Mashreq first half net profit surges 150% to Dh3.5 billion

Operating income growth was primarily driven by net interest income

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The bank posted a noteworthy increase in annualised return on equity to 30.2 per cent

Published: Wed 26 Jul 2023, 9:38 PM

Mashreq posted a 150 per cent surge in its net profit for the first half of 2023, the Dubai-headquartered bank announced on Wednesday.

Operating profit for the period stood at Dh3.7 billion, an 88 per cent increase compared to the first half of 2022 on the back of a healthy operating income growth of 60 per cent.

Operating income growth was primarily driven by net interest income which has increased significantly by 96.3 per cent as a result of growth in the loan portfolio and the high interest rate environment; the non-interest income to total income ratio currently stands at 29.5 per cent.

A significant improvement in operational efficiency led to the cost to income ratio coming down to 28.3 per cent in the first half of 2023 compared to 38.7 per cent in the first half of 2022.

Credit cost decreased by 88 per cent year on year to Dh54 million in the first half of 2023.

The bank posted a noteworthy increase in annualised return on equity to 30.2 per cent (up from 13.9 per cent in the first half of 2022) demonstrating excellent shareholder value.

Total loans and advances increased by 5.2 per cent year to date and stands at Dh95 billion. There was a healthy growth of 11.4 per cent year to date in customer deposits that reached Dh126.8 billion; CASA ratio continues to remain high at 65 per cent.

Loan-to-deposit ratio was at 74.9 per cent at the end of June 2023, compared to 79.4 per cent in December 2022. Liquid assets ratio stood at 30.8 per cent as of June 2023, compared to 33.5 per cent in December 2022.

Capitalisation level remains robust with the Capital adequacy ratio at 18 per cent, Tier 1 Capital ratio at 15.7 per cent, and CET1 ratio at 15 per cent as of June 2023.

Impairment allowance reduced significantly to Dh54 million in the first half of 2023, driven by enhanced asset quality and higher recoveries and represents only 0.1 per cent of net loans.

Non-performing loans to gross loans ratio declined to 1.7 per cent as of the end of June 2023 (2.2 per cent as of December 2022) and the lowest in the market.

Total provision for loans and advances reached Dh4.4 billion and coverage ratio improved to 237.6 per cent as on June 30, 2023 as compared to 190.8 per cent in December 2022.

Abdul Aziz Al Ghurair, Chairman of Mashreq, said: “Our growth trajectory is characterised by the symbiosis of strong revenue growth and bottom-line expansion. This is complemented by our keen focus on operational efficiencies and a robust liquidity framework. Our strategic direction is reflected in our successful growth across all our key business segments. As we wrap up the first half of 2023, Mashreq stands tall as a dynamic digital challenger bank, delivering enticing returns for our stakeholders amidst a volatile global economy. With our eyes firmly set on the future, we are confident in our readiness and resilience to continue driving value and sustaining our growth momentum.”

Ahmed Abdelaal, group chief executive officer of Mashreq, said: “At Mashreq, we know our role extends beyond providing financial services. It’s about enriching customer experiences and investing in our most significant asset—our people. As we continue to navigate forward, we pledge our unwavering commitment to delivering unparalleled value to our customers, shareholders, and the wider community.”