Mashreq Bank in Dubai Internet City. Image Credit: Pankaj Sharma/Gulf News Archives

Dubai: Mashreq on Monday reported a net profit of Dh598 million, up by 9.5 per cent year-on-year, largely driven by 4 per cent increase in operating income.

Net interest income and net income from Islamic products were up by 6.7 per cent year-on-year, on the back of a 3.9 per cent loan growth in the first quarter.

“As the economic climate in the UAE continues to improve on the back of stabilising oil prices, our net profit increased by 9.5 per cent year-on-year, driven by a 4 per cent increase in operating income. Our earnings per share remain robust and we continue to maintain a strong liquidity position, as evidenced by our healthy loan-to-deposit ratio of 85 per cent,” said Mashreq’s CEO, Abdul Aziz Al Ghurair.

There has been an increase in net interest margin from 3.34 per cent as in the first quarter of 2017 to 3.45 per cent as at the close of the first quarter of 2018.

Total non-interest income increased by 0.2 per cent year-on-year to reach Dh609 million. Net fee and commission income represented 58.6 per cent of total non-interest income in the first quarter of 2018 as compared to 61.9 per cent in the first quarter 2017.

Mashreq’s total assets decreased by 1.4 per cent to Dh123.4 billion in the first quarter 2018, compared to Dh125.2 billion at the end of 2017. Loans and advances grew by 3.9 per cent year to date at Dh65.2 billion, driven by a 4.8 per cent growth in conventional finance.

Liquid assets-to-total assets stood at 26.6 per cent with cash and due from banks at Dh32.7 billion as of March 2018. The loan-to-total assets ratio at 52.8 per cent increased slightly as compared to 50.1 per cent at the end of 2017.

Customer deposits, at Dh76.5 billion, increased by 0.6 per cent as compared to the 2017 year-end position, primarily due to a 13.2 per cent increase in Islamic deposits. The loan-to-deposit ratio stood at 85.2 per cent compared to 82.5 per cent at the end of 2017.

Non-performing loans (NPLs) increased marginally by Dh149 million in the quarter, leading to a NPLs-to-gross loans ratio of 2.9 per cent at the end of March 2018

Net allowances for impairment for the first quarter of 2018 were Dh302 million as compared to Dh571 million in the fourth quarter of 2017, and Dh311 million in the first quarter of 2017.

Total operating income for the first quarter of 2018 stood at Dh1.5 billion, a year-on-year increase of 4 per cent. Though operating expenses have increased by 4.1 per cent the efficiency ratio in the first quarter 2018 has remained stable at 39 per cent compared to last year.

“As customer demand begins to shift, technological innovation emerges as a key focus area for banks in the Middle East. I am proud to say that Mashreq is committed to maintaining its leadership position in digital banking across the region,” said Al Ghurair.

Mashreq’s Capital adequacy ratio as per Basel III stood at 17.1 per cent as of March 2018, compared to 17.2 per cent at the end of 2017, with a Tier-1 capital ratio of 16.1 per cent compared to 16.2 per cent at the end of 2017.