Mashreq Bank’s Net Profit Up 6.5% In 2017

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Date: 03.03.2018

A.E.-based lender Mashreq Bank’s net profits rose by 6.5% to reach $571 million as of December 2017, up from 517 million the previous year.

“Despite global economic uncertainty and the slight slowdown in the GCC region, we saw steady growth across all divisions of the Bank, and our net profit stood at AED 2.1 billion, up by 6.5% compared to last year,” said Abdul Aziz Al Ghurair, Mashreq’s CEO, in a press release.

Meanwhile, the company’s impairment allowance went down 14.2% year-on-year, and its non-performing loans to gross loans ratio reduced to 2.94% (compared to 3.06% in 2016).

Mashreq Bank’s investment income grew by 84.9% year-on-year while its total assets stood at $34 billion in December 2017, up from $33.4 billion at the end of 2016.

Mashreq’s loan-to-deposit ratio was 82.5% at the end of 2017, up from 79.2% in December 2016. This indicates a decrease in deposits to the bank, lowering its liquidity. However, its capital adequacy ratio was 18.3%, higher than the regulatory minimum of 12%. It increased from 16.9% in December 2016, indicating a better ability to cushion any potential losses.

Low oil prices affected banks across the country, putting pressure on government revenue and spending, slowing cash supply growth in the region and decreasing deposits into banks. Still, the U.A.E. banking sector is recovering—consulting firm Alvarez and Marsal’s November 2017 U.A.E. Banking Pulse report, which included Mashreq, found that banks in the country are performing well, with growing profitability.

“The return to growth, which we anticipated, is coming to fruition as banks have steadily adapted to the new normality of the current oil price environment,” said Dr. Saeeda Jaffar, the co-head of Alvarez and Marsal’s Middle East office, in the report. “Last year, banks timorously implemented housekeeping measures to mitigate against fears, which did not materialize, that the operating environment would worsen significantly. This has led to an increase in lending activity, with cost bases stabilized by those housekeeping measures, the result has been higher profitability and better returns on equity.”

One of U.A.E.’s oldest lenders, Mashreq has also been ramping up its digital offerings in a bid to be profitable in the region’s competitive banking sector. In 2017, the bank launched Mashreq Neo, a full-service digital bank and the first digital bank in the region.

The lender also marked 50 years in the U.A.E. in 2017. It was founded by Abdulla Bin Ahmed Al Ghurair, who (combined with his family) ranked fourth on Forbes Middle East’s list of The World’s Richest Arabs 2017.

https://www.forbesmiddleeast.com/en/mashreq-banks-profits-up-2017/

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