Mashreq to focus on digital investments

On Wednesday, the bank reported its financial results for the year ending 31st December 2020 and reported a decline in revenue by 14.1 per cent to Dh 5.1 billion, which was mainly driven by the low interest rate regime, the impact of the pandemic and slower economic activities as a result of the lower oil prices. The net profit was down Dh1.3 billion loss from Dh2.1 billion profit in 2019.

AbdulAziz Al Ghurair, chairman of Mashreq, said: “Covid-19 has been both a significant disruptor as well as a catalyst for positive change in business operations. The pace of vaccine rollout in the UAE as well as in other countries provides us with cautious optimism that the regional and global economies will steadily recover as the year progresses, fuelling future growth.

These have been unprecedented times, and our focus throughout has been to work closely with our clients, and colleagues, delivering uninterrupted services, consistency of standards and the safest possible working environment. I am very proud of how our people have risen to the challenge, and gone above and beyond for all our clients.”

Last year, almost 84 per cent of retail clients were onboarded digitally and corporate payments shifted to 100 per cent digital, substantiating the effectiveness of the bank’s transformation strategy.

“In 2020, we focused on enhancing our already advanced digital transformation, delivering innovative digital, AI and data-centric solutions, and completely new propositions for our clients. We also continued to invest in fundamental programmes that will position this bank for long term growth, as our industry changes shape around us, and to keep pace with the technologies that drive us forward. I firmly believe this is the right strategy, for our shareholders, for this country, and for our clients. Mashreq is, and will continue to be, a core contributor to the UAE economy for many years to come,” added Al Ghurair.

The bank’s operational costs saw a drop of five per cent driven mainly by the digitisation efficiencies. However, year on year overall costs position was up by 12.3 per cent due to one off cost associated with branches rationalisation in UAE and enablement of remote working for our global staff during the pandemic

Ahmed Abdelaal, Group CEO, Mashreq Bank, said: “Over the course of 2020, we actively managed our position and took a prudent approach to safeguard Mashreq’s position, whilst doing everything in our power to help our customers prosper. We expect to see a challenging first half in 2021, but are cautiously optimistic for a recovery in the second half. As we begin to look forward, it is important to recognise that the future of banking is rapidly merging with the trajectory of technology. We believe investments in our digital platforms and operating model will deliver sustainable savings in the long term, and position us strongly for this existential change impacting our industry."

The bank’s non-interest income to operating income ratio remained strong at 48 per cent and newly introduced digital channels supported a 55 per cent increase in the client base, where CASA balances witnessed a 23.5 per cent year on year indicating an increase of Dh8.9 billion.

Mashreq’s income from operations before risk charges was Dh2.2 billion, which is down 34.6 per cent year on year, a result of the drop in revenue and one-off operational costs. The impairment allowance charge of Dh3.4 billion was up from Dh1.2 billion in 2019. The NPL ratio stood at 5.1 per cent and coverage was 130 per cent reflecting prudent measures taken to maintain the quality of the portfolio.

Capital adequacy ratio was at 16.0 per cent and Tier 1 capital ratio at 14.9 per cent. The bank proactively managed its liquidity position throughout the year and have consistently taken a conservative approach to their liquidity position. At year end liquidity coverage ratio (LCR) stood at 160 per cent and loans to deposits (LTD) ratio is 81 per cent signifying a solid liquidity position. — business@khaleejtimes.com