Dubai-based Mashreq Bank reported a net profit of Dh1.9 billion ($520 million) for the year ending on December 31, 2016.
Witnessing a stable growth, Mashreq’s operating income rose 3.2 per cent year-on-year to Dh6.2 billion driven by strong growth in net interest income and net income from Islamic products.
Net interest income and net income from Islamic products were up by 4.2 per cent year-on-year, on the back of a 1.4 per cent y-o-y increase in loan volume.
Commenting on the bank's performance, Abdul Aziz Al Ghurair, Mashreq’s CEO, said: "While the region weathered tough business conditions in 2016, Mashreq had a reasonable year despite the economic climate and low oil prices. Topline, in terms of operating income, rose by 3.2 per cent and our balance sheet grew 6.6 per cent. We continued to focus on driving efficiency and productivity leading to a reduction in operating expenses by 2.7 per cent and this led to a healthy growth in operating profit of 7.3 per cent. The last quarter saw an improvement in our asset quality, as evidenced by non-performing loans falling 17 per cent quarter on quarter and impairment allowance decreasing by 9.5 per cent in the same period. We are pleased with the strong year end finish and the improving trend in net profit in the fourth quarter, which rose 6.3 per cent against the third quarter of 2016."
The bank consistently maintained a high proportion of net fee and commission income. Mashreq’s best-in-class net fee, commission, investment and other income to operating income ratio remained high at 42.2 per cent. Net fee, commission and other income increased by 1.8 per cent year on year.
Having a strong balance sheet, Mashreq’s total assets increased by 6.6 per cent in the year to reach Dh122.8 billion; customer deposits increased by 4.6 per cent to reach Dh77.0 billion. The bank’s loan-to-deposit ratio remained robust at 79.2 per cent at the end of December 2016.
Boasting a relatively healthy liquidity and capital position, Mashreq’s liquid assets to total assets stood at 30.4 per cent with cash and due from banks at Dh37.3 billion. Its capital adequacy ratio and Tier 1 capital ratio continue to be significantly higher than the regulatory limit standing at 16.9 per cent and 16.0 per cent, respectively.
Mashreq’s non-performing loans to gross loans ratio decreased to 3.1 per cent at the end of December 2016 (3.6 per cent as of September 2016), while the risk charge for the year increased from Dh1.0 billion to Dh1.7 billion. The bank’s total provisions for loans and advances reached Dh3.3 billion, constituting a 151.1 per cent coverage for its non-performing loans.
Confident about the New Year, Al Ghurair concluded: "Mashreq is in a very strong position as it enters 2017 with a diversified balance sheet and customer base. With the government’s continued focus on economic diversification, investment in non-hydrocarbon assets, and its smart city initiatives, Mashreq’s strategy on innovation and focus on customer experience will serve us well as we enter our 50th year."
Mashreq Bank posts $520m profit
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