Bank Of Sharjah Reports and consolidated financial statements for the year ended 31 December 2025

Bank of Sharjah P.J.S.C.

Board of Directors' report and consolidated financial statements for the year ended 31 December 2025

Bank of Sharjah P.J.S.C.

Table of contents

Board of Directors' report

Independent auditor's report

Consolidated statement of financial position

Consolidated statement of profit or loss

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

Pages

1

2 - 7

9

10

11

12

13 - 71

Bank of Sharjah P.J.S.C. 1

Board of Directors' report

The Directors have pleasure in presenting their report together with the audited consolidated financial statements of Bank of Shaijah P.J.S.C. (the "Bank") and its subsidiaries, together referred to as (the "Group") for the year ended 31 December 2025.

Financial Highlights

As of 31 December 2025, the total assets of the Group amounted to AED 48.4 billion, an increase of 11.0°4 compared to AED 43.6 billion as at 31 December 2024. Net loans and advances amounted to AED 30.4 billion, an increase of

25.3•4 from AED 24.3 billion as at 31 December 2024. Investments securities increased by 8.0°é to AED 10.9 billion as at 31 December 2025 from AED 10.1 billion as at 31 December 2024. Customers' deposits increased by 6.19’» to reach AED 31.5 billion as compared to AED 29.7 billion as at 31 December 2024, demonstrating overall strengthening of the Group's liquidity position. Total equity amounts to AED 4.6 billion as of 31 December 2025.

Net interest income recorded a significant increase of 58.1°/» and reached AED 678 million for the year ended 31 December 2025 from AED 429 million in the previous year. Operating income for the Group increased by AED 420 million and reached AED 1,146.5 million for the year ended 31 December 2025 compared to AED 726.5 million in the previous year. Income on properties recorded AED 210.6 million for the year ended 31 December 2025 compared to AED 104.4 million in the previous year, Profit before tax increased by 92.8°/< and reached AED 802.8 million for the year ended 31 December 2025 compared to AED 416.4 million in the previous year. As a result net profit of AED

728.8 million was recorded for the year ended 31 December 2025, compared to AED 384.7 million in the previous year, reflecting an 89.4°A increase.

Auditors

Grant Thornton Audit and Accounting Limited (Dubal Branch) were appointed as auditors of the Group for the year ended 31 December 2025 at the Annual General Meeting held on 23 April 2025.

The Directors during the year were:

1. Sheikh Mohammed Bin Saud Al Qasimi (Chairman)

2. Sh. Saif Bin Mohammed Bin Butti AI Hamed (VlGe Chairman)

3. Mrs. Arwa AI Owais

4. Mr. Talal AI Midfa

5. Mr. Abdul Aziz AI Hasawl

6. Mr. Mubarak AI Besharah

7. Mr. Salem Al Ghammai

8. M . salah Ahmed Abdalla Al Noman

9. Mr. Abdulla Sherif AI Fahim

10. Mr. Amer Abdulaziz Khansaheb

11. Mr. Waleed Ibrahim AlSayegh

On behalf of the Board

Mohammed Bin Saud AI Qasimi Chairman

Grant Thornton Audit and

Accounting Limited

‹oueai eran<>

The Oftlces S

Level 3

Otnce 3o2, 303, 30B One Central, DWTC Oubai, UAE

PO.Boxt620 T+97'¥43889925 f+971438899l6

w ra ho e

INDEPE IDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF B nlK OF SHARJAH PCSC

We hnvc audited the consolidated fn•nci•1 stnt i in ofBW of Sherjeh PJSC (the "Bm9 end in aubiidiaries (collectively refmcd to as die "Group"), which comprise the coosolidnttd statement of financial posifion us at 31 December 2025, the consolidated sntement of profit or loss, the consolidated stntcment of comprehensive income, the consolidated statement of changes in equity and the coneolidnted stctemc it of cash Oows for the year then rided, and notes to the consolidated

In our opinion, the sccompenyiog consolidated financial statements presmt Partly, in s11 matezisl respects, the consolidated financial position of the Group as at 31 December 2025, and ita consolidated financial perkirinance sod consolidated cash flom for the year then ended in eccotdancc with IFRS Accounting San‹ mls as issued by International Accounting Stnndacds Board (IASB).

Bsaimfuf Ou

We conducted our audit in accordance with Inteoietional Students on Auditing (ISAS). Our responsibilities under those sanderds an further described in the W‹if›rs Rfxuuibiliñufor the Wi&f§f& Wnseâ Fiirse&f$Mnaa section of our ieporc We src independent of the Group in accordance with the Interactional Hthics Steoderds Board for Accountants' menu&cat & @ff&iu@ r» ioa«f a»ñuia {mAm,g I ea*ffAJa&car Jñs&rdrj t‘7Ef&fi Co&”j as applicable to audits of consolidated financial statements of public intermt entities, together with the ethical requirements that are ctlevazit to audits of the consolidated financial statemenn of public interest entities in the United Amb Emintes, and we hevr fiilfilled our other ethical responsibilities in accordance with thtse requirement md the IESBA Code We believe that the audit evidence we heve obtained is sufocient and appropriate to provide abasis for our opinion.

ney eudit matters sre thoec matters that, in our professional judgment, were of most ngnificsnct in our sudit of the consolidated £ine ‹:iet itntemeno of the current year. These matters were addressed in the content of our audit of the consolidated financial statements as awholt, andin forming our opinion thereon, end we do not provide a separate opinion

                                                   2                                              

INDEPBNDRi"4’T AUDITOR'S RBPORT TO THE SHARRHOIOERS OF BANK OF SHARJAH PjSC

3

It'•fDBPENDZbIT AUDITOR'S SSPOSZ TO °£'BE GMABEHOLDBBS OP BAt'•f& OP SMAS}AM USC

gey Audit Matters (continued)

4

D4DEPRNDBNT AUDITOR’S REPORT TO THE SHAREHOLDERS OP BANK OF SHARJAH EJSC

Other lofotmntion

The Bonrd ofDirectors of the Group exe responsible for the othn information. The other information comprises the Board oEDirectozt' report but dots not include the conselidated financial statements end our suditor's report thereon. The Annusl Reposrt sod the Msnngement Discussion and An*iyxis Report are expected to be mede sveilable to us after the dnte of

Our opinion on the consolidated financial statements doc not cover the other information ncept for ae financial information given in the Board ofDirectors' report, end accordingly we do not end will not exprmi any fomi of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to tead &e other iofocmntion idmti6ed above and, in doipg so, consider whether the o&er information is m•tetially inconsistent with the consolidated financial stntemcnts, or our knowledge obtained in the audit, or otherwise appears to be eiatezially missisted.

If, bssed on the work we have perfomied on the other ieformaaon that we obtained prior to the date of this auditor's

hnvc nothing to repon in this tegetd. Whtn we head the Annual Report and the Managemmt Discussion end Analysis Report, if we conclude that there is a mstexial miiststement therein, are are required to cominuoimte die matter to those

Rcsponalbfliaes of Management and Thoee Charged with Governance foe the Gonsolideted Finsinciet Ststemenia

Management is respoosiT›1e for the prcpeeation end fnir preoeritntion of the consolidated financial stntemcnts in accordance with IPRS Accounting Stnndarde as issued by IASB and their prepention in compliance with applicable provisions ofUAB Federal Decree-law No (32} of 202t, as amended, end UAU Federal Decree-Law No. (6) of 2025 end for such internal control as management deieozfinea is nccesiszy to enable the prepsrntion of consolidated financial statements thnt arc fine

£rom metcfiel n›irsatcment, whether due to ftaud or ettor.

In prepefing the consolidated financial satemenis, management is responsible for assessing the Group's abiliq in continue as agoingconcern, diackuing, as applicahle, mm related to goingconcern enduaing thegoingconcern busts ofaccounting ualess msnsgement either intends to liquidate the Group or to ceese operations, or her no realistic slternatne but to do so.

Those charged with goverm ce are responsible for overseeing &e Group's finsncisl reporting process.

Our objectives src to obtain reasonable assurance eboui whether the consolidated financid imternents as a whole src free flown material miistntement, whether dun to I&nd oz ettor, and to issue an auditor's report thet includes our opinion Rmsonnble nssurencc is a high lerel of assurance, but is not z guacanm tbnr n audit conducted in ittotdaaee widi ISAs will ahvays detect a material misetetemmt when it exists. Misstatements can curse from fmud or enor and are conaidexed material if, individually or in the aggregate, they could r nably be expected to influence the economic decisions of usera taken on the bssis of these consolidated financial statements.

As part of an audit in accoxdsnce Frith ISAS, we exercise pfofessioeal judgment end maint&i professional skcpticiam throughout the audit. We also:

£t'4DEPRNDBNT AUDITOR'S RRPORT TO THE SHñEBHOLDRRS OP BANK OF SHARJAH PJSC

Rnport on the Audit of the Consolidated Financial Stetementa (continued)

Anditor•s Reeponaibitities for the Audit of the Consolidated Finenciai Sieiemeno (continued)

• Idcndfy •nd assese the asks of material misstatement of the consolidstrd finencisl stntemena, whether due to keud or enor, design md perform audit procedures responsive td those zie£s, and obtain audit esidcnct thet is sufficicnt end appropnatc to provide a basit for our opinion. The tiak ofnot detecting n material misstatement resulting from trend is higher then the one resulting ftomerror, as fzsudmay involve collusion, forgery, intentional omission, misrepreee ations, or the overndc ofinternal controls.

• Obtain en undcrstandipg ofintnzosl control relcmnt to the audit in order to dcaign audit procedures that sze approptictc in the circumstances, but not for the purpose of expressing en opinion on the effectivenns of the Group's internal

• Evaluate the appropzinteness of accounting policies used and the rmsonableness of acmunting estimates and related

• Conclude on the appropñateness ofmanagement's use of the going concern beers of accounting and, based on the audit widence obtninnd, whether a matecinl uncertainty exists related to events or conditions that may c st significant doubt on the Group's abifity to continue ss agoing concern. If we conclude thnt z matttial uncettninty cairn, wr are required to draw attention in our auditor's report to the related disclosures in the cooaolideted financial satements or, if euch disclosures ate inadequate, to modify our opinion. Our confusions are based on the audit evidmce obtained up to the detc of our auditor's reporc However, future evtnts or conditions mm ceusc the Group to cease to continue ss a going

• Evaluate the overallpresentation, sauctu n end contmt ofthe consolidated financial stetrmerits, including the disclosures, rind whether the consolidated Boencinl stniementa represent the undtdying trznaactions end wents in a manner thst achieves fair prmenation.

• Plan end perform die group audit to obtain sufficient appropciatn sudit evidence regecdiog the financial information of the mtities oz buaineos activities within the Group to express an opinion on the consolidated financial stntrments. We exe responsible for the direction, supervision end performance of the greup audio We remain soleiy responsible for our audit opinion.

We communicnte with those changed with governance ceganling, smopg other m , the planned scope and timing of the audit and mgnificsnt audit tradings, including any eigpificant deficiencies inintaual control thnt we identif;y duziog our eudic

We also provide those charged with governance with a nntemcnt thnt we have complied with relevant ethical requiremena regarding independence, and to communicate with them sllrelnaonships end other matters tint mm reasonably be thought to bear on our independence, end where npp1ic*file, actions taken to eliminate tliieaa of Safeguards applied.

From the maners communicated with those charged with governance, we detetznine &ose mattem that were of most ccc inthe iudit of the consolidated financial easements ofthe cunent peered and are therefore the key audii matters. We describe &esc matters in our euditox's report unless law or regulation precludes public diclosure &out the matter or when, in extremely mre circumetuncee, xc determine that a matter ahould not be communicated in our zepozt bemuse the adverse consequences of doing eo would reesonnbly be expected to outweigh the public interest benefiin of such

INDR•PRNDBNT AUDITOR’S REPORT TO THE SHARBHOLDBRS OF BANK OP s JM PCSC

(continued)

Repozt oa Otbec £egd andRegulatory SequJeeroeata

As required by the UAE Federal Decree-Law No. 32 of 202t, ss amended, we report thet for the ymr endtd 31 December

2025:

We heve obtained all the information we considered necessary for the purposes of our audit;

ii) The consolidated financial statements have been prepared and comply, in elf material *aspects, with the applicable provisions of the UAR Federal Decree-Lew No (32) of 2021, ss amended;

The Group hss tneiniaincd proper boohs of account in accordance with established accounting pt:inciplts;

iv The financial infomistion included in the Boinl ofDirecton' report is consistent with the books of account of the Group;

v) Note 9 to the consolidated financial statements discloses pumhases or investment in shares duting the financial year endod 31 December 202s;

Note 32 to the consolidated financial stn tuts discloses mattcisl related party aans ctions and the teens under which they were conducted;

Note 29 to the consolidated financial itam»ene discloses social contributions made dufing the financial year tnded

31 December 20M; and

) Bssed on the infoonstion that has been msde aveileble to us, nothing has come to our attention which causes us to believe nut the Group hes, during the year ended 31 Decembn 2025, contmventd any of the applimble provisions of the UAB Podetal Decree-Lew No (32) of 2021, us amended or ofits Articles of Association which would materially effect its nctiviqes or its financial position as at 31 December 202a.

Purthcr, as required by Article (140) of the UAE Pedeisl Dectet-Law No. (6) of 2025, we teport thst we have obtained all the information and explanations we considered necessary for the purpose of our audit

GBdI•IT TI4ORN 'ON

dPmbhu

Consolidated statement of financial position As at 31 December

ASSETS

Cash and balances with central bank Deposits and balances due from banks Loans and advances, net

Investment securities, net Investment propeAies

Assets acquired in settlement of debts

Other assets

Properties and equipment Subsidiary held for sale

Notes

6

7

8

g

10

11

12

14

2.1

2026

AED'0O0

3,245,127

917,953

30,440,444

10,913,096

1,247,068

122,870

482,372

157,188

8d4,790

2024

AED'000

4,639,575

595,972

24,302,758

10,101,570

1,157,453

1,070,090

679,832

190,932

644,790

Total assets

LIABILITIES AND EQUITY

Liabilities

48,371,413 43,582,972

Customers' deposits

Deposits and balances due to banks

Repo borrowings Other liabilities Issued bonds

15 31,507,048

16 3,654,192

17 1,994,572

18 1,141,143

19 5,440,315

29,704,942

2,822,812

2,420,284

1,245,042

3,563,070

Total IIabIIlties

Equity

Capital and reserves

43,737,270 39,756,150

Share capital Statutory reserve Impairment reserve

Investment fair value reserve Currency translation reserve Retained earnings

20

20

8 (b)

3,000,000

1,161,347

226,946

(731,440)

(386,676)

1,363,047

3,000,000

1,088,466

190,316

(811,062)

(386,675)

744,234

Equity aMributable to equity holders of the Bank

Non-controlling interests

Total equity

Total llabllltles and equity

4,633,Z26 3,825,282

918 1,540

4,6z4,143 z,g26,622

48,371,413 43,582,972

Mo ed K diri

C ef Executive Officer

To the best of our knowledge, the consolidated financial statements fairly present, in all material respects, the consolidated financial position. consolidated financial performance and consolidated cash flows of the Group as of, and for the year ended 31 December 2025. The consolidated financial statements of the Group were approved by the Board of Directors and authorised for issue on 17 March 2026.

Mohammed Bin Saud Al Qaslmi

Chairman

The accompanying notes 1 to 38 form an integral part of these consolidated financial statements.

Equity holders of the Bank Non-controlling interests

Net profit for the year

Basic and diluted profit per share (AED)

729,404

(622)

728,782

21 0.24

384,474

216

384,690

0.13

The accompanying notes 1 to 38 form an integral part of these consolidated financial statements.

Net profit for the year

Other comprehensive Income/(toes) ltema

Ifi/ria ihet will not be redassited subseouenllv o consolidated

rfBBrnenf oforoGf or /orr'

Net change in falr value of equity instruments measured at fair value through other comprehensive income

Itens ihatman ba redaaslfiad subsaouanN la consolidated a&Cement olorofit or lose:

Net change in fair value o( debt Instruments measured at fair value through other comprehensive income

2025

AED'000

728,782

61,426

2024

AED'000 384,690

(67,542)

(2,058)

The accompanying notes 1 to 38 form an integral part of these consolidated financial statement.

Consolidated statement of changes in equity for the year ended 31 December

Investment

Equity rlbutable to equity

11

Non•

AED'000 AED'000 AED’000 AED’000 4 000 @0 ¥,050 000 1g0 1g {7$4

AED'000

AED'000 AE0'000 AED’000 AED'000

Adlustmant on disposal of FVOCI investment

Transfer to etoutory reserve

(8Z.Z88)

- 8,703

384,474 321,W1

216 321,307

Net profit for the yaar •

Other comprehensive lnoome for be year •

Total comprehensive income for the year

Adjustment on dbposeJd FVOGI investment

Trgnefer o statuary reserve Trawler Irom Tmpaiment reserve Excess provision held

Btlence es at 31 Deaembar zozs

7E,a?'8

(tH,316)

1,0M

1W,S16

(SzB,04e)

y8,ssg

007.84S

Bank of Shariah P.J.S.C.

for the year ended 31 December

Caeh flowe from operatlng actlvhles Net profit before tax for the year Adjustments for:

2025

Noles AED'000

802,798

2024

AED’000

418,360

Depreciafion of property and equipment Gain on sale on property and equipment Gain on sale on Investment properties Discount on debt securities

Unreallsed gain on Investments Realised gain on investments Realised gain on financial aseets

Gain on sale of assets acquired in settlement of debts

Unrealized gain on Investment properties

Unrealized gain on assets aoquired in settlement of debts

Net impalnnent charge on financlal assats

Dividends income

Amortlzatlon of the dlscount and other changes In debt securities Interest on Lease Liability

14&29

27

27

10

11

28

27

21,70B

1?,004)

(3100) (56,3Z4) (5,T4# (M,b)

49,BM

8,799

2,181

21,068

(792)

(8,271)

(5,76s)

(4.269)

(4.077)

(43,832)

(54,700)

(6,006)

44,384

(1,129)

Issued bond cost (4,497) 

Operatlng profit before changes In oparating aasets and IlablIItIce 354,970  

Deposits and balances due from banks maturing after threa months from

dates of placements

Statutory deposit with central bank Loans and advances

Other assets

Customers' deposlD Other liabilities

Caah (used In)/ generated from operations

(86,372) 206,106

(t43,650) M0,6S4

(5,155,558) (2,290,106)

235,269 576,343

1,802,106 3,362,344

   (134,783) (742,874)  

  (3,227,096) 1,717,417  

Net (decrease)/ lncreaae In cash and eash equivalents durlng the year

Cash and carh equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

   (116,823) 423,389  

2,818,405 2,395,016

2,701,582 2,818,405

The accompanying notes 1 to 38 form an integral part of these consolidated financial statements.

Notee to the consolldated financial atatements for the year ended 31 December 1025

1 General Information

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 Rular of Sharjah and was registered in February 1993 undw the Commerclal Companies Law Number 8 of 1984 (as amended). The Bank commenced its operations under a bM ^9 !!••nse 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 regiMered office is located at Al Khan Road, P.O. Box 1394, Shar|ah, United Arab Emirates. The Bank operates through six branches in the Unhed Arab Emirates located In the Emirates of SharJah, Dubai, Abu Dhabi, and Ctty of AI Am. The accompanying con6olidalnd financial statements combine the activities of the Bank and IB subsidlarles

” (collectlvely the "Oroup"), as listed in Note 31.

1. Baety of preparation

   1. Subaldlary held for sale

      The Central Bank of the UAE continues to support the Bank's strategic initiative to delink and deconeolldate IO Lebanese subsidiary, in line wlth the Central Bank of the UAE recommendatlona and Board approval, effective 1 April 2023. This approach alms to reduce accountlng volatlllty and address hlstorlcal anomalies arblng from consolidatbn. The subsidiary remains dasslfled es an asset held for sale and ie measured In accordance wkh lFRs 5 at the bwer of canying amount arid fair value less costs to sell, based on a market-orlented valuation approach.

      Ouring the year ended 31 December 2025, Lebanon's political and economic environment showed gradual Improvement, contributing to a more stable operating landscape and renewed Interest in potential transamions within the banking sector. The Bank made tangible progress in advancing the sale process, engaging muklple credible potendal buyers who have executed confidentiality agreements and entered structured discussions. As at year-end, transactbn materials were flnalbed and shared to support ongoing due diligence.

      While completion remains subject to regulatory approvals and market conditions, the Improving external environment and continued buyer engagement support management's expectation that the disposal process will continue to advance. Accordingly, the Lebanese subsidiary continues to meet the criteria for classification as held for sale under IFRS 5.

      The results of the Lebanese subsidiary for the year ended 31 December 2025 and 2024 are considered to be immaterial to the overall financial statements of the Group, aocordlngly, these have not been induded In these consolldated flnanclaJ statements.

      The breakdown of the Lebanese subsidiary's net assets as at 1 April 20z3 Is as follows:

      Loans and advances, net hems measured at fair ralue

      Iwestrnams measurat at amorlbM coct

      MABIMTIE6

      Customers' deposits

      Deposits and dalartcee due to banks

      Pert value of net esseta

      AED'000

      ?0,B#1

      2,918,886

      Bank of Sharjah P.J.S.C.Notee to the consolidated financial statements for the year ended 31 December 2025

      2. Basis of preparation (contlnued)

   2. Baele of preparation

      The consolidated flnandal statements of the Group have been prepared in accordance wkh IFRS Accountlng Standards as issued by International Accounting Standards Board ("IASB”) and apptlcable requirements of the laws of the United Arab Emirates (“UAE“). Group has also complied with provisions of the UAE Federal Decree Law No. 32 of 2021 ("Companies Law") which was Issued on 20'September 2021 and came into effect on 2 January 2022.

      Basis ofmeasurarient- the consolidated financial statements have been prepared on the historical cost basis except for certain financial Instruments arid investment properties that are measured at talr values as explained in the accounting policies below.

      Ft/ncgaria/ andpreseriIa#on currency - The consolidated financial statamants are presented in Unlted Arab Emirates Dirham (AED) and all values are rounded to the nearest thousands' dirham, except when otherwise indicated.

      Basle of consoTidaton - The consolidated flnanclal staBments Incorporate the financial statements of the Bank and entaes controlled by the Bank Control Is achieved when the Bank has:

      • power over the Investee,

      • exposure, or has rlght6, to variable returns from its involvement with the investee; and

      • the ability to uce Its power over the Invested to aPect its returns.

        The Bank reassesses whether or not It controls an Investee If facts arid circumstances Indicate that tIere are changes to one or more of the three elements of control listed abova. This indudes circumstances In which protective ^9hts (e.g. more from a lendlng relatlonsNp) becomee substantlve and lead to the Bank having power over as investee. When the Bank has less than a majority of the voting rights of an Investee, it has power over the iwestee when the vodng rlghB are sufficient to give it the pramical ability to direct the relevant activities of tke invested unilaterally. The Bank considers all reBvant fams and circumstances In assessing whether or not the Bank‘s voting rights In an investee are sufficient to give It power, Including:

      • the size of the Bank holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

      • potential voting rights held by the Bank, other vote holders and other partles;

      • rights raising from other contractual arrangements; and

      • any addNonal facts and circumstances that indicate that the Bank has, or does not have, the current ability to direct the relevant activities at the time that decisions need to ba made, including voting patterns and prevtous shareholders' meetings.

Consolidation of a subsldlary begins when the Bank obtains control over the subsidiary and ceases when the Bank loees control of the subsidiary. Specifically, Income and expenses of a subsidiary acquired or disposed of durlng the year are included in the conso8dated statement of proflt or loss from the date the Bank gains oonkol until the date when the Bank ceases to control the subsidiary. Pzofit or loss and each component of other comprehensive income are attributable to the owners of tha Bank and to the non-controlling interests. ToBl comprehansive Income of the subsidiaries is attrButable to the owners of the Group and to the non-controlling Imerest even If this results In the non-coMrolllng interests havlng a defictt balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accoun•^4policies Into line with the Group's accounting policies. All lntragroup assets, liabilities, equity, Income, expenses and cash tlows relating to transactions between entities of the Group are ellmlnaed In full on consolldatlon.

Changes in the Group's ownership interests In subsidiaries that do nd resuk in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amoums of the Group's Interests arid the non-controlline n‹• ••ts are adjusted to reflect the changes In their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the falr value oJ the conslderatbn

paid/payable or receded/receivable is recognised directly In equity and attributed to owners of the Group. When the Group loses control of a subsidiary, a gain or loss Is recognlsed in the consolidated statement of prolit or loss and Is calculated as the dCerence between (§ the aggregate of the fair value of the conslderalbn recelvad and the fair value of any retained Interest, and (II) the previous carrying amount of the assets (including goodwill) and IBtiilities of the

Notes to the consolidated financial statements for the year ended 31 December 2025

2. Basis of preparation (continued)

A2 Basis of preparatlon (continued)

subsldlary, and any non-controlling Imarests. All amounts previously recognised In other comprehensive Income in relation to that subsidiary are accounted for as If the Bank had directly disposed of the related assek or liabilities of the svbsidiary (i.e. reclassified to statement of proflt or loss or oansferred to another category of equity as specified/permitted by applicable lFRSs). The faJr value of any lnveatmem retained in the former subsidiary at the date when control Is lost is regarded as the fair value on tnltlal recognMlon for subsequem accounting under iFRs 9 (iFRS 9 FinandaJ instruments) issued in 2010, when applicable, or the cost on Initial recognition of an Investment In an associate or a joint venture.

1. Application of other new and revised International Financial Reporting Standards("IFRS") aa lesuad by the International Accounting 9tandarda Board (IASB)

   1. New and emended IFRS Accounting Standards that are effective for the current period

      The followlng new and revised IFRS Accounting sta«a‹r s, which became effective for annual perlods beglnnlng on or after 1 January 2025, have been adopted in consolidated financial statemems. Their adoption has not had any material Impact on the disclosures or on the amounts reported In these consolidated financial statements.

      New and revised IFR3 Accounting standard
      Amendments to IAS 21 The Effects of Changes In Foreign Exchange Rates relating to Lack of Exchangeablllty	The amendments contain guidance to specify when a currency !gexchangeable and how to determine the exchange rate when It '^ n0t’

      Other than the above, there are no other significant IFRS Accounting Standards and amendments that were effective for the first time for the financial year begtnning on or after 1 January 2025.

      Bank of Shar]ah P.J.S.C.

      Notes to the consolidated financial statements

      for the year ended 31 December 2025

      1. Application of other naw and zavleed IntsmaMonal Financial Reporting Stariderda ("IFRS") ae lesued by the International Accounting Standards Board (IASB) (continued)

   2. New and revised lFR6 In iesue but not yet effective and not early adopted

      At the daB of authorisation of these oonsolldated financial statements, the Group haa not applied the following new and revised IFRS Accounting Standards that have been Issued but are not yet etfectlve:

      New and revlead IFRG Accounting Standards	Eflestlve for annual peñods beginning on
      Amendments to IFRS 9 Financial Instruments and IFRS 7 Flnanclal Instruments: Dlscb0ures res e the classification and measurement of financial Instruments The amendments address matters identiRed durlng the po6t-implemematlon review of the dasslflcatlon and measuremeN requirements of IFRS 9.	1 January 2026
      Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Diecloaures regarding purchase power arrangements The amendments aim at enabllng entitles to include Information In their financial statements that In the IASB's view more faithfully represents oontraNs referencing nature-dependent electricity.	January 2028
      Annual Improvements to IFRS Aocountln9 Standards - Vdume 11 The pronouncement comprises the following amendment:	1 January 20Z6
      IFRS 18 Presentation and Disclosures In Financial StaBmems IFRS 18 Includes requirements for all entkles applying IFRS for the presentation and disclosure of Information In financial statemems to help ensure they provlde relevant Information that fakMully represents an entlty's assets, liabilities. equity, income and expenses.	1 January 2027
      IFRS 19 Subsldlaries wkhoN Public Aocountablllty: Disclosures IFRS 19 specifies the disclosure requirement an ellglble subsidiary is permNed to apply Instead of the disdosure requirements in other IFRS Aocountlng Standards.	1 January 2027
      Amendments to IFRS 19 Subsidlarlea without Public Accountability: Disclasuree The amendments cover new or amerded IFRS Accounting Standards keued between 28 February 2021 and 1 May 2024 that were not considered when IFRS 18 was first issued.	1 January 20Z7

      • IFRS 1 First-time Adopgon of International Financial Reporting Standards: Hedge accounting by a first-time adopter

      • IFRS 7 Financlal Inatrument8 - Disclosures: Oain or loss on derecognition

      • IFRS 7 Financial Instruments - Dlsdosures: Dlscbsure of deferred difference between fair value and transaction prlce

      • IFRS 7 Finenclal Instruments - Disclosures: IntroduNion and wedit risk dbclosures

      • IFRS e FinanclaJ Instruments: Lessee derecognition of lease liabilities

      • IFRS 9 Financial Instruments: Transaction prlce

      • IFRS 10 Consolldated Financial Statements: Determinatlon of a•de fanto agenf’

      • IAS 7 Statement of Cash Flows: Cost method

      Bank of Shariah P.J.S.C.Notee to me consolidated flnanclal statements for the yaar ended 31 December 2025

      1. Application of Amer new and revised International Flnanclai Reporting Standards ("IFRS‘1 as Issued by the international Accounttng Standards Bocrd (IAGB) (continued)

         3.2 New and revised IFRC In lasue but not yet effective and not early adopted (continued)

         New and revised IFRS Accountlng Standards	Effective for annual periods beginning on or afier
         Amendments to IAS 21 The Effects of Changes In Foreign Exchange Rates reladng to Translation to a Hyperinflatlonary Presentation Currency The amendments darlfy how companies should translate financial statements from a non-hyperlnflationary currency Into a hyperlnflatlonary one.	January 2027
         Amendments to IFRS 10 Consolldatad Financial Statements and IAS 28	EtfectNe date
         Iweatments In Associates and Joint Ventures (2011)	deferred
         The amendments relate to the treatmem of the sale or conPlbutlon of asseB from an investor to its associate or jolnt venture	! efinitely. Adoption Is still permitted.

         The Group anticipates that these new standards, Interpretations arid amendments MII be adopted in the Group's consolidated financial statements as and when they are applicable and adoption of these new standards, Interpretations and amendments may have no material Impact on the consolidated financial statements of Oroup in the period of Inkial appllcaflon.

      2. Material eccountlng polldee

         1. Financial instruments Recognition and Initial Measurement

      A financial instrument la any contract that glvea rise to botha financial asset for the Group and a financial liability or equity Instrument for another pany or vlce versa All regular way purchases or salea of financial assets are recognised and de‹eoognteed on a trade date basis. Regular way purchases or saJea are purchases or sales of financial assets that require delivery of 8ssets within the tlme frame established by regulation or convention In the marketplace. Recognised financial ascets and financial liabllkles are Initially measured at falr value. Transactlon costs that are directly attrlbutable to the acquisition or issue of financial assets and financial IlablMties (other than financial assets and flnandal liabilities at FVTPL) are added to or deduced from the fair value of the financial assets or financial llabllkies respectively, as approprlate, on initial recognition. Transaction costs direcUy attributable to the acqulsltlon of financial assets or financial IlabllltBs at FVTPL are recognised Immediately in consolldated statement of profit or loes.

      Clasefflcstlon of flnanclel assets

      Balances with central bank, due from banks and financial inetltutlons, financial asseD and certain kems in receivables and other assets that meet the following conditions are subsequently measured at amortised cost less Impairment loss arid deferred Income, if any (except for those assets that are designated as at fair value through proflt or loss on initial recognition). IFRS 9 conBlns three principal classitlcatlon categories lor financial assets: measured at amortized cost, fair vatue through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). On initial recognition, a financial asset Is classified as measured at: amortlsed cost, FVOCI or FVTPL.

      Bank of Shar]ah P.J.S.C.Notea to the consolidated financial statements for the year ended 31 Daoember 202S

      1. Material accounting policies (continued)

         1. Rnaneial lnsbuments (continued) Claeelflcatlon of financial assets (continued}

            A financial asset Is measured at amortised cost if k meets both ol the folbwlng condklons and Is not designated as at

            FVTPL:

            • the asaet is held within a business model whose objective Is to hold assets to collect contractual cash flows; and

            • the contractual terms of the financial asset gNe rise on speeded daBs to cash flows that are solely payments of prindpal and Internet on the prlnclpal amount outstanding.

              A debt Instrument ia measured at FVOCI only k it meets both of the following condltlons arm Is not designated as at FVTPL:

            • the asset Ie held within a business model whose objemive is achieved by bdh oollactlng contractual cash flows

            • the conFactual terms of the financlal « eave rlse on specified dates to cash flows that are solely payments of pñndpal and interest on the principal amount outetandlng.

      On InItIaI recognMon of an equity Invntment thai is not held for trading, the Bank may Irrevocably elect to present subsequent changes In Blr value In OCI. This election Is made on an investment-by-Investment basis. In addition, on Initial recognition the Bank may irrevocably deslgnate a flnancial asset that otherwise meets the requirement lo be measured at amortised cost or at FVOCI as at FVTPL if dolng so eliminates or significantly reduces an accoun¥ng mismatch that would otherwise arise.

      FlnaneMl amets measured at amortised cost

      The elective Interest rate method ie a method of calculating the amortised cost of those financiaJ Instruments measured at amortised cost and of allocating income over the relevant period. The effecive interest rate ie the rate that Is used to calculate the presem value of the estimated future caah receipts (lncludng all fees and polnta paid or received that form an integral part of the ePec0ve Interest rate, transaction cosN and other premlums or discounts) through the expected life of the finandal insbuments, or, where appropriate, a shorter period, to arrlve at the net carrying amounl on InkBI recognition. Income is recognised in the coneolldated statement of profk or lose on an effective Interest rate basis for financing and investing instruments measured subsequently at amortBed cost.

      Financial assets measured at FVTPL

      Investments In equity Instruments are classifled as financial assets measured at FVTPL, unless the Group designates fair value throu9^ other comprehensive Income (FVTOCI) at lnltlal recognltlon. FlnanclaJ asseB that do not meet the amortised cost criteria described above, or that meet the criteria but the Group has chosen to designate It as at FVTPL at lnklal recognltlon, are measured at FVTPL Financial assets (other than equlty Instrument) may be designated at FVTPL upon Inltial recognition if such designation eliminates or sIgnIficaNIy reduoes a measurement or recognition lnconslstency that would arise from measuring assets or liabilities or recognizing the gains or tosses on them on dlfierent basB. Financial asseta are redaseified from amortised cost to FVTPL when the businesa model Is changed such that the amor¥sed cost crkerla are no longer met. Reclassification of financial asseB (other than equity InstrumerXs) designated as at FVTPL at InltBl recognltion la not permitted. Financial asseD measured at FVTPL are measured at fair value at the end of each reporting perbd, with any gains or loscs6 arising on re-measurement recognised in the consolidated statement of proflt or bss at the end of each repoftlng period. The net gain or loss recognised in the consolidated statement of protk or loss. Fair value Is determined In the manrer descrlbed In note 37.

      FlnaneMl aseete measured at FVTOCI

      On initial reoognition, the Group can make an Irrevocable eBctlon (on an Instrument-by-instrument basl8) to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI Is not permNed if the equlty Investment Is held for trading. A financial as6et Is held tor trading M:

      Bank of 6har]ah P.J.S.C.Notes to the consolidated financial statements for the year ended 31 December 2025

2. Material aocountlng policies(conMnued)

   1. Financial lnctrumenta (eontlnued)

      Financial assets measured at FWOCI (continued}

      • it has been acquired principally for the purpose of selling k in the near termi

      • on Initial recognition it is part of a portfolio of ldentllied financial Instruments that the Group manages together and haa evldenoe of a recent actual pattern of short-term profh-taNng; or

      • k B a derivative that Is not designated and effecive aa a hedglng Instrument or a financial guarantee.

        Investments in equity instruments at FVTOCI are Initially measured at fair value plus transaction costs.

        Subsequently, they are measured at fair value with gains and lossea arising from changes In fair value recognised in other comprehensive Income and accumulated In the investments fair value reserve. Where the asaet Is disposed of, the cumulative gain or loss previously accumulated In the investments fair value reserve is not transferred to oonsolidated statement of profk or loss.

        Buclnesa model assessment

        The Bank assesses the objectlve of a business model in which an acset Is held at a portfollo level because this best reflects che way the buslneaa Is managed and information is provided to management. The lnformallon considered includes:

      • the stated policles and objectives for the portfollo and the operatbn of those policies in practice. In particular, whether management's strategy focuses on earning contraNual interest revenue, malntalnlng aparticular interest rate profile, matching the duration of the financial assets to the duratlon of the IlabiNles that are funding those aasets or realBing cash flows through the sale of the assets;

      • how the performance of the portfolio is evaluated and repoñed to the Bank's management;

      • the risks that aPect the performance of the buBiness model (Bad the flnanclaJ assets held withln that buslnesa model) ard how those flsks are managed;

      • how man«9^^ of the business are compensated - e.g. whether compensation Is based on the talr value ol the aaeets managed or the contractual cash flows collectedi and

      • the frequency, volume and timing of sales In prior periods, the reckons for such sales and Its expectatlons about Mure sales actMty. However, Information about sales actlvlty Is not considered in Isolation, but as part of an overall assessment of how the Bank‘s stated objectlve for managing the financial assets ie achleved and how cash flows are realised.

        Flnanclal assets that are held for tradlng or managed and whose performance Is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash fiowe nor held both to cotlect contractual cash flows and to sell finandal asset6.

        Assessments whether oontractunl caeh fiowe are aofdy payment of principal and lntareM

        For the purpoae6 of this assessment, 'principal' Is deflned as the fair value of the financial asset on Initial recognNon. 'Imerest' is defined es coriskleration for the time value of money and lor the wedlt rbk ascodated with the princ@al amount outstanding during a particular perlod of time and for other basic lendlng rlsks and costs (e.g. liquidity risk arid admlnletratlve costs), as well as profit margin. In assessing whether the contractual ca6h flows are solely payments of principal and Interest, the Bank considers the contractual terms of the Instrument. This includes asseeelng whether the flnanclal asset contains a contractual term that could change the timing or amouN of contractual cash flows such that It would not meet this condklon. In making the assessment, the Bank conslders:

      • oontingent events that would change the amount and timing of cash flows;

      • leverage features;

      • prepayment and extension terms;

      • terms that IImk the Group's clalm to cash from specified assets; and

      • features that modify conslderatlon ot the tlme value of money (e.g. perlodkal reset of interest ratea).

Bank of Shariah PM.S.C.

Notea to the consolidated financial statements for the year ended 31 December 2025

1. material accounting pollolec (continued)

   1. Financial Instruments (contlnued)

      Assessments whether contractual cash flowa are solely payments of prinelpal and Interest (continued)

      The Gr0up holds a portfolio of long-term fixed-rate loans for which the Group has the option to propose to revice the Interest rats at periodic reset dates. These reset rights are limited to the market rate at the time of revision. The borrowers have an option to either aocept the revised rate or redeem the loan at par wkhout penalty.

      The Group has determined that the contractual cash flows of these loans are SPPI because the option varlas the Interest rate In a way that l6 conslderatbn for the time value of money, credit risk, othar basic lending riske and costs associated with the principal amount outstanding.

      Restructured Rnandal assets

      If the terms of a financial asset are renegotiated o‹ modlfied or an existlng financial asset Is replaced wkh a new one due to tlnanclal dlfflcultles of the borrower, then an assessment is made of whether the financial aseet should be derecognised and ECLs are measured as follows:

      • If the expected restructuring will not resuk In derecognition of the existing asset, then the expected cash flows arising from the modified flnancial asset are Included In calculating the caah shortfalls from the existing asset;

      • If the expected restructudng will result in derecognition of the existing asset, then the expected faJr value of the naw asset Is treated as the final cash flow from the existing financial asset at the tlme of Its deraGognition. Thla amount la included in calculating the cash shortfalls from the exlstln9 ^ ariclal asset that are discounted from the expected date of derecognhion to the reporting date using the orlglnaJ effective Interest rate of the existing financial

Derecognition Financial aasets

The Oroup derecognises a financial asset only when the contractual rights to the asset's cash flows expire (Including expiry arising from a modiGcation with substamially different terms), or when the financial asset and substantially all the risks and raward6 of ownership of the asset are transfered to another entity. If the Group neither transfers nor retains substantially all their risks and rewards of ownership and continues to control the transfered asset, the Group recognises Its retained interest In tha asset and an associated liability for amoums It may have to pay. If the Group retains substantially all the risks arid rewards at ownership of a transferred finandal asset, the Group conlinues to recognise the financial asset and also recognises a collaterallsedborrowtng for the proceeds receded.

In the case where the financial asset is derecognised, the loss allowance for ECL is remeasured at the date of derecognition to determine the net carrying amount of tha asset at tha date. The difference batwaen this revised carrying amount and the fair value of the new financlaJ asset with the new terms wlll lead to a gaJn or loss on derecognltlon, Tñe new financial asset will have a loss allowance measured baced on 12-month ECL exoept In the rare occasions where the new loan 1s consbered to be originated credit Impaired. This applies only In the case where the fair value of the new loan Is recognbed at a slgnNcant discount to ks revised par amount because there remains a high risk of default which has not been reduced by the modification. The Group monitors credh risk ot modified financial assets by ev8Juatlng qualkatlve and quantitative intormatlon, 9uch as If the bonower Is In past due status under the new terms.

Notes to the consolidated financial statements

for the year ended 31 December 2025

4 Material accounting pollcfea (conMnued)

J.1 FlnancMl Instruments (continued)

ri›anusl aaaeB (continued}

Any cumulative gain or loss recognised In OCI In respect of equlty investment secudtles designated as at FVOCI Is not recognised In proflt or loss on derecognklon of such securkles. Any Interest in transferred financial aasets that quallfy for derecognltlon that is created or ret8lned by the Group Is recognlsed as a separate asset or llability.

The Group enters into transactions whereby It transfers assets recognlsed on Its consolidated statement of flnancial posNon but retains ekher all or substantially all of the rlelcs arid rewards of the cransferred assea or a poréon of them. In such cases, the transfered assets are not derecognised. Examples of such transac¥ons are eecuritiea lending and sale-and-repurchase transaNlons.

Financial liabilities

The Group derecognlses finandal liabilitles when, and only when, the Group's obligaaons are discharged, cancelled or have expired. The dltferense between the carrylng amount of the 4nandal liability dereoognieed and the consideratbn paid and payable b recognised in the statement of proflt or locs.

When the Group exchanges with the existing lender one debt Instrument Into another one wlth substantially different terms, such exchange Ie accoumed for as an extingulshment of the odginal financial liability and the enklonof a new financial liability.

Non-recourse loans

In some cases, loans made by the Group that are secured by collateral of the borrower limit the Group's claim to cash flows of the underlying collateral (non-recourse loans). The group applies judgment in aS6e6slng whether the non-recourse loane meet the SPPI criterion.

The Group typically conelders the followlng informatbn when maldng thB judgement:

• whether the contractual arrangemeN specifically definee the amounts and dates of the cash payments of the loan;

• the (air value of the collateral relatke to the amount of the secured financial asset;

• the ability arid willingness ol the borrower to make contractual payment, notwithstanding a decline In the value of collateral;

• whether the borrower is an IndNldual or a substantive operating entity or is a special-purpose entity;

• the Group's risk of loss on the ascet relative to a full-recourse loan; and

• the extent to which the collateral represents all or a substantial porEon of the borrower's assets: and whether the Group will benefit from any upside from the underlying assets.

  Meaaureñient of ECL

  Credk loss allowances are measured using a three-stage approach based on the extent of credit deterioration since

  origination:

• Stage 1 - Where there has not been a significant Increase In credk ñek (SICR) since Initial recognkbn ofa flnandal instrument, an amount equal to 12 moNhs expected credk loss is recorded. The expeded credit bss is computed using a probabillty of default occurring over the next 12 months. For thoee Instrument wkh a remaining maturity

  of lees than 12 monthsa, probability of default corresponding to remaining term to maturlty Is used.

• Stage 2 - When a flnandal Instrument experiences a SICR subsequeN to origination but Is not considered to be In defauk, it Is lnduded In Stage 2. Thb requires the computation of expected credit loss based on the probability of defauk over the remainlng estlmated life of the financial Instrument.

• Stage 3 - Financial Instruments that are oonsidered to be in defauh are Included In this stage. Slmilar to Stage 2, the allowance for credit losses captures the Ilfetlme expected credit losses.

Notas to the consolidated financial statements

1. Material accounting policies (continued)

   1. Flnanelel Instruments (conMnued) Measurement of ECL (continued)

      ECL8 are an unbiased probability-weighted estimate of the present value of credit losses that Is determined by evaluating a range of poaaible outcomes. For funded exposures, ECLls measured as follows:

      • for flnamlal assets that are not credk-Impaired at the reporting date: as the present value of all cash shor0alls (I.e. the difference between the cash flows due to the entity in accordance wkh the contract and the cash flows that the Group expects to receive arising from the weighting of mukiple fulure economic scenarios, discounted at the acset's coupon rata as a praxy for effective inBrest rate (EIR);

      • flnanclal assets that are credlt•lmpaired at the reportlng date: as the difference between the gross carrylng amount and the present value of estimated future cash lbws;

        However, for unfunded exposures, ECL Is measured as follows:

        For undrawn loan commkments, as the present value of the difference between the contractual cash lbws that are due to the Group k the holder of the oommitment draws down the loan and the cash flows that the Group expects to reoaive ff the loan Is drawn downi and for financial guarantee coNracts, the expected payment to reimburse the holder of the guaranteed debt Instrument less any amounts that the Group expects to receNe from the holder, the debtor or any other party. The Group measures ECL on an lndlvoual basis, or on a collective basis for porI1oIlos of loans that share similar economic and credit risk characterletlm. The measurement of the lose allowance Is based onlhe present value of the aaaet's expected cash flows using the asset's coupon rate, regardless of whether It Ie measured on an individual basis or a collectNe basB.

        The key lnput6 into the measurement of ECL are the term structure of the following varlables:

      • Probability of de(auIt (PD) - PD estlmates are estimates at a oertaln date, which are calculated based on statistical rating models currently used by the Group. and assessed using rating tools tailored to the various categories and sizes of counterparties.

      • Expoeure at defauM (EAD) —EAD represents the expected exposure upon default ot an obligor. The Group derives the EAD from the current exposure to the counterparty arid potential changes to the current amount albwed under the coNram and arising from amonisation. The EAD of a financial asset Is Its gross carrying amount at the tlme of default. For lendlng commltment8, the EADs are potential future amounts that may be drawn under the oontract, which are estlmated based on historical observatlons and forward-looking forecasts. For flnanclal guarantees, the EAD represents the amount of th» eu8ranteedexposure when the financial guarantee beoomes payable.

        EAD is calculated as below:

        — For Loans and other Direct Facllltles: EAD reflects only the drawn exposure. Since all faclllties show 10096 drawn, no CCF Ie applied to undrawn amounts

        For Indlrecl FacllNes: EAD Is derived by applying UGD to the outstanding expo6MM.

      • Loas given defauk (LGD) - LOD Is an estimate of the loss arising on default. It Is based on the difference between the contractual cash flows due and those that the lender would expect to receive, considering cash flows from the proceeds from liquidation of any collateral.

LOD b derived as below: Senior Unsecured: 4596

Eligible Securities as per Basel lower LGD, taking into consideration applicable Basel haircuts on collateral as well as LGD floors to certain collateral

Forward•looklng Information

The measurement of expected credit losses for each stage and the assessment of slgnlficant increases In credit risk conslders Informatbn about past events and current conditions as well as reasonable and supponable forecasts of future events and economic condltlone. The eetimatlon and application of forward-looking Information requires significant judgement. The group formulates three economic scenarios:a base case with a 409a weight, upalde Scenario with a 3096 weight and a downside eosnarlo with 3056 welgN.

1. Material accounting policies (continued)

   1. Flnanelal Inotrumente (continued)

      In lie models, the Group relles on a broad range of forward-looking Information as economic Inputs, such as: GDP (Gross Domestic Product) growth and oil pñces. The inputs and models used for calculatlng expected credit losaes may not always capture aJl characteristics of the markel at the date ol the flnanclal statemems. To reflect this, qualitative adjustments or overlays are made aa temporary adjustmeNs using expert credit judgement. The economlc scenarios used as at 31 December 2025 Included the following kay Indicators for the years ending 31 December 2026 to 2030.

      uAz	OII Prlos
      		Upmds			(16)
      		ue•d•
      		Downs+#

      Aaeesament of algnffieant Incfesea In credit rlak

      The aacessment of a significant Increase in credk risk Is done on a relaMve basB. To assees whether the credit risk on a financlal asset has increased signlficantly slnce origination, the Group compares the risk of default occurring over the expected life of the flnancial asset at the reporting date to the correspondlng dsk of defauk at odginatlon, uelng key risk lndkatora that are used in the Group's existing rlsk management processes. At each reporting daB, the assessmentol a changa In credlt ñsk will be individually assessed for thoae considered irdivktually significant. TNs assesement Ie symmetrical In nature, allowing credk risk ot financial assets to move back to Stage 1, it certain criteria are met, It the Increase In credit risk since orlglnatlon has reduced and is no longer deemed to be significant.

      The group assesses whether credit rlsk has increased significantly ainca lnkial recognition at each reporting date. Determlnlng whether an Increase In credk risk Is significant depends on the characteristics of the financial instrument and the borrower, and the geographical region. What 1s consldered significant dlflers for differed types ot lendlng, In particular between wholesale and retail. The credit risk may be deemed to have incre »9nIfIcantlysince lnkial reco9 ltlOf based on qualkatlve factors linked to the Oroup's wedk risk management process that may not otherwl60 be fully reflected In Its quantitative analyais on a timely basis. This will be the case for exposure that meet certain heightened risk crkerla, such as placemeN on a watch llat. Such qualitative laNors are based on Its expert judgemem and relevant hlstoricd experiences. As a backstop, the groUp conelders that a 8ignlfcant increase In credk risk occurs no later than when an asset is more than 30 days paat due. Daya past due are determined by counting the number of

      daya slnce the eadiest ekzpsed due date In respesl of which full payment has not been received. Due dates are determined wkhoN considering any grace perlod that might be available to the borrower. If there 1s evidence that there b no longer a slgnlflcant increase in credit risk relative to the Initial recognkion, then the loss allowance on an instrument returns to belng measured as 12-moNh ECL. Some qualltatlve Indicators of an Increase In credo risk, such as delinquency or forbearance, may be Indicative of an increased risk of default tha persisB ater the Indicator itself has oeased to exlat. In these cases, the Group determines a probation period during whlch the finandal asset is required to demonstrate good behaviour to provide evidence that Its credk rlsk has declined sufficienMy. When contractual terms of a loan have been modified, evidence that the criteria for reoognislng lifetime ECL are no lon9•^=•lIncludes a history of up-to-date payment performance against the modified contractual terms.

      4 Materlal accounting policies (continued)

      ¥.1 Financlal instruments (conflnued}

      Aeeeesmem of significant lncmase In credit risk (continued)

      The group monitors the effectiveness of the cñterla ueed to Identify significant increases In credit risk by regular reviews to confirm that:

      • the criteria are capable of ldentlfying significant increases in credit rtsk before an exposure is in dgfault;

      • the criteria do not align wlth the poiN in time when an asc+t becomes 30 days paat due;

      • the average time between the identitlca0on of a slgnlflcant increase In credit rlsk and defauk appears reasonable;

      • exposures are not generally transferred directly from 12-month ECL measurement to credlt Impdred; and

      • there Is no unwarranted voIaMIIty In loss allowance from tranafars between 12-month PD [stage I] and llfetlme PD [stage 2].

        When determining whether the rtsk of defauk on a flnancial instrument has Increased enNcantly eince initial recognition, the Group considers reasonable and supportable Information that Is relevant and available without undue cost or efiorl. This Indudes both qualitative and qualltatlve information and analysts, based on the Group‘s historical experience and expert credit assessment and Including forward-looking Information. The objective oJ the assessment Is to Identlfy whether a significant increase In credit risk has occurred for ari exposure by comparing:

      • The remaining lifetime probability of default (PD) as at the reporting date; with

      • The remaining lifetime PD for this point in tlme that was estlmated at the tlme of lnNal recognklon ot the exposure (adjusted where relevant for changes in prepayment expectations)

        The Group uses three criteria for determining whether there has been a significant Increase in credit rlsk:

      • quantkatlve test based on movement In PD;

      • qualitative indicators

      • a backstop of 30 days past due.

        Improvement In cradll ited profile

        If there is evidence that there ts no longer a * 4^!‹ N lncreas6 In credit risk relative to initial 9nition,then the loss allowance on an Instrument returns to belng measured as 12-monlh ECL.

        The Group has deflned below criteria in accordance with regulatory guldellnes to assess any Improvement in the credit risk profile which will result into upgrading of customers movtng from Stage 3 to Stage 2 and Fom Stage 2 to Stage 1.

        For Wholesale Obligors, moving from Stage 3 to Stage 2 Is done when at leaat 3 Instalments have been mede for monthly repayment schedule, and at least 1 Instalment for any other repayment schedule tor longer Intervals.

        For Wholesale Obligors, moving from Stage 2to Stage 1 Is done when at least 6 instalments have been made in case of monthly repayment, 2 instalments In case of quarterly repayment, 2 Instalments in case of half yearly repayment, 2 Instalments In case of yearly repayment and 12 months minlmum In the case of any other frequency.

        Definition of default

        The Bank considers a financlal asset to be in default when:

      • the borrower Is unlikely to pay its credit obligations to the Bank In full withoN recourse by the Bank to actions such as realising security (If any Is held};

      • the bonower is past due more than 90 days on any materlal credit obligation to the Bank; or

      • it is becoming probable that the borrower will restructure the asset as a resuk of bankruptcy due to lhe bonower's Inability to pay its credit obligations.

        Overdrafts are consktered as being past due once the customer has breached an advised limk or been advised of a llmk smaller than the cunent amount outstanding.

        In assessing whether a borrower la in default, the Bank conslders Indlcators that are:

      • qualitative - e.g. breaches ot covenant,

      • quantitative - e.g. overdue statUs arid non-payment on another obligation of the same Issuer to the Bank; and

      • based on data developed internally and obtained from external soumes.

Inputs Into the assessment of whether a financlal Instrument b In default and their ›enIflcancemay vary over dme to reflect changes In circumstances.

Bank of Shar]ah P.J.S.C.

ecus t» me consolldated financial statetrients for the year ended 31 December 2025

1. Mstedal accounting policies (continued)

   1. Financial lnstru-ents (continued}

      Presentation of allowance for ECL In the statement of financial position

      Loss allowances for ECL are presented In the statement of financlat position aa follows:

      • financial assete measured at amortised cost: (as a deductlon from the gross carrying amount of the assets);

      • where a financial Instrument Includes both a drawn and an undrawn component, and the Group cannot Identify the ECL on the loan commkment component separately from thoce on the drawn component: The Group presents a combined loes allowance for both components. The combined amount 1s presented as deduction Fom tha gross carrying amount of the drawn component

      • debt Instrument measured at FVOCI: no bss allowance is recognized In the statement of flnaricial position because the carrying amount of theae assets is their fair value. However, the loss allowance is disclosed and 1s recognised In the statement of proflt or loss.

        Restrusturad flnanelel essets

        If the terms of a financial asset are renegotiated or modlfled or an existing financial asset Is replaced with a naw one due to finandaJ difficulties of the borrower, then an assessment Is made of whether the financial asset should be derecognised and ECL are measured as fotlows.

      • If the expected restruQurlng will not resuk in derecognition of tha existing asset, then the expected cash flows arlslng from the modltled flnancBl asset are lnduded In calculating the cash shortfalls from the existing asset.

      • If the expected ‹estructurlng will result In derecognNon of the exlstlng asset, then the expected fair value of the new asset Is treaed as the final cash flow from the exlstlng flnanclal asset at the tlme of Its derecognNon. The amount Is Included in calculating the cash shortfalls from the existing financial aaset that are discounted from the expected date of derecognition to the reporting date using the original effective iNerest rata of the existing financial asset.

        Derecognition of financial aesats

        The Group derecognises a financial asset only when the contractual dghts to the asset's cash flows expire (Including expiry arising from a modification wih substantially different terms), or when the financiaJ asset and substantially all the risks and rewarda of ownership of the asset are transferred to another entity. If the Group neither transfers nor retains substantially all tha risks and rewards of ownership and continues to control the transferred asset, the Group recognises ks retalned Interact In the asset and an associated llablllty for amounts It may have to pay. TI the Group retains substantially all the rlsks and rewards of ownership of a transferred financial asset, the Oroup continues to recognise the financial asset and also reoognises a collaterallsed bonowlng for the proceeds received. In the case where the financial asset Is derecognised, the loss alDwances for ECL Is remeasured at the date of derecognhlon to determine the net carrying amount of the asset at that date. The difference between this revised carrying amount and the fair value of the new financial asset with the new terms will laad to a gain or loss on derecognition. The new financial asset will have a loas allowance measurad based on 12-month ECL except in the rare occasions where the new loan Is considered to be originated credk impalred. This applies only In the case where the fair value of the new loan h recognised at a significant discount to its revised par amount because there remains a hlgh ñsk of default which has not been reduced by the modFlcation. The Group monitors credit risk ol modlfled flnanclal assets by evaluating qualkatNe arid quantitative Information, such as If the borrower Is In pad due status under the naw terms. On derecognltlon of a financial asset In Its entlrety, the difference beMeen the carrying amount allocated to the part that Is no longer recognlsed and the sum of the consideration recelved for the part no longer recognised and any cumulative gain / loss allocated to It that had been recognised in OCI is recognised in consolidated statement of proflt or loes. Any cumulative gain / IosG recognised in OCI in respeM of equity investmem securhles designated as at FVOCI is nol recognisad in the oonsolidated statement of proN or lose on derecognition of such securities. Any Interest In transferred financial assets that qualify for derecognition that Is created or retained by the Group Is recognized as aseparate asset or liability.

        Financial liabilities

        Financial llabllltles are classlfied as ehher financial liabilities 'at FVTPL‘ or 'amortised cost’. The Group initially recognizes flnanclal llabllkles such as deposits and debt securhles Issued on the date at which they ar•••9inated. All other financial IIabiIltIes (lndudlng IlablIItIes designated at falr value through proflt or loss) are Initially recognised on the trade date at whlch the Group becomes party to the contractual provision of the Instrument.

        Bank of Sharjah P.J.S.C.

        Notas to the consolidated financial statements for the year ended 31 December 2025

        1. Material accounting polieiea (continued)

           1. Financial Instruments (continued) Financial liabilities at amortized coat

              Other flnandal Ilabilkies, includine borrowings, are initially measured at fair value, net of transaction costs. Other financial llabllilies are subsequently measured at amortised cost using the effectNe Interest method, with interest expense recognlsed on an effective yield basis. The effective Interest method is a method of calculatlng the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly dlsoounts estimated fulure cash payments through the expected life of the 8nancIaI Ilablllty, or, where appropriate, a shorter period.

              Derecognition of flnanclal liabilities

              Financial liabilities are dereoognlsed when they are extinguished - that Is when the obllgatbn specified in the contract is discharged, cancelled or expired.

              Offsetting

              Financial assets arid llablllties are offset and reported net in the consolidated financial position only when there 1s a legally enforceable right to set off the recognised amounts and when the Group iNends to settle either on a net basis, or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the aocountlng standards, or for galns and losses arlelng from a group of similar transactions such as In the Group trading activity. The Group is party to a number of arrangements, including master nettlng agreements, that give It the right to offset financial assets and financial liabilities but where It does not Intend to settle the amounts.

           2. Derivative flnandal Instruments

        A derivative is afinancial Instrument whose value changes in response to an underlying variable, thai requires litlJe or no initial inveMmeN and that is settled at a future date. The Group enters into a variety of derivative finandal instruments to manage Its exposure to foreign exchange rate risks, Including forward foreign exchange cowacts, interest rate swaps and currency swaps. All derivatives are carried at their fair values as asseD where the falr values are positive ard as liabilities where the falr values are negaive. Fair values are generally obtained by referenoe to quoted market prices, disoounted cash flow models and recognised pricing models as appropriate.

        He@e Accountng - The Bank may designate a recognised asset or Ilablllty, a firm commitment, highly probable forecast transactlon or net investment of a foreign operation into a formal hedge accountlng relationshlp with a derivative that has been entered to manage interest rate and/or foreign exchange risks present in the hedged Item. The Bank continues to apply the hedge accouNlng requirements of IAS 39 Financial Instruments: Recognition and Measurement. For the purpose of hedge aocounting, the Group classifies hedges Into Mo categories: (a) fair value hedges, which hedge the exposure to changes in the fair vdue of a recognised asset or liability, and (b) cash fbw hedges, which hedge exposure to varlablllty In cash Ilows that are either attributable to a particular rlsk assoclated with a recognised asset or liabllity, or a highly probable forecasted transacion that will affect future reported net inoome. In order to qualify for hedge accountlng, It is required that the hedge should be expected to be highly effective, I.e. the changes in (alr value or cash tlows of the hedging Instrument sfould effectlvely offset corresponding changes in the hedged Item and should be reliably measurable. At Inception of the hedge, the risk management objedives and strategies are documented including the idenMcation of the hed9ingInstrument, the related hedged hem, the nature of risk being hedged, and how the Group will assess the effectiveness of lhe hedging relationship. Subsequently, the hedge Is required to be assessed arid deBrmined to be an effective hedge on an ongoing basis.

        Fair value hedgea - Where a hedging relationship is designated as al fair value hedge, the hedged item IS adjusted for the change In fair value In respect of the risk being hedged. Gains or losses on the re-measurement of both the derivative and tha hedged item are recognised in the comolldated statement of prom»‹ ioss. Fair value adjustmems relating to the hedging Instrument are aIIocaBd to the same conso¥dated statemeN of profit or loss category as the related hedged Item. Any Inetfectiveness Is dso reoognised In the same consolidated statement of proflt or loss category as the related hedged hem. If the derivative is expired, sold, terminated, exemlsed, it no longer meets the criteria for fair value hedge accounting, or the designation ie revoked, hedge aocountlng is discontinued. Any adjustment up to that point to a hedged Mem for which the effective INerest method is used, is amortised in the consolidated statement of profit or loss as part of the recalculated effectlve merest rate over the period to maturity.

        Notes to the consolidated financial etataments for the year ended 31 December 2025

        4 Material aceountlng policies (contlnuad}

   2. Dedvagve financial Instruments (continued}

      Cash lia•ha@es - The effeuéve portion of changes In the falr valua of derlvatlves that are de9lgnated and qualified as cash fbw hedges are recognised in the cash how hedging reserve In equity. The Ineffective part of arty galn or loss is recognised immediately In the consolidated statement of profit or loss as trading revenua/loss. Amounts accumulated In equity are transferred to the consolidaea staemeut of profit or loss in the periods in which the hedged item affects proN or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a nonfinancial liability, the cumulative galns or loases prevbusly defened In equity are transferred from equity and included h the Initial measurement of tñe cost of the asset or liability. When a hedging Instrument is expired or cold, or whan a hadge no bnger meeD the cNerB for hedge accounting, the cumulatlva galns or loases recognbed In other comprehensive income remain in equtty ungl the forecast transaction Is recognBed, In the case of a non-flnanclal aseet or a ron-flnancial liability, or unlil the forecast tramactlon affects the consolidated statement of proflt or bss. If the forecast trarisactbn b no longer axpeded to occur, tha cumulative gains or losses recognised in other romprehensiVe income are Immediately transferred to the consolidated statemem of profit or loss aud cbssilied as wading revenue/loss.

      Deta#ves Tal do nof qualify kx fiefifie aaaonn#ng • All galns and losses from changes In the falr values of derivatives that do not qualify for hedge accounting arerecognised Immediately In the consolidated statement of proflt or loss as trading revenue/loss. However, the galns and losses arising from changes In the falr values of derivatives that as managad in conjunction with financial tnatrument4 designated at falr value are Induded In net Iroome from Ilnandal Instruments designated at fair value urder other non interest revenueJoss. Derivatives embedded in other financial instruments or other non-financial host comracts ae treated as separate derivatives when their rhks and characterbtics are rot closely related to those of the host contras and the host contract is not carried at fair value with unrealised galns or losses reported in the consolldated statement of proN or losa.

   3. Ccsh and cash equivalents

      Cash and cash equivalents include cash on hand, unrestricted balances held whh Central Bank, deposits and balances due from banks, items in the course of colleNlon from or in transmbsion to other banks and highly IQuId assets with original maturities of less than three months from the daB of acquisition, which are subject to Insignificant ñsk of changes in their fair value, and are used by the Group in the management of ita short-term commitments. Cash and cash equivalents are carried at amortised cost In the consolidated statement of flnandal position.

   4. Reverse•repo placements

      Assets pumhased wtth a simultaneous commitment to resell at a fhed ptice on a specified fulra date are not recognised. The amount paid to the counterparty under these agreements Is shown as reverse repurchase agreement in the consolidated statement of financial position. The difference beMaen pumhase and resale prioe ie treated aS lntereat Income and accrued over tha life of the reverse repurchase agreement and charged to the consolldated statement of profit or locs using the affective Interest rate method and recognized Initially at amortised cosL

   5. Investment properties