Mashreq Bank posts 12% rise in net profit

Mashreq has reported its financial results for the first nine months ending 30 September 2017

16/10/2017 18:26 AST

Mashreq's CEO, HE AbdulAziz Al Ghurair, said: “It has been a period of muted growth for the UAE banking system with the banking sector Gross Credit growing by only 0.3 per cent as of August 2017. However at Mashreq we have been successful in increasing our loan book by six per cent year to date. With a focus on cost management that has seen us reduce operating expenses by 1.7 per cent year on year and a strong 30 per cent decline in credit costs, I am delighted to report a 12 per cent year on year increase in Net profits for the first nine months of the year. Our strong liquidity and capital position has us well placed to capitalise on future growth opportunities.”

Al Ghurair concluded, “In the future, banking will go digital and that is why we are investing significantly to develop new capabilities and evolve new business models. Mashreq Neo, a full service digital bank, is a recent example of our response to the fast evolving needs of today's consumers.”



Operating income

Total operating income for 9M 2017 was AED 4.4 billion, down by 4.9 per cent compared to 9M 2016 operating income of AED 4.7 billion due to a fall in non-interest income.

Net Interest Income and income from Islamic Financing remained stable at AED 2.7 billion compared to 9M 2016. Net Interest Margin for 9M 2017 has increased to 3.45 per cent compared to 3.37 per cent for 1H 2017.

Though Investment income increased by 73.8 per cent, total non-interest income fell by 11.3 per cent as Net fee and commission decreased by 9.0 per cent YoY to reach AED 1.2 billion. Net fee and commission income represented 66.7 per cent of total non-interest income in 9M 2017 as compared to 65.0 per cent in 9M 2016.

Operating expenses for the first nine months decreased by 1.7 per cent YoY to reach AED 1.8 billion; Efficiency Ratio at 39.6 per cent in 9M 2017 increased slightly with respect to the previous year (38.3 per cent as of 9M 2016).

Net profit for the quarter increased by 0.6 per cent to AED 561 million from AED 557 million in 2Q 2017 (AED 1.66 billion in 9M 2017 vs AED 1.49 billion in 9M 2016).

Mashreq’s Total Assets remained flat at AED 121.8 billion as of September 2017, compared to AED 122.8 billion at the end of 2016. Loans and Advances increased by 6.0 per cent YTD to end at AED 64.7 billion driven by 4.0 per cent growth in conventional finance. Liquidity continues to remain healthy with a high liquid asset to total assets ratio of 26.7 per cent.

Total Customer Deposits decreased marginally by 1.2 per cent YTD to AED 76.1 billion due to a decline in both Islamic and conventional deposits. Loan-to-Deposit ratio stood at 85.0 per cent in September 2017 vs 79.2 per cent in December 2016.

Non-Performing Loans stood at AED 2.9 billion in September 2017 leading to a Non-Performing Loans to Gross Loans ratio of 3.7 per cent at the end of September 2017 (3.1 per cent in December 2016). Net Allowances for impairment for 9M 2017 were AED 916 million compared to AED 1.3 billion in 9M 2016, a 30.0 per cent YoY decrease. Total Provisions for Loans and advances reached AED 3.8 billion, constituting 134.4 per cent coverage for Non-Performing Loans as of September 2017.



Capital and liquidity

Mashreq’s Capital adequacy ratio stood at 18.0 per cent (regulatory minimum of 12 per cent) as of 30 September 2017, compared to 16.9 per cent as of 31 December 2016. Tier 1 capital ratio at 17.1 per cent continues to be significantly higher than the 8 per cent regulatory minimum stipulated by the UAE Central Bank (16.0 per cent as at 31 December 2016)

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