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UAE: Mashreq posts Dh820m net profit

By Issac John DUBAI - Mashreq, a leading UAE financial services group, announced on Wednesday a net profit of Dh820 million for 2011 on an operating income of Dh3.9 billion.

The banking group's total assets showed a moderate decline of 6.6 per cent to Dh79.2 billion compared to Dh84.8 billion at the end of 2010, due to the bank's balance sheet management strategy, the company said in a statement.

"The bank continued to maintain high liquidity. The liquid assets of Dh24.9 billion led to a healthy liquid to total asset ratio of 31 per cent as of December 31, 2011," the statement said.

Abdul Aziz Al Ghurair, chief executive officer of Mashreq, said the 2011 annual financial results reflected the company's policy of balancing prudence with profitability. "Although 2011 was a challenging year for the region, we continue to maintain high levels of capitalisation and liquidity and remain fully committed to the markets across the GCC."

In the first 10 months of 2011, net profit of banks operating in the UAE grew 11.3 per cent to Dh24.98 billion, reflecting a rebound in lending activities.

The governor of the Central Bank of the UAE Sultan bin Nasser Al Suwaidi has said the UAE banks have enough liquidity to meet the local market's demands. In 2010, banks in the UAE increased their net profits by 10.4 per cent to Dh17.6 billion from Dh15.9 billion in 2009. The consolidated assets of local banks grew six per cent to Dh1.293 trillion in 2010 from Dh1.216 trillion in 2009.

Mashreq said in addition to specific provisions, the bank maintains a healthy general provision (collective impairment allowance), which at year-end stood at two per cent of net loans and advances.

The bank said as a result of proactive risk management, loans and advances dropped 8.5 per cent to Dh37.7 billion from Dh41.2 billion at the end of 2010. "Given the elevated level of liquidity, Mashreq could afford to rationalise its liability structure by shedding some high-cost deposits, leading to an 11.4 per cent reduction from December 2010 to Dh45.4 billion. However, the bank continues to maintain a robust loan-to-deposit ratio of 83 per cent as at December 2011," said Al Ghurair

"Our single minded goal is to deliver sustainable financial results while adapting to rapidly changing market conditions by focusing on customer centricity across our businesses. Meeting and exceeding the needs of our customers is the corner stone of our business philosophy," he said.

The group's total income for 2011 of Dh3.9 billion represents an 11.7 per cent drop relative to 2010. Net interest income and income from Islamic products net of distribution to depositors for the year 2011 reported at Dh1.9 billion was down 15.1 per cent while net fee, commission and other income at Dh1.9 billion was down eight per cent.

The bank's general and administrative expenses for the full year 2011 remained stable at Dh1.8 billion, showing a slight increase of 1.7 per cent.

Provisions for loans and advances continued to drop by 32 per cent to Dh1.2 billion from Dh1.8 billion in 2010, while the efficiency ratio increased modestly to reach 46.3 per cent.

"The bank continued to maintain a very healthy capital adequacy ratio which stood at 22.6 per cent as of December 2011, while the Tier 1 ratio went up to 16.2 per cent for the same period," the statement said.

© Khaleej Times 2012