Sharjah, UAE : Bank of Sharjah P.J.S.C (“the Bank” “The Group”) today announced the reviewed results of the period ended 30 September 2021. The following Management Discussion and Analysis includes financial results for the Group.
Since 2020, COVID 19 and other significant development impacted markets where the Group operates. Despite all challenging environments, the Group’s UAE operations demonstrated resilient performance underpinned by the robust fundamentals of the Bank.
The Group’s balance sheet remains strong, with total assets standing at AED 38.50 billion (31 December 2020: AED 36.14 billion) reflecting an increase of 7% and Total Equity of AED 3.77 billion (31 December 2020: AED 3.16 billion) 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. The Group continues to also enjoy comfortable liquidity and a solid capital position with a customer deposit base of AED 25.17 billion (31 December 2020: AED 23.67 billion) reflecting an increase of 6% for the period, with a loans-to-deposits ratio of 81% (31 December 2020: 82%) and a cost-to-income ratio of 50% (30 September 2020: 29%).
The Group’s operations in Lebanon, through its subsidiary Emirates Lebanon Bank SAL (“ELBank”), continued to witness unprecedented events stemming from political and economic turmoil, since 17 October 2019. The Group has complied with Banque du Liban (“BDL”) Circular No. 13129, dated 4 November 2019, calling for the increase by 20% of the equity of Lebanese banks prior to 30 June 2020. It is important to stress that 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 in accordance 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. The non-monetary items of the balance sheet, income statement, statement of other comprehensive income and statement of cash flows of Emirates Lebanon Bank SAL, have been adjusted for inflation and re-expressed in accordance with the variation of the consumer price index (‘CPI’). The re-expression of non-monetary items is made from the date of initial recognition in the statements of financial position and considering that the financial statements are prepared under the historical cost criterion. The consumer price index at the beginning of the reporting period was 284.04 and closed at 613.96.
The net effect of hyperinflation on the Consolidated Equity for the period ended 30 September 2021 was positive and amounted to AED 391 million, representing the difference between AED 1,475 million negative variation on the P&L figures and AED 1,866 million positive variation on total equity.
The Consolidated Net Profit of the Group prior to hyperinflation reached AED 175 million.
Upon application of AED 1,475 million as Hyperinflation effect the Group recognized a Net Loss of AED 1,300 million and a Total Comprehensive Loss of AED 1,252 million versus a positive equity component of AED 1,866 million.
The detailed report can be viewed here.
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© Press Release 2021
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