Mashreq Bank is latest UAE bank to confirm a Dh1b profit for 2021
Mashreq builds on gains from core categories as well as a drop in impairment costs
Dubai: Mashreq has become the latest UAE bank to report a Dh1 billion or plus profit for 2021, and providing more proof of a return to form for the sector. In Mashreq’s case, the Dh1 billion profit marks a major turnaround from the Dh1.3 billion loss sustained in 2020 and was brought on by higher operating profits and lower impairment costs.
Earlier, FAB in Abu Dhabi and Emirates NBD confirmed solid 2021 results, with the improvement in the economy and core categories within the banking sector showing marked improvements.
According to Abdul Aziz Al Ghurair, Chairman, “In the near term, Mashreq Bank will maintain a conservative risk appetite and leverage its industry-leading digital capabilities to ensure all its customers receive the very best services and solutions possible. We recorded significant improvements in operating income and net profits by year-end, driven in part by robust growth across the loan portfolio and an improved credit environment characterized by reduced impairments and a slight reduction in our non-performing-to-gross loan ratio."
Operating profit for the year was at Dh3.2 billion, which is a smart 44.5 per cent increase compared to 2020. This is where higher operating income and lower operating expenses played their part.
* Impairment allowance dropped to Dh2.1 billion from Dh3.4 billion in 2020;
* The non-performing loans to gross loans ratio was cut to 5.2% as of end of December from 5.6% as of September last; and
* Total provision for loans and advances were Dh6.7 billion and coverage ratio stood at 128.2% as of end December 2021 (up from 125% in September 2021.
On two other key fundamentals, Mashreq effected gains, with a growth of 15 per cent in customer deposits to Dh101.5 billion. Operating income increased 12.8 per cent to Dh5.8 billion from higher net interest income and income from Islamic financing plus improvements in fees and commission.
“The combination of a steady return to growth across the national economy, and the successful application of the bank’s digital and operational strategies provided a strong platform for growth in 2021,” said Al Ghurair. "We will continue to build a robust infrastructure and a compliance strategy aligned to the central government policies for each geography where Mashreq is present."