Sharjah: Bank of Sharjah Group has reported a pre-provision net profit of Dh 175 million for the period ended 30 September 2021.
Upon application of Dh1,475 million as ‘hyperinflation effect’ linked to operations of its Lebanese subsidiary Emirates Lebanon Bank (ELBank), the Group recognized a net loss of Dh 1,300 million and a total comprehensive loss of Dh 1,252 million against a positive equity component of Dh 1,866 million.
The Group’s balance sheet remains strong, with total assets standing at Dh 38.50 billion, up 7% against Dh 36.14 billion as of 31 December 2020, and total equity of Dh 3.77 billion against Dh 3.16 billion as of 31 December 2020, reflecting an increase of 19%.
The Group continues to enjoy a high asset quality and other robust metrics that remain healthy as a result of strict adherence to maintaining a disciplined and focused approach to lending, recovery and funding. Liquidity and capital positions are comfortable with customer deposit base increasing 6% to Dh 25.17 billion from Dh23.67 billion. Loans-to-deposits ratio stood at 81% against 82% as of 31 December 2020, and cost-to-income ratio at 50% against 29% as of 30 September 2020.
The Group’s operations in Lebanon, through its subsidiary Emirates Lebanon Bank SAL continued to witness unprecedented events stemming from political and economic turmoil, since 17 October 2019. The Group has complied with Banque du Liban Circular No. 13129, dated 4 November 2019, calling for the increase by 20% of the equity of Lebanese banks prior to 30 June 2020. The operating income before impairments and application of hyper inflationary accounting standards of ELBank remains in line with last year’s comparable results.
The International Monetary Fund (IMF) published in December 2020 the inflation forecasts. Whereby, the Lebanese economy is considered a hyperinflationary for the purposes of applying IAS 29 and for the retranslation of foreign operations inaccordance with IAS 21 and its effects on the condensed consolidated interim financial statements for the period ending 30 September 2021.
Accordingly, the financial statements of Emirates Lebanon Bank SAL have been restated by applying a general price index to the historical cost, in order to reflect the changes in the purchasing power of the LBP, on the closing date of the financial statements.
“Despite Covid-19 the Bank performed exceptionally well and delivered positive and eloquent results that under hyperinflation accounting moved from P&L directly to equity. From Board of Directors’ perspective protecting shareholders equity is the most important responsibility,” said Sheikh Mohammed Bin Saud Al Qasimi, Chairman of Bank of Sharjah