Pillar III Disclosure for Bank of Sharjah PJSC for the year ended 31 March 2025

Pillar 3 Report

31 March 2025

Table of Contents

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

   1. Verification 4

      1. Implementation of Basel III standards and guidelines 4

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

   1. Summary comparison of accounting assets versus leverage ratio exposure (LR1) 7

   2. Leverage ratio common disclosure template (LR2) 8

7. Liquidity risk management 9

   1. Eligible Liquid Asset Ratio (ELAR) 9

   2. Advances to Stable Resources Ratio (ASRR) 10

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 CBUAE supervises Bank of Sharjah ("BOS" or the "Bank") and its subsidiaries (together referred to as the "Group") on a consolidated basis, and therefore receives information on the capital adequacy of, and sets capital requirements for, the Group as a whole. The capital requirements are computed at a Group level using the Basel III framework of the Basel Committee on Banking Supervision ("Basel Committee"), after applying the amendments advised by the CBUAE, within national discretion. The Basel III framework is structured around three 'pillars': minimum capital requirements (Pillar I); supervisory review process (Pillar II); and market discipline (Pillar III).

   The disclosures have been prepared in line with the disclosures template introduced by the CBUAE guidelines on disclosure requirements published in November 2020, November 2021, December 2022 and December 2023 respectively.

   The Pillar III report of the Group for the period ended 31 March 2025 comprises detailed information on the underlying drivers of risk-weighted assets (RWA), and the capital of the Group. The report should be read in conjunction with the Group's reviewed Financial Statements as at 31 March 2025.

   The complete listing of all direct subsidiaries of Bank of Sharjah PJSC as at 31 March 2025 is as follows:

   Name of Subsidiary	Proportion of ownership interest		Year of incorporation	Year of acquisition	Country of incorporation	Principal activities
   	2025	2024
   Emirates Lebanon Bank S.A.L.	100%	100%	1965	2008	Lebanon	Financial institution
   El Capital FZC	100%	100%	2007	2017	U.A.E.	Investment in a financial institution
   BOS Real Estate FZC	100%	100%	2007	2007	U.A.E.	Real estate development activities
   BOS Capital FZC	100%	100%	2007	2007	U.A.E.	Investment
   Polyco General Trading L.L.C.	100%	100%	2008	2008	U.A.E.	General trading
   Borealis Gulf FZC	100%	100%	2010	2010	U.A.E.	Investment & Real estate development activities
   Muwaileh Capital FZC	90%	90%	2010	2017	U.A.E.	Developing of real estate & related activities
   BOS Funding Limited	100%	100%	2015	2015	Cayman Islands	Financing activities
   BOS Repos Limited	100%	100%	2018	2018	Cayman Islands	Financing activities
   BOS Derivatives Limited	100%	100%	2018	2018	Cayman Islands	Financing activities
   GTW Holding LTD	100%	100%	2022	2022	U.A.E. (ADGM)	Facilitate the sale of real estate assets
   GDLR Holding LTD	100%	100%	2022	2022	U.A.E. (ADGM)	Facilitate the sale of real estate assets
   BOS Real Estate Egypt	100%	100%	2023	2023	Egypt	Real estate development activities

3. 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.

     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 31 March 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 31 March 2025.

4. Key Metrics (KM1)

Key prudential regulatory metrics have been included in the following table: