| 09 Nov 2009 |
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Mashreq bank restructures its asset book
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MashreqMashreq
, the largest private sector bank in Dubai, has restructured its asset book significantly by moving an additional Dh13.7 billion to the Central BankCentral Bank and increasing loans to government and public sector entities byDh4.25bn, an analysis of the balance sheet said.Thus the total funds between Central BankCentral Bank
deposits and loans to government and public sector entities have surged by about 250 per cent during the nine months, from Dh12.236bn as of December 31, 2008, to Dh30.239bn as of September end."MashreqMashreq
may have taken a 'wait and watch' strategy in the wake of the ongoing recession when the bank on its part has large exposure to the troubled Saudi group," an analyst told Emirates Business. Though there were unconfirmed reports that the bank's exposure to the Saudi groups could be in the region of $400 million (Dh1.46bn), a clear picture on the same is yet to be known. However, the bank is reported to have moved court on the issue.While the bank has reduced its loan book from Dh48.434bn to Dh44.003bn during this period, the total assets have moved up from Dh93.243bn to Dh99.924bn. Despite the drop in loans and advances, customer deposits have grown from Dh48.435bn to Dh55.792bn thus showing that the bank has accorded higher priority to liquidity than profitability.
"The steps taken by the bank during the nine months show that it has been moving away from risky areas and consolidating its position in less risky areas. The clear indication to this is that the 'loans to trade' has more than halved from Dh13.574bn to Dh6.390bn during this period. Likewise, there has been a drop in personal loans also when its volume contracted marginally from Dh12.165bn to Dh11.485bn.
"The fact that the cash and deposits with Central BankCentral Bank
will fetch much less than what the bank pays for deposits is an indication the net interest income will be under pressure," said another analyst. MashreqMashreq posted an operating profit for the nine-month period at Dh3.884bn.By CL Jose
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