Sharjah Islamic Bank plots capital expansion

The transaction is structured at AED2.40 per new share, made up of AED1 in nominal value and AED1.40 in share premium. Eligible shareholders will be entitled to subscribe for one new share for every three existing shares held. Sharjah Islamic Bank has said the offer price represents a 37 per cent discount to the closing share price recorded on 13 February 2026, a pricing approach aimed at encouraging take-up in a market where rights issues often rely on a clear discount to secure broad participation.

The fundraising push follows shareholder approval at the bank’s annual general assembly on 9 March, when investors also backed a 20 per cent cash dividend for 2025, equivalent to AED647.1 million or AED0.20 per share. That dividend was up from 15 per cent a year earlier, underlining how the bank is trying to balance higher distributions with a sizeable call for fresh equity. Management framed the capital increase as part of a broader strategy to preserve long-term shareholder value while keeping pace with asset growth and regulatory demands.

Abdulrahman Mohamed Nassir Salem Alowais, chairman of the bank, has described the move as a milestone that would help Sharjah Islamic Bank accelerate organic growth and enter what he called a more ambitious phase in its sixth decade. The bank, established in 1975 and converted fully to Islamic banking in 2002, is positioning the capital raise as both a growth tool and a signal of confidence at a time when Gulf lenders are competing for market share in retail, business, and corporate banking while also investing more heavily in technology and compliance.

Support from key shareholders is central to the pitch. Sharjah Islamic Bank said the Government of Sharjah, through Sharjah Asset Management and Sharjah Social Security Fund, has committed to subscribe in full for its proportional entitlement. That matters because anchor support can reduce execution risk and reassure minority investors that the issue is not simply a defensive balance-sheet repair. The bank has also said the rights issue has received the necessary approvals from the Central Bank of the UAE and the Capital Markets Authority, clearing a major regulatory hurdle before subscription proceeds.

The backdrop to the deal is a sharper improvement in operating performance through 2025. Sharjah Islamic Bank reported net profit after tax of about AED1.32 billion for the year, up 26 per cent from AED1.05 billion in 2024. Total assets rose 14 per cent to AED90.3 billion, while customer financing climbed to AED45.6 billion and customer deposits reached AED55.7 billion. The non-performing financing ratio fell to 3.8 per cent from 4.9 per cent, and the coverage ratio improved to 109 per cent, pointing to better credit quality even as the loan book expanded.

Those figures help explain why management is moving now. A bank with rising assets and stronger profitability can make a more persuasive case for new equity than one reacting to stress. Sharjah Islamic Bank says the proceeds will be used to strengthen its capital base well beyond regulatory requirements, extend runway for balance-sheet growth and maintain attractive returns to shareholders. That language suggests the bank wants to stay ahead of capital needs rather than wait for rapid asset growth to compress internal buffers.

The rights issue also reflects a broader pattern across Gulf banking, where lenders are trying to capture business linked to public spending, infrastructure programmes, private-sector expansion and demand for Shariah-compliant finance. Islamic banks in particular have been pushing to widen fee income, deepen corporate relationships and build digital capabilities, all of which require capital support as balance sheets grow. For Sharjah Islamic Bank, the challenge will be to show that fresh equity can translate into higher earnings over time without diluting shareholder returns more than necessary in the near term.