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Abu Dhabi, UAESunday 16 December 2018

Mashreq reports second quarter net profit gains of 3.4 per cent

A 28 per cent fall in impairment allowances buoys its second quarter growth

Abdulaziz Al Ghurair, the chief executive of Mashreq Bank, said the bank boosted second quarter net profit despite the market slowdown and regional headwinds. Courtesy Mashreq Bank
Abdulaziz Al Ghurair, the chief executive of Mashreq Bank, said the bank boosted second quarter net profit despite the market slowdown and regional headwinds. Courtesy Mashreq Bank

Mashreq, the Dubai-based lender, said its second quarter net profit advanced 3.4 per cent, boosted by gains in investment income and a decline in money set aside to cover bad debt.

Its net profit rose to Dh557 million in the three months ended June 30 compared with Dh539m in the corresponding period last year. The bank said investment income jumped 27.7 per cent to Dh39m from Dh30m in the same period last year.

The bank's second quarter profit beat the analyst estimate of Dh520m compiled by Bloomberg.

Meanwhile, impairment allowances fell 28 per cent to Dh341m compared with Dh472m in the second quarter of last year.

“Mashreq’s continued focus on business performance while remaining committed to our customers’ needs is evident in the financial results for the first half of 2017," said Abdul Aziz Al Ghurair, the bank's chief executive.

"Our perennial drive to deliver innovative solutions which exceed customer expectations is the reason we are able to achieve sustained performance, despite market slowdown and regional headwinds," he said.

UAE banks have been battling surging levels of bad debt since the price of oil crashed in 2014. Though in recent quarters, impairments at lenders have begun to subside amid the improving economy.

Last week, Fitch Ratings affirmed Mashreq's long-term issuer default rating at 'A' and upgraded the bank's Viability Rating to "bbb-" from "bb+". The Viability Rating reflects the bank's low risk appetite and improved asset quality owing mainly to the reduction of its small and medium enterprise lending book to Dh1 billion from Dh5.4bn since the beginning of last year.

Elsewhere, the National Bank of Fujairah (NBF) said its second quarter net profit increased 24.4 per cent to Dh155m compared to Dh125m in the same period last year, lifted both by interest from loans as well as fees and commissions. Net interest income and net income from Islamic financing and investment activities gained 9.2 per cent in the second quarter to Dh224m compared to Dh205m in the corresponding period last year.

The bank's provisions in the second quarter declined 12 per cent to Dh72m compared to Dh82m in the same period last year.

"NBF's strategy continues to revolve around client relationships, which is reflected in the segmented approach adopted by the bank to serve its customer needs with a dedicated focus," said Vince Cook, the bank's chief executive.

"This also helps in diversification and maintaining stable growth."