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Mashreq profits rise as assets quality improves

Mashreq, one of the UAE’s leading national financial institutions, on Tuesday declared a modest increase in its net profit for the first quarter that reached Dh271 million, compared to Dh265.3 million for the same period last year.

The bank said total income for the bank during first quarter reached Dh937 million, showing a 14.3 per cent drop relative to same period last year. However, Mashreq’s best-in-class net fee, commission and other income to operating income ratio, increased further to close at 53.1 per cent, it added.

“Our performance during the first quarter reflects our strategy to continue strengthening our balance sheet over the long term. We have successfully maintained our position as a financial institution which is liquid and is well-capitalized,” Mashreq chief executive officer Abdul Aziz Al Ghurair said.

Focusing on building strong customer-centric products and services has been a priority, while improving the bank’s offerings, hence enhancing customer loyalty, Al Ghurair said. Mashreq continued to rationalise its liability structure by shedding high cost deposits, leading to a 2.2 per cent reduction in customer deposits as compared to December 2011, reaching Dh44.4 billion. However, the bank continues to maintain a robust loan-to-deposit ratio, which stood at 84 per cent by the end of first quarter this year.

“Economic indicators suggest the UAE and regional economies have recovered from the downturn of three years ago and we are now seeing steady growth in most sectors. The local banking industry demonstrated healthy signs in the first quarter, which will have a positive impact going forward,” he added.

In its first quarter results statement, as per the balance sheet management strategy of the bank, Mashreq’s total assets witnessed a moderate decline of 3.3 per cent reporting Dh76.6 billion compared to Dh79.2 billion at the end of 2011. While Liquid Assets to Total Assets stood at 29 per cent with cash and due from banks reporting Dh22.4 billion as of March 31, 2012.

Loans and advances remained stable at Dh37.2 billion, a minimal decrease of 1.4 per cent from Dh37.7 billion at the end of 2011. Demonstrating Mashreq’s ongoing efforts on improving its assets quality, the provisions for loans and advances continued to decline by 46 per cent and 50 per cent as compared to first and fourth quarters of 2011 respectively to reach Dh176 million.

As part of Mashreq’s prudent financial management practice, expenses are kept under control, with general and administrative expenses remaining stable at Dh456 million compared to the same period in 2011, and reporting a decrease of 5.5 per cent compared to last quarter of 2011.

Maintaining a cautious approach towards Capital management, the bank’s capital adequacy, increased to 23.4 per cent representing a 0.8 per cent rise from December 2011 levels, while Tier 1 capital ratio also improved by 0.6 per cent to 16.8 per cent over the same period. — abdulbasit@khaleejtimes.com