Mashreq bank's net profit remained nearly unchanged for 2018 due to decline in fee, commission and investment income and rise in operating expenses, citing difficult year due to market fluctuations.
The Dubai-based lender said its net profit inched up 0.4 per cent to Dh2.062 billion last year as compared to Dh2.052 billion in the previous year with total provisions for loans and advances reaching Dh3.6 billion, constituting 137.2 per cent coverage for non-performing loans.
"As all of you are aware, 2018 was a difficult year due to market fluctuations, however, we rose to the challenge and managed to sustain our revenues. Much of this can be attributed to the bank's focus on strategically acquiring good assets and growing the loan portfolio, whilst increasing its funding base," said Abdul Aziz Al Ghurair, CEO, Mashreq. The bank's net interest income and income from Islamic financing grew 1.8 per cent year-on-year to Dh3.64 billion but dropped in fourth-quarter 2018 to Dh851 million from Dh908 million in Q4 2017. Its impairment allowance was down by 17.3 per cent year-on-year to Dh1.23 billion and total operating income fell 1.3 per cent to Dh5.94 billion.
Mashreq bank's fourth-quarter net profit plunged 19.5 per cent to Dh312 million as compared to Dh388 million for the same period last year. Its insurance, forex and other incomes fell 51 per cent in Q4 to Dh141 million.
Total assets last year grew 11.8 per cent to Dh139.9 billion and liquid assets ratio stood at 33.2 per cent with cash and due from banks at Dh43.2 billion as on December 2018. While loans and advances and customer deposits grew 10.4 per cent and 9.4 per cent to Dh69.27 billion and Dh83.2 billion - respectively.
Moody's Investors Service last week said that recent merger and acquisition drive among GCC banks, which has been stoked by slow growth and subdued credit demand in the region, will help the sector by easing overcapacity and boosting profitability.
"Slow growth and subdued credit demand in the region is one of the biggest drivers of consolidation," said Ashraf Madani, a Vice President and Senior Analyst at Moody's. "This has intensified competition for depositors and borrowers, dampening profits at GCC banks."
In the UAE, the latest round of bank merger talks - the fourth series of consolidation in the UAE's banking history - have been under way since September 2018. The three-way merger process involves Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank. While Abu Dhabi-listed Bank of Sharjah, Invest Bank and United Arab Bank have denied merger reports.
Mashreq chief executive officer Al Ghurair noted that the bank last year employed latest technology for smoother and better services for customers and it is working to expand it across other units.
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