A Mashreq Bank branch in Bur Dubai. Image Credit: Arshad Ali/Gulf News

Dubai: Mashreq reported a net profit of Dh1.7 billion for the first nine months of 2018, up 5 per cent compared to Dh1.6 billion reported in the same period last year.

For the third quarter of 2018, the bank reported Dh587 million net profits, compared to Dh563 million reported in the second quarter of this year and Dh561 million in the third quarter of last year.

“With a firm focus on fostering innovation in each aspect of our business, Mashreq’s third quarter results are testament to the continuing success of our transformation. We achieved solid growth in our balance sheet with a deposit growth of 8.1 per cent year-to-date, well above market norms. This was complemented by our strong liquidity position with high liquid assets to total assets ratio of 28.4 per cent,” said Abdul Aziz Al Gurair, Mashreq’s CEO.

Total operating income for the nine-month period ended September 30, 2018 was Dh4.6 billion, up 3.6 per cent compared to Dh4.4 billion reported in the same period last year. Insurance, FX and other income contributed to Dh230 million of the increase; revenue from net interest income and income from Islamic financing also saw an increase of Dh120 million year on year.

Net interest income and income from Islamic financing increased by 4.5 per cent year on year and stands at Dh2.8 billion.

Total non-interest income increased by 2.2 per cent — the decline in fee, commission and investment income was compensated by a 47.6 per cent increase in FX, insurance and other income. Net fee and commission income represented 58.9 per cent of total non-interest income in the nine-month period in 2018 compared to 66.7 per cent in the same period last year.

Investing in innovation

Operating expenses for the first nine months of 2018 increased by 10.9 per cent year-on-year to reach Dh1.9 billion. Efficiency ratio at 42.4 per cent at the close of the third quarter of 2018 increased with respect to the previous year 39.6 per cent in the same period in 2017, largely driven by increased investment in technology and branch transformation project.

“As one of the most innovative banks in the region, we remain committed to investing in state-of-the-art technology including robotics, artificial intelligence and machine learning, ensuring our customers benefit from a modern, simplified and intuitive banking experience,” said Al Gurair.

Mashreq’s total assets increased by 9.8 per cent year on year in the first nine months of 2018 to Dh137.4 billion compared to Dh125.2 billion at the end of 2017. Loans and advances increased by 10.6 per cent year to date at Dh69.4 billion driven by 7.7 per cent growth in conventional finance.

Total customer deposits increased by 8.1 per cent year to date, to Dh82.2 billion due to an increase in both conventional deposits (6.5 per cent) and Islamic deposits (24.6 per cent). Loan-to-Deposit ratio stood at 84.3 per cent at the close of the third quarter of 2018 compared to 82.5 per cent in December 2017.

Non-performing loans stood at Dh2.6 billion in September. Net allowances for impairment for the 9-month period in 2018 was Dh838 million compared to Dh916 million in the same period last year.

Capital adequacy ratio as per Basel III stood at 16.9 per cent at the end of the third quarter with the Tier 1 capital ratio at 15.8 per cent.