Sharjah Islamic Bank (SIB) kicked off 2025 on a strong financial footing, reporting a net profit of AED318.9 million in the first quarter — a 24.6% increase from AED255.9 million in Q1 2024.
What’s Driving the Profit Growth?
The bank’s strong performance was largely powered by growth in Islamic financing and Sukuk investments. Income from these sources rose by 6.6% year-on-year, reaching AED914.3 million, up from AED858.1 million a year earlier.
SIB’s steady financial returns also reflect a balanced profit-sharing approach. Total distributions to depositors and Sukuk holders rose to AED546.9 million, up from AED490 million in Q1 2024. This underscores the bank’s commitment to Sharia-compliant equitable profit distribution, even amid fluctuating funding costs and market pressures.
Diversifying Revenue Beyond Core Banking
To reduce reliance on interest-based income, SIB is actively diversifying its revenue streams. One standout area is net fee and commission income, which surged 38.3% to AED107.6 million, up from AED77.8 million in the same period last year. This contributed to a total operating income of AED531.7 million — a 5.3% increase year-on-year.
Managing Costs While Investing in Growth
Despite higher spending, the bank maintained operational efficiency. General and administrative expenses rose to AED198.3 million — up 11.3% — due to continued investment in technology, talent, and infrastructure to support expansion and improve service.
Still, net operating income before provisions rose by 2%, reaching AED333.4 million, demonstrating SIB’s ability to absorb cost pressures without compromising profitability.
Strong Credit Recovery and Risk Management
A major contributor to Q1 success was a net recovery in impairment provisions, which added AED17.2 million to the bank’s earnings. This marks a significant turnaround from Q1 2024, when the bank recorded AED45 million in provisions. The shift signals improved asset quality and effective risk mitigation.
This recovery helped lift profit before tax to AED350.6 million, up 24.5% from AED281.7 million a year ago.
Growth Across the Balance Sheet
SIB’s total assets grew by 4.5%, reaching AED82.8 billion as of March 31, 2025. Liquidity remained strong, with liquid assets comprising 21.8% of total assets (AED18.1 billion).
Customer financing climbed to AED40.3 billion (up 4.5%), while customer deposits increased modestly to AED52.1 billion. This brought the bank’s financing-to-deposit ratio to 77.4%, up from 72.8% at the end of 2024 — indicating increased lending activity supported by a stable deposit base.
Strengthened Capital and Return Ratios
With shareholders’ equity at AED8.2 billion, representing 9.9% of total assets, SIB maintains a robust capital position. As a result, key profitability metrics improved:
- Return on Assets (ROA): 1.58% (up from 1.44%)
- Return on Equity (ROE): 15.5% (up from 12.76%)
What This Means
Sharjah Islamic Bank’s Q1 2025 performance highlights its resilience in a competitive financial landscape. With strong revenue growth, disciplined cost management, and improving asset quality, the bank appears well-positioned to sustain its momentum through the rest of the year — while maintaining its commitment to ethical, Sharia-compliant banking principles.
