjah sees Q1 profits fall nearly 40%

Net profit drop is blamed on increased impairment provisions, decline in regional stock markets

Bank of Sharjah sees Q1 profits fall nearly 40%
Bank of Sharjahs net profit for the first quarter of 2011 was nearly 40 percent lower than the same period last year.

Bank of Sharjah said on Saturday its net profit for the first quarter of 2011 was nearly 40 percent lower than the same period last year.

It posted net profits of AED81m ($22m) compared to AED134m, blaming increased impairment provisions and the decline in regional stock markets for the decrease.

Total assets reached AED20.6m, an increase of 12 percent, the bank added in a statement.

Over the last year, Bank of Sharjah has substantially increased its deposit base, it said, adding that they reached AED14.7m as of March 31, an 18 percent increase over the corresponding period in 2010.

During the first quarter of 2011, the bank's loans and advances reached AED12.7m, a rise of seven percent on the year earlier.

The decline in the regional financial markets, exacerbated by the recent political uncertainty in the Middle East, resulted in a AED3.7m loss to the bank's trading investments portfolio.

Fitch Ratings recently reaffirmed Bank of Sharjah's Long-term Issuer Default Rating at 'BBB+' with a stable outlook.

Varouj Nerguizian, executive director and general manager of Bank of Sharjah, said: "The political unrest that occurred in the MENA region during the first quarter of 2011 negatively impacted regional financial markets.

"The challenge of continually assessing risk and monitoring exposure to these markets, coupled with new risk classification measures introduced by the UAE Central Bank, might prove detrimental to the banking sector in 2011 considering the subdued economic environment."

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