Bank of Sharjah's net profit slumped 45 percent in the first nine months of 2011 compared to the same period last year.
Net income reached AED216m, compared to AED393m and was blamed mainly on an increase in impairment provisions.
The bank said in a statement: "In view of the slower than expected recovery in the UAE economy and because of the new risk classification measures introduced by the UAE Central Bank, the bank considered it prudent to further constitute AED40m of collective impairment provisions during the third quarter of 2011."
Total assets reached AED21.5bn, an increase of seven percent year-on-year, the bank said in a statement. The increase in total assets was mainly driven by a rise in customer deposits, the statement added.
Total deposits reached AED15.7bn as of September 30, an increase of 14 percent.
The bank's loans and advances rose six percent, totalling AED12.8bn over September 30, 2010.
Varouj Nerguizian, executive director and general manager at Bank of Sharjah, said: "While profitability is lagging behind due to general provisions, effective performance should be compared to the average of both net income and comprehensive income of 2010, as the year-end figures are more reflective of the reality than the quarterly figures.
"In an uncertain environment, prudential provision remains the key to meeting the unexpected."