190313 mashreq
A view of the Mashreq Bank branch in Dubai Internet City. The bank posted a net profit of Dh450 million for the first quarter. Image Credit: Gulf News Archive

Dubai: Mashreq has become the first of the UAE's leading banks to report Q1-2020 financial results, posting a net profit of Dh450 million, down 28.3 per cent year-on=year.

Bank’s operating income for the first quarter stood at Dh1.5 billion, a slight decline compared to last year. Mashreq’s non-interest income to operating income ratio increased to 48.7 per cent in Q1-2020 compared to 40.4 per cent in the first three months of last year.

The bank reported significant growth in investment income - of Dh127 million - compared to Dh48 million same period last year.

Ahmed Abdelaal, Group CEO

“These are difficult times for the whole world and despite a tough operating environment, Mashreq continued its positive growth trajectory in Q1-2020. We achieved a respectable Dh450 million in net profit for the first quarter despite strong headwinds like steep decline in interest rates and impact of the COVID-19 crisis,” said Ahmed Abdelaal, Group CEO.

Assets and asset quality

Mashreq’s total assets grew 2 per cent to Dh162.6 billion while loans and advances increased by 2.8 per cent to Dh78.3 billion as compared to December 2019. In the first quarter of this year, customer deposits declined 2.7 per cent to Dh88.5 billion, while loan-to-deposit ratio remained strong at 88.5 per cent.

Non-performing loans (NPLs) to gross loans ratio increased to 4.4 per cent by March end vs 3.6 per cent in December 2019. Total provisions for loans and advances reached Dh4.3 billion, constituting 101.4 per cent coverage for NPLs.

Liquidity and capital adequacy

Mashreq’s liquid assets ratio stood at 31.8 per cent at the close of the first quarter with cash and due from banks at Dh46.2 billion. Capital adequacy ratio and Tier 1 capital ratio continue to be higher than the regulatory limit - at 15.9 per cent and 14.8 per cent respectively.

“Given the unprecedented situation we are facing, we invoked several management actions during the quarter, aimed at ensuring the safety and security of all our stakeholders as well as supporting their financial well-being. As a result, today, 97 per cent of our workforce operate from home and continue to provide uninterrupted service to our customers, which is testament to our robust business continuity planning measures,” said Abdelaal.