Dubai: Mashreq, one of UAE's largest private sector lenders, Tuesday reported a 22 per cent increase in its net profit for the first half of 2011 to Dh551.6 million compared to Dh453 million for the same period in 2010, on an operating income of Dh2.2 billion.

The bank reported a decline in provisions for loan losses by 29 per cent to Dh637 million. The efficiency ratio remained healthy at 42 per cent.

Mashreq's total assets slightly increased to Dh85 billion at the end of the first half compared to Dh84.8 billion as at December 31, 2010.

Liquid assets increased 37 per cent with cash and dues from banks at Dh31 billion. Total customer deposits, including Islamic deposits, stood at Dh52 billion, reporting an increase compared to Dh51.2 billion at the end of 2010.

Abdul Aziz Al Ghurair, CEO of Mashreq said, "Mashreq has delivered a robust performance during the first six months of the year. This highlights our strategy and commitment towards the banking industry in the UAE and the region."

"We continue to invest in people, technology, and upgrading of our products and services to seize opportunities as various markets witnessed slow but steady recovery."

Net interest income and income from Islamic products, net of distribution to depositors decreased by 11.6 per cent to Dh1.035 billion. Net fee commission and other income decreased by 12 per cent reporting Dh556 million, against Dh633 million for the same period last year. However, fee and other income to gross income ratio at 52 per cent is one of the best in its class.

Maintaining a cautious approach towards liquidity management, credit expansion and capital management, Mashreq strengthened its balance sheet. It had strong capital adequacy, high liquidity and low advances to deposits ratio.

The capital adequacy ratio remained strong at 22.59 per cent with its tier one ratio at 15.92 per cent. The advances to deposit ratio is healthy at 73 per cent.

Retail expansion

At a retail level, during half yearly performance, Mashreq continued to strategically expand in the UAE, with the opening of its 54th branch, located in Umm Suqeim area, which includes a Mashreq Gold centre.

Mashreq also launched the first Student Banking Centre (Electronic Banking Unit) at Dubai International Academic City (DIAC), serving 27 universities and academic institutions.

Earlier this year, Mashreq announced the opening of offices in Nepal.

Mashreq signed an exclusive agreement with Bank of China to establish a ‘China Desk' in the UAE. The first of its kind exclusive agreement demonstrates Mashreq's long-term plans with Bank of China and the strong presence of both institutions.