Bank Of Sharjah : Pillar III Disclosures for Bank of Sharjah PJSC for the period ended 30 September 2025

Pillar 3 Report

30 September 2025

Table of Contents

1. Introduction 3
2. Purpose and basis of preparation 3
3. Overview of Pillar III 4

   1. Verification 5

      1. Implementation of Basel III standards and guidelines 5

4. Key Metrics for the group (KM1) 6
5. Overview of Risk Weighted Assets (OV1) 7
6. Leverage Ratio 8

   1. Summary comparison of accounting assets versus leverage ratio exposure (LR1) 8

   2. Leverage ratio common disclosure template (LR2) 9

7. Liquidity risk management 10

   1. Eligible Liquid Asset Ratio (ELAR) 10

   2. Advances to Stable Resources Ratio (ASRR) 11

1. Introduction

   Bank of Sharjah P.J.S.C. (the "Bank"), is a public joint stock company incorporated by an Amiri Decree issued on 22 December 1973 by His Highness The Ruler of Sharjah and was registered in February 1993 under the Commercial Companies Law Number 8 of 1984 (as amended). The Bank commenced its operations under a banking license issued by the United Arab Emirates Central Bank dated 26 January 1974. The Bank is engaged in commercial and investment banking activities.

   The Bank's registered office is located at Al Khan Road, P.O. Box 1394, Sharjah, United Arab Emirates. The Bank operates through six branches in the United Arab Emirates located in the Emirates of Sharjah, Dubai, Abu Dhabi, and City of Al Ain.

2. Purpose and Basis of preparation

The Central Bank of the UAE continues to support the Bank's strategic effort to delink/deconsolidate its Lebanese Subsidiary, as the underlying accounting anomalies impact is not sustainable for the Bank and pose a threat of unnecessary volatility. Accordingly, the objective remains to cease the consolidation of the Lebanese Subsidiary's financial statements in the Group's financial statements, as per the Central Bank of the UAE recommendations effective 1stApril 2023. This step is necessary to mitigate the accounting anomalies and disruptions resulting from the consolidation of the Lebanese Subsidiary. On 22ndJune 2023, the Board approved the de-linking.

When the Group classified the Lebanese subsidiary as an "asset held for sale," all the subsidiary's assets and liabilities were categorized accordingly. Once classified in this category, the group of assets and liabilities is measured at the lower of carrying amount or fair value less costs to sell. If impairment occurs, an impairment loss is recognized in the condensed consolidated interim statement of profit and loss. Impairment losses may be reversed. The fair value less cost to sell estimate remains a significant judgment, determined based on the market offer approach.

The previously heightened geopolitical environment in Lebanon had delayed the sale beyond the 12-month timeframe stipulated by IFRS 5. However, recent political and economic developments clearly indicate a more stable and promising outlook, prompting renewed interest from potential buyers. During the period ended 30 September 2025, the Bank received reconfirmed offers from potential acquirers, reflecting a more positive market sentiment. Discussions are advancing, with buyers demonstrating increased confidence in Lebanon's financial sector recovery. The Bank has received expressions of interest from other potential buyers and is engaged in further discussions. An accredited multinational sell-side advisory firm has been appointed to support the sale process, including initiating due diligence procedures.

While the Bank remains confident in the successful sale of Emirates Lebanon Bank, it acknowledges that delays may still occur due to external factors. Nonetheless, the improving political and financial landscape is expected to facilitate and expedite the completion of the transaction. Additionally, the Bank has received an updated letter from the regulator reaffirming support for the classification of EL Bank as held for sale under IFRS 5, reflecting the improved market conditions and ongoing strategic efforts to finalize the sale.

1. Purpose and Basis of preparation (continued)

   The complete listing of all direct subsidiaries of Bank of Sharjah PJSC as at 30 September 2025 is as follows:

   Name of Subsidiary	Proportion of ownership interest		Year of incorporation	Country of incorporation	Principal activities
   	2025	2024
   Emirates Lebanon Bank S.A.L.	100%	100%	1965	Lebanon	Financial institution
   EL Capital FZC	100%	100%	2007	U.A.E.	Investment in a financial institution
   BOS Real Estate FZC	100%	100%	2007	U.A.E.	Real estate development activities
   BOS Capital FZC	100%	100%	2007	U.A.E.	Investment
   Polyco General Trading L.L.C.	100%	100%	2008	U.A.E.	General trading
   Borealis Gulf FZC	100%	100%	2010	U.A.E.	Investment & Real estate development activities
   BOS Funding Limited	100%	100%	2015	Cayman Islands	Financing activities
   Muwaileh Capital FZC	90%	90%	2010	U.A.E.	Developing of real estate & related activities
   BOS Repos Limited	100%	100%	2018	Cayman Islands	Financing activities
   BOS Derivatives Limited	100%	100%	2018	Cayman Islands	Financing activities
   GTW Holding LTD	100%	100%	2022	U.A.E. (ADGM)	Facilitate the sale of real estate assets
   GDLR Holding LTD	100%	100%	2022	U.A.E. (ADGM)	Facilitate the sale of real estate assets
   BOS Real Estate Egypt	100%	100%	2023	Egypt	Real estate development activities

2. Overview of Pillar III

   Pillar III complements the minimum capital requirements and the supervisory review process. Its aim is to encourage market discipline by developing disclosure requirements which allow market participants to assess certain specified information on the scope of application of Basel III, capital, particular risk exposures and risk assessment processes, and hence the capital adequacy of the institution. Disclosures consist of both quantitative and qualitative information and are provided on the consolidated level.

   The CBUAE issued Basel III capital regulations, which came into effect from 1 February 2017 introducing minimum capital requirements at three levels, namely Common Equity Tier 1 ('CET1'), Additional Tier 1 ('AT1') and Total Capital.

   The minimum capital adequacy requirements as set out by the Central Bank of UAE are as follows:

   • Minimum common equity tier 1 (CET 1) ratio of 7% of risk weighted assets (RWAs).

   • Minimum tier 1 ratio of 8.5% of RWAs.

   • Total capital adequacy ratio of 10.5% of RWAs.

In addition to CET 1 ratio of 7% of RWAs, a capital conservation buffer (CCB) of 2.5% of RWAs shall be maintained in the form of CET 1. A further counter cyclical buffer (CCyB) requirement shall be met by using CET 1. The level of CCyB is to be notified by 'the Central Bank' and there is no CCyB requirement during the current period. The Group has complied with all the externally imposed capital requirements and has prepared the capital adequacy ratios excluding the currency translation reserve resulting from the Lebanese operations.

1. Overview of Pillar III (continued)

   Following are the changes in the revised standards which have been adopted:

   • The Tier Capital Supply Standard

   • Tier Capital Instruments Standard

   • Pillar 2 Standard: Internal Capital Adequacy Assessment Process (ICAAP)

   • Credit Risk, Market Risk and Operational Risk

   • Equity Investment in Funds, Securitisation, Counterparty Credit Risk, Leverage Ratio

   • Credit Value Adjustment (CVA) for Pillar I and III

   CBUAE requires the Pillar 2 - Supervisory Review Process to focus on each bank's Internal Capital Adequacy Assessment Process (ICAAP) in addition to Pillar 1 Capital calculations. The ICAAP should include a risk based forward looking view of, but not limited to, Credit, Market and Operational Risk Capital.

   1. Verification

      The Pillar 3 Disclosures for the period ending 30 September 2025 have been reviewed by the Group's internal and statutory auditors.

   2. Implementation of Basel III standards and guidelines

The Group is compliant with Standardised Approach for Credit, Market and the Basic Indicator Approach for Operational Risk (Pillar 1) as applicable as of 30 September 2025.