Mashreq operating profit climbs 9%

Mashreq on Sunday reported more than nine per cent year-on-year growth in its operating profit for the first nine months of the year but the bank's net profit declined by more than nine per cent during the same period this year.
The bank declared a 12.2 per cent decline in its operating profit for the third quarter of 2016 at Dh914 million compared to same period last year at Dh1.04 billion.
Although the results show declining trend, the bank's chief executive officer AbdulAziz Al Ghurair is confident to finish the 2016 on strong note and optimistic for 2017. "I .. will be well poised and ready to take advantage of the multiple growth opportunities in 2017," Al Ghurair said. The bank's operating income was up 4.6 per cent year-on-year to Dh4.7 billion driven by strong growth in both interest and non-interest income. Its operating profit increased by 9.2 per cent year-on-year to Dh2.9 billion.
Net profit for the first nine months stood at Dh1.5 billion, showing a decrease of 9.4 per cent over last year after adjustments.
Mashreq's best in class net fee, commission and other income to operating income ratio remained at high 42.6 per cent.
The bank's total assets increased by 3.9 per cent to Dh119.6 billion while Loans and Advances increased by 3.5 per cent to Dh62.3 billion as compared to December 2015. Customer deposits increased by 2.2 per cent to reach Dh75.3 billion as compared to December 2015. Non-Performing loans to gross loans ratio of the bank remained stable at 3.6 per cent at the end of September 2016. Total provisions for loans and advances reached Dh3.6 billion, constituting 136 per cent coverage for non-performing loans.
"We took clear decisions at the outset to continue to grow by improving share of wallet of our existing customers and selectively on boarding new-to-bank quality customers. The impacts of these decisions are reflected in the bank's top line revenue growth of five per cent," the chief executive said.
Mashreq's net interest income, net income from Islamic products and interest earned on marketable securities1 at Dh2.7 billion was up by 4.9 per cent compared to 9 months of 2015, driven by 6.7 per cent year-on-year increase in finance volume.
On a quarterly basis, it has decreased by 4.4 per cent from Dh0.9 billion in 2Q 2016. There has been a decrease of 9bps in net interest margin from 3.13 per cent in 9 months 2015 to 3.04 per cent in 9 months of 2016.
Total non-interest income increased by 4.2 per cent year-on-year to reach Dh2 billion on the back of an increase in Insurance, FX & Other Income. Net fee and commission income represented 65 per cent of total non-interest income in 9-months of 2016 as compared to 68 per cent in 9 months of 2015.
- abdulbasit@khaleejtimes.com