Mashreq posts 34% jump in net profit

The bank said the strong growth mainly comes from increasing lending, deposits; new products, and corporate accounts.

By Staff Report

Published: Thu 31 Oct 2013, 10:31 AM

Last updated: Fri 3 Apr 2015, 5:35 AM

Mashreq bank on Wednesday declared a 34 per cent year-on-year increase in net profit for the first nine months of the year.

The bank said the strong growth mainly comes from increasing lending, deposits; new products, and corporate accounts.

The Dubai-based bank reported Dh1.3 billion net profit for January to September period compared to Dh970 million for the corresponding period last year.

The bank’s total operating income for the period grew to Dh3.5 billion, showing an increase of 19.2 per cent compared to a year earlier, driven by both net interest income and net fee and commission income. Earnings per share strengthened to Dh7.70 at the end of September this year compared to Dh5.74 a year earlier.

The bank’s net interest income at the end of September 2013 was up by 18.6 per cent compared to a year earlier, driven by 17.7 per cent year-on-year increase in loan volume and 40 bps improvement in net interest margin from 2.51 per cent in September 2012 to 2.91 per cent this year, which was predominantly led by change in balance sheet structure and composition of loans.

“The strong underlying growth in our lending and deposits, the success of new product lines in delivering new revenues – like insurance and investment in our Retail Division , the extremely robust growth in the current account deposits in our Corporate Banking Division have all contributed handsomely to this year on year growth in revenues and the bottom line,” Mashreq’s chief executive officer Abdul Aziz Al Ghurair said in a statement.

Asset quality continued to improve as Non Performing Loans to Gross Loans ratio reduced from 9.4 per cent in December 2012 to 6.4 per cent at the end of September 2013. Mashreq’s Provisions for Loans & Advances, for the nine months, stood at Dh627 million, and Total Provisions for Loans and advances reached Dh2.90 billion, constituting 87.9 per cent coverage for Non Performing Loans as on September 30, 2013.

Mashreq’s capital adequacy ratio and tier 1 capital ratio continue to be significantly higher than the regulatory limit and stood at 18.2 per cent and 16.4 per cent respectively, at the end of September 2013.

In its third quarter results statement, Mashreq’s total assets increased by 8.7 per cent to reach Dh83 billion, compared to Dh76.4 billion at the end of 2012.