Dubai: Mashreq on Wednesday reported a net profit of Dh535 million for the first half of 2020 down 56.2 per cent year on year.
First half profits declined sharply to due to significant increase in impairment allowance in the second quarter on the back of tough operating environment, Mashreq said in statement.
Mashreq’s non-interest income to operating income ratio remained high at 47.1 per cent. Bank’s total assets increased by 8.7 per cent year to date to Dh173.3 billion and loans and advances remained at Dh76.5 billion. Customer deposits grew 8.3 per cent year to date to reach Dh98.6 billion.
The bank said the economic situation brought about by COVID-19 coupled with the oil price decline has led to a challenging credit environment that is being actively managed. The Bank continues to monitor local developments that affect our offices across the world.
“Despite headwinds caused by unprecedented challenges, Mashreq remains resilient. Our robust approach to business continuity ensured our operations were unimpeded throughout the first half of the year and our customers were able to stay connected with uninterrupted access to all our services. This is a testament to our digital capabilities and focus on customer experience,” said Ahmed Abdelaal, Group CEO, Mashreq Bank.
Non-performing loans to gross loans ratio increased slightly from 4.4 per cent to 4.6 per cent as of end of June 2020. Impairment allowance increased sharply from Dh482 million in the first half of 2019 to Dh978 million in the first half this year. Total provision reached Dh4.3 billion as of end of June 2020.
Liquidity and capital
Mashreq maintained adequate liquidity despite market volatility and pandemic uncertainty. Liquid assets ratio stood at 37.3 per cent with cash and due from banks at Dh58.2 billion as on June 30, 2020. Loans to deposits ratio remained at 77.6 per cent at the end of June 2020.
“During the first half of the year, Covid-19 sent tremors of uncertainty across the global and regional economy, as lockdowns were imposed across most of the world. Despite this, Mashreq maintained adequate liquidity to meet our business needs, and ensure we were able to effectively serve our customers, clients and communities during this unprecedented situation, while prioritizing the health and safety of our people,” said AbdulAziz Al Ghurair, Chairman of Mashreq.
At the close of the first half of the year, Mashreq’s capital adequacy ratio and Tier 1 capital ratio stood at 17 per cent and 15.9 per cent, respectively.
“As we navigate the ongoing economic uncertainty, we remain well placed to handle a variety of scenarios, and will continue to operate prudently to manage any risks that lie ahead. Undoubtedly, significant challenges are on the horizon, but we have every bit of confidence that we will overcome them, and the UAE will prove its strength and resilience to make a robust recovery,” said Al Ghurair.