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Sharjah banks report strong profit growth

Sharjah banks InvestBank (INVESTB), Sharjah Islamic Bank (SIB) and United Arab Bank (UAB) all announced strong profits for the first nine months of 2014. Investbank reported a six percent increase in net operating profit to AED 373 million (US$101m ), SIB reported a 33.5 percent increase in net profits to AED 295 million (US$ 80m), whilst UAB reported a 20 percent increase in net profit to AED 498m (US$ 136m). UAB was recently recognised as the Fastest Growing Bank in the Middle East by the Banker Middle East Industry Awards 2014.

Sharjah’s economy is currently enjoying a period of accelerated growth, registering an 8 percent growth in gross domestic product (GDP) during 2013, second in the region only to Dubai’s 9 percent GDP growth. This growth is also the product of the carefully managed strategic development of Sharjah and the government’s strong fiscal policy. The Government of Sharjah announced its first ever credit ratings in January of this year, with Moody’s Investor service assigning Sharjah a long-term rating of A3, with a stable outlook and Standard & Poor’s giving Sharjah a long-term rating of A, also with a stable outlook.

Sharjah banks SIB and UAB have both recently been rated by Moody’s Investors Service, UAB receiving a Baa1/Prime-2 global foreign and local-currency deposit rating with a stable outlook. Moody’s assigned issuer ratings of A3/Prime-2 and a standalone bank financial strength rating (BFSR) of D+ to SIB, which is equivalent to a baseline credit assessment (BCA) of baa3 with a stable outlook. The rating reflected SIB’s very strong capital buffers, low borrowing and satisfactory profitability. Meanwhile, Capital Intelligence (CI) affirmed the Financial Strength Rating (FSR) of InvestBank at ‘BBB’ this year, citing adequate capital and good profitability as supporting factors.

The Sharjah economy, in which no individual sector represents more than 20 per cent of the GDP, received a further vote of confidence with the successful launch of Sharjah’s first sovereign sukuk (or Islamic bond). Demand for the 10-year US$ 750 million (AED 275b) sukuk topped US$7.85 billion (AED 29b) and also received a Moody’s rating of A3.

Investbank, Sharjah Islamic Bank (SIB) and United Arab Bank (UAB) are all listed on the Abu Dhabi Securities Exchange (ADX) in the UAE.

Source: InvestBank, SIB, UAB, media

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