UAE’s Sharjah Islamic Bank H1 profit slumps on higher provisions
Sharjah Islamic Bank’s first-half earnings were hit by higher provisions as second-quarter profit slumped by 29.72% compared to the same three months last year.
It performed better in the first-quarter year-on-year when it saw a 1.3% increase in in profit to 153.66 million dirhams.
The bank on Wednesday (July 22) reported 97.542 million dirhams ($26.56 million) in profit for the three months ending June 30 compared to a higher 138.797 million dirhams for the same period in 2019.
This takes Sharjah Islamic’s profit for the first six months to 251.2 million dirhams ($68.4 million), a drop of 13.5% compared to the corresponding half last year.
The bank attributes the fall to an increase in provisions by 65.8 million dirhams to reach 81.1 million dirhams. For the same period last year, provisions were 15.3 million dirhams.
“Higher provisions are a result of prudent forward looking provision coverage considering the economic slowdown owing to pandemic outbreak,” the bank said in a statement filed with the Abu Dhabi Securities Exchange.
It added that the increase in provisions is in line with its reassessed scenario to reflect the impact of the current uncertainty in measuring ECLs, or expected credit losses.
INCOME
The Islamic bank earned 455.032 million dirhams in total income for Q2, compared to 472.803 million dirhams year-on-year. For the six-month total, it brought in 911.786 million dirhams in total income, down 3.5% compared to the same six months in 2019.
Net operating income fell by 2.7% to 642.8 million dirhams due to the continuous decline in market profit rates, said the bank.
Financing and sukuk is the bank’s biggest earner, bringing in an income of 854.119 million dirhams, down from 880.826 million dirhams for H1 2019.
Net customer financing for Q2 reached 29.1 billion dirhams
Customer deposits increased by 18% from the end of 2019 to reach 32.238 billion dirhams.
Overall, Sharjah Islamic’s assets at the end of June was 52.7 billion dirhams, up by 13.5% from the end of 2019.
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