Profit down but directors rewarded for 2009 performance
Bank of Sharjah directors received a significant pay rise last year - even though the lender's profits fell, its financial statements reveal.
Net profits at the bank fell 15 per cent compared with 2009, to Dh403.9 million (US$109.9m), but directors' remuneration increased by 61.6 per cent to Dh9.6m.
Bank of Sharjah said more directors received remuneration after the acquisition of Emirates Lebanon Bank in 2008. The increase was also tied to Bank of Sharjah's performance in 2009 when profits increased by 14.1 per cent to Dh467.9m.
Although this is common practice in the UAE it differs from the rest of the world where bankers' pay is determined by the current year's performance.
The bank's underlying performance also weakened, with net interest income falling 2.7 per cent to Dh550.1m.
"2010 was a very challenging year for the banking industry. The balance sheet of Bank of Sharjah witnessed solid growth in its structure," said Varouk Nerguizian, the executive director and general manager.
Impairments were among the bright spots reported by the lender, falling 16.1 per cent to Dh75.5m. However, profits were hit by a Dh35m loss on investment properties that were revalued during the year.
The bank said its lower levels of net income was a result of low liquidity on UAE stock markets and low levels of interbank lending.
Nick Nadal, the director of the Hawkamah Institute for Corporate Governance, said Bank of Sharjah deserved praise for its transparency on the issue of directors' pay.
"If you're trying to attract international investors, what they're looking for is more transparency," Mr Nadal said.
Many banks are in a bind, having to pay more for directors at a time of falling profits as they shake off the worst of the financial crisis, said Jonathan Gould, the manager for financial services recruitment at Morgan McKinley.
"A lot of [bankers] are reasonably happy, but not all of them will get good bonuses this year. And a lot of them will jump ship," he said.