Wednesday, Apr 30, 2014

Dubai: Mashreq has reported a 35 per cent increase in net profit in the first quarter of 2014 to Dh575 million compared to Dh425 million for the same period in 2013.

The bank’s total operating income for the period grew to Dh1.4 billion, an increase of 23.6 per cent compared to a year earlier. Net interest income at the end of March 2014 was up by 41 per cent compared to a year earlier, driven by 5.6 per cent year-on-year increase in loan volume and 45 basis points (bps) improvement in net interest margin.

Mashreq’s net fee, commission and other income to operating income ratio remained high at 50.4 per cent led by a 33.3 per cent growth in net fee and commission income and 28.3per cent growth in net investment income.

“The first quarter results build confidence and are usually indicative of the year ahead. We have started off the year with an increase of 35 per cent in net profits from the same period last year. We see our growth narrative forging ahead in 2014,” said Abdul Aziz Al Ghurair, CEO of Mashreq.

On the cost front, general and administrative expenses for the period increased by 7.7 per cent compared to a year earlier to reach Dh524 million. However, Mashreq’s efficiency ratio improved by 5.6 per cent on a year-on-year basis to reach 37.9 per cent at the end of March 2014.

Earnings per share strengthened to Dh3.40 at the end of March this year compared to Dh2.52 a year earlier.

Non-performing loans (NPLs) to gross loans ratio reduced from 6 per cent in December 2013 to 5.8 per cent at the end of March 2014.

Adequacy ratio

Mashreq’s allowances for impairment, net, for the first quarter of 2014, was Dh251 million, and total provisions for loans and advances reached Dh3.3 billion, constituting 102 per cent coverage for NPLs as on March 31, 2014.

The bank’s capital adequacy ratio and tier 1 capital ratio continue to be higher than the regulatory limit and stood at 16.8 per cent and 15.3 respectively, at the end of first quarter.

While assets increased by 4.9 per cent to reach Dh94.1 billion in March 2014, compared to Dh89.7 billion at the end of 2013, liquid assets to total assets stood at 26 per cent.

Loans and advances grew by 5.6 per cent during the first quarter of 2014 to reach Dh53.3 billion, compared to Dh50.4 billion at the end of December 2013. Customer deposits increased by a similar percentage, during the same period, to stand at Dh61.9 billion at the end of March 2014.

The bank’s loan-to-deposit ratio remained stable at 86 per cent at the end of March 2014, the same as in December 2013. The bank’s loan-to-total assets ratio improved slightly from 56 per cent to 57 per cent.

Mashreq CEO is optimistic on the overall economic environment in the region and the prospects of the bank in terms of asset growth and profitability. “We are well positioned to take advantage of the growth opportunities that the region is expected to witness in the coming years,” said Al Ghurair.

By Babu Das Augustine Deputy Business Editor

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