Dubai: Mashreq, one of the leading financial institutions in the UAE, Wednesday reported Dh85 million net profit for the first half (H1) of 2021 compared to Dh535 million reported in the same period last year.
The bank’s operating income increased by 1.4 per cent over the previous year to Dh2.9 billion due to improvements in fees and commission.
Mashreq’s non-interest income to operating income ratio improved to 49.8 per cent compared to 47.1 per cent in the first half of 2020.
Operating profit at Dh1.6 billion is a 4.6 per cent increase compared to first half of 2020 as a result of increased operating income and reduced operating expense.
“Recording a net profit of Dh85 million during the first half of 2021, I believe we are fortunate to have been steered through the pandemic and its far-reaching impacts by a national leadership that has taken proactive measures to protect business interests, jobs and economic stability,” said AbdulAziz Al Ghurair, Chairman of Mashreq Bank.
Balance sheet
Mashreq’s total assets increased by 9 per cent year to date to Dh172.8 billion and loans and advances increased by 8 per cent to Dh77.3 billion. Customer deposits grew 8.1 per cent year to date to reach Dh95.4 billion and the loan-to-deposit ratio remained stable at 81per cent at the end of June 2021.
“The bank saw a year to date growth of 8.1 per cent in customer deposits and a high share of CASA [current and savings accounts] of over 57 per cent which points towards growing confidence in the national economy. That confidence is tempered by a conservative risk policy, which in H1 contributed to a higher level of provisions but a reduction of 20 bps in our nonperforming loan (NPL) ratio,” said Ahmed Abdelaal, Group CEO, Mashreq Bank.
Asset quality
Total provision for loans and advances reached Dh5.3 billion and coverage ratio stood at 117 per cent as on June 30, 2021, up from 104.3 per cent in March 2021.
Impairment allowance in the first half of 2021 stands at Dh1.5 billion compared to Dh978 million for 1H 2020, reflecting conservative provisioning policy.
Non-performing loans to gross loans ratio was at 4.7 per cent as of end of June 2021, down from 4.9 per cent at the end of last quarter.
Liquidity and capital adequacy
Liquid assets ratio stood at 31.8 per cent with cash and due from banks at Dh50.1 billion as on June 30, 2021. Capital adequacy ratio and Tier 1 capital ratio stood at 14 per cent and 12.8 per cent respectively.
“Our focused strategy and advanced digital transformation program served Mashreq well throughout the first half of 2021. These fundamentals have ensured that the bank’s financial strength remains robust throughout the period, as evidenced by our capital adequacy ratio of 14 per cent, Tier 1 ratio of 12.8 per cent and a liquid-to-total-assets ratio of 31.8 per cent,” Abdelaal.
