Mashreq net profit surges 130% to Dh8.6 billion in 2023

Overall loan portfolio quality improved significantly


Somshankar Bandyopadhyay

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Published: Mon 29 Jan 2024, 10:38 PM

Mashreq on Monday reported that its net profit surged to a record Dh8.6 billion for FY 2023, a substantial increase of 130 per cent year-on-year.

The bank attributed the increase primarily to net interest income soaring by 69 per cent year-on-year. The main drivers are significant business growth with robust client margins, the continuation of the prevailing high-interest rate environment as well as positive one-offs relating to loan loss provisioning. Non-interest income reached Dh3.1 billion, marking a 13 per cent year-on-year growth in FY 2023.

The bank has demonstrated positive jaws of 31.4 per cent in FY 2023, while the cost-to-income ratio improved by over 8 per cent year-on-year. “This indicates strong business performance with effective control over operating costs while enabling continued investments in enhancing our client experience, risk management, and supporting business growth,” the bank said in a statement.

Operating profit has surged from Dh4.4 billion to Dh7.5 billion in FY 2023, representing almost 70 per cent increase compared to the same period in 2022. Earnings per share stood at Dh42.82.

The allowance for impairments has experienced a net release of Dh1.4 billion, driven by prudent risk management, high recoveries from non-performing loans (NPLs) and a one-off release of the general provision.

Return on Equity (ROE) at record-high of 34.3 per cent in FY 2023, doubling compared to FY 2022, while the cost-to-income ratio decreased to 30.9 per cent.

High liquidity was denoted during the year under review by a liquid assets ratio of 33.6 per cent and an efficient liquidity coverage ratio of 134 per cent as of December 2023.

Capitalisation level (excluding proposed dividend) remained robust with the capital adequacy ratio at 16.5 per cent, tier 1 capital ratio at 14.3 per cent and CET1 ratio at 13.7 per cent as of December 2023.

Overall loan portfolio quality improved significantly with gross impairments to gross advances at just 0.3 per cent (0.9 per cent in FY 2022). The non-performing loans to gross loans ratio declined to 1.3 per cent as of end of December 2023 (2.2 per cent as of December 2022) and is one of the lowest in the market, the bank said.

AbdulAziz Al Ghurair, chairman of Mashreq
AbdulAziz Al Ghurair, chairman of Mashreq

AbdulAziz Al Ghurair, chairman of Mashreq, said: “Our franchise continues to yield outstanding results, bolstered by the addition of a substantial number of new clients and the deepening of existing relationships across the bank. This remarkable achievement mirrors the nation’s significant economic expansion and the resilience and dynamic growth of the UAE’s financial services, setting a precedent in the global banking arena. With the UAE banking sector reaching a historic high, and total assets crossing the Dh4 trillion mark, we look forward to 2024 with a sense of optimism and readiness to uphold and extend this trajectory of dynamic and continued growth.”

Ahmed Abdelaal, Group Chief Executive Officer, Mashreq
Ahmed Abdelaal, Group Chief Executive Officer, Mashreq

Ahmed Abdelaal, group chief executive officer, Mashreq, said: “Our performance this year has truly been exceptional, serving as a testament to the success of our strategic direction within the ever-evolving global economic and political landscape. As a modern, digitally empowered challenger bank, we have firmly cemented our position in the market. Looking ahead, our course and position remain resolute, even in the face of ongoing uncertainty. We possess a stable, robust, and resilient business model, characterised by high-quality earnings and a well-diversified loan portfolio spanning our various markets. It is imperative, however, that we brace ourselves for the normalisation of interest rates, which will necessitate adjustments in operational strategies to align with this new reality.”

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