Robust income growth and low risk cost drive Mashreq profit

Mashreq announced on Thursday that its net profit soared to Dh5.8 billion for the first nine months of 2023, a jump of 122 per cent year-on-year.

The Dubai lender’s operating profit surged from Dh3.2 billion to Dh5.6 billion for the first nine months of 2023, a 73 per cent increase compared to the same period in 2022.

The increase in operating income and net profit is primarily attributed to a significant 82 per cent increase in net interest income. This growth is a result of several factors, including the expansion of its balance sheet, healthy client margins, and the prevailing high-interest rate environment. Non-interest income has reached Dh2.3 billion, marking an 8.1 per cent year-on-year growth for the first nine months of 2023.

The bank has demonstrated a positive jaws ratio of 34.8 per cent for the first nine months of 2023, and the cost-income ratio has improved by over 8 per cent year-on-year. This indicates effective control over operating costs while enabling continued investments in enhancing our client experience, risk management and supporting business growth.

The allowance for impairments has experienced a net release of Dh341 million, driven by a decrease of 69 per cent year-on-year in low-risk charges, amounting to Dh244 million.

“This performance is attributed to our successful growth strategy, commitment to customer excellence, strong operating performance, efficient cost management, and prudent risk management capabilities,” the bank said in a statement.

Return on Equity (RoE) reached a record-high of 32.1 per cent for the first nine months of 2023, doubling compared to the first nine months of 2022. Earnings per share stood at Dh28.75.

High liquidity was denoted by a liquid assets ratio of 32.3 per cent and an efficient liquidity coverage Ratio of 126.6 per cent as of September 2023.

The bank’s capitalisation level remains robust with the capital adequacy ratio at 18.6 per cent, Tier 1 Capital ratio at 16.3 per cent and CET1 ratio at 15.6 per cent as of September 2023.

Overall loan portfolio quality improved significantly with gross impairments to gross assets at just 0.2 per cent (0.8 per cent in the first nine months of 2022).