Mashreq declares Dh2.4b full year net profit

Dubai: Mashreq on Wednesday reported Dh2.4 billion net profit for 2015, maintaining it at the same level as in 2014.

For the fourth quarter of the year, the bank’s net profit declined 13.7 per cent to Dh556.2 million compared to Dh644.3 million in the same quarter of last year, but the profit was up 0.9 per cent on a quarter on quarter basis compared to third quarter.

“The Bank has maintained a steady performance in the difficult market conditions, proving once again that being prepared is half the battle won. As many others in the industry, we read the signs of the market softening early and took decisions to moderate our growth strategy accordingly. As a result, the year has delivered stable financial results for the year ending December 2015,” said Mashreq’s CEO, Abdul Aziz Al Ghurair.

Net interest income at Dh3.3 billion was up by 7.3 per cent compared to 2014, driven by 9 per cent year-on-year increase in average loan volume. There has been a slight decline in net interest margin from 3.2 per cent as of December 2014 to 3.1 per cent as of December 2015.

On a quarterly basis, Net interest income has moderately decreased by 1.6 per cent to Dh813 million in the fourth quarter of 2015 as compared to Dh826 million in the third quarter of 015.

Net fee and commission income increased slightly by 0.9 per cent year-on-year to reach Dh1.7 billion. Net fee and commission income represented 63.5 per cent of total non-interest income in 2015 as compared to 60.9 per cent in 2014.

Mashreq’s total assets increased by 8.8 per cent to reach Dh115.2 billion at year end 2015. On a year-on-year basis, loans and advances grew by 3.7 per cent driven by 14 per cent growth in Islamic finance.

Liquid assets to total assets stood at 29.9 per cent with cash and due from banks at Dh34.4 billion as of December 2015. Loan-to-total assets ratio at 52.3 per cent fell slightly as compared to 54.8 per cent at the end of 2014.

Customer deposits at Dh73.6 billion, was up 7.5 per cent as compared to year-end 2014, driven by 61.9 per cent growth in Islamic deposits and 3.1 per cent growth in conventional deposits. Loan-to-deposit ratio stood at 81.7 per cent compared to 84.8 at year end 2014.

Mashreq’s non-performing loans (NPL) were down to Dh2 billion at year end 2015 leading to a NPL to gross loans ratio of 2.8 per cent at the end of December 2015 from 2.9 in September 2015. Net allowances for impairment for 2015 were Dh1 billion as compared to Dh1.1 billion in 2014. Total provisions for loans and advances reached Dh2.8 billion, constituting 145 per cent coverage for NPLs as on December 2015.

The bank’s capital adequacy ratio stood at 16.9 per cent compared to 16.6 per cent as year-end 2014 with the Tier 1 capital ratio improving to 15.9 per cent at year end 2015 compared to 15.3 per cent as of 31 December 2014.

“The fact is that we are passing through a period of great economic change in the world, and I believe that we must proceed with determination to focus on the essentials to make banking smoother and friction free for our clients and customers. We remain confident that the UAE’s effort in economic diversification means it is likely to weather this turmoil with grace and emerge strengthened, with a banking industry that is a beacon of prudence to the world,” said Al Ghurair.