Mashreq, a leading bank in the UAE, has posted a net profit of AED1.6 billion ($436 million) in the first quarter (Q1) of 2023 on the back of a 96% increase in operating profits while its total assets zoomed to AED200 billion.
The bank’s operating profit at AED1.8 billion ($490.2 million) represents a 96% increase compared to Q1 2022 driven by healthy operating income growth in the UAE and across other countries. The bank showed improved efficiency and its cost to income ratio stands at 30.2% in Q1 2023 compared to 40.3% in Q1 2022.
Mashreq’s non-interest income to operating income ratio continues to remain one of the industry’s best at 30.7%. Credit cost decreased by 58% year on year. This coupled with a solid operating income growth allowed Mashreq to post a strong net profit.
Loans and advances
Total loans and advances increased by 5.6% year-on-year and stands at AED91.1 billion, loan-to-deposit ratio was at 75.8% at the end of March 2023 (79.4% in December 2022).
Non-Performing Loans to Gross Loans ratio declined to 1.9% as of end of March 2023 (2.2% as of December 2022).
The bank saw a growth of 5.6% YTD in Customer deposits to reach AED120.2 billion, liquid assets ratio stood at 35.6% as of March 2023 (33.5% in 2022). Capitalisation levels have improved significantly with the capital adequacy ratio at 17.4% and Tier 1 Capital ratio at 15.1% as of March 2023.
Impairment allowance reduced significantly to AED96 million in Q1 2023 on the back of improved asset quality and represents only 0.1% of net loans, while the total provision for loans and advances reached AED4.9 billion and coverage ratio improved to 231.3 % as on March 31.
Enhanced efficiencies
Abdul Aziz Al Ghurair, Chairman of Mashreq, said: “Owing to robust growth in operating income, enhanced efficiencies, and improved risk position, Mashreq concluded the first quarter of 2023 with outstanding financial results, demonstrating nearly double year-on-year operating profits and crossing the AED200 billion in total assets milestone.
“As a challenger bank, Mashreq actively participated in the UAE’s innovation ecosystem during Q1, becoming a founding member of the DIFC’s venture-building programme, Launchpad. The Bank’s performance was further supported by the introduction of numerous platforms and digital journeys, both domestically and internationally, across retail, business, and corporate and investment banking.
“The effectiveness of Mashreq’s digital strategy is evident through the substantial increase in customer deposits, improved cost-to-income ratio, and remarkable net profit growth. These achievements have been driven by various factors, such as enhanced asset quality, a decrease in non-performing loans, and a favorable non-interest income to operating income ratio.”
Product expansion
Moreover, the progress made in product expansion and geographic reach during Q1 marks a crucial milestone for the bank, with the approval of a digital licence in Pakistan and considerable expansion in Egypt. Mashreq’s performance in these and other international markets led to numerous awards in Q1, not only in the UAE but also in Egypt, Kuwait, and Qatar, he said.
Mashreq places a strong emphasis on sustainability, especially as the UAE is set to host COP 28, further highlighting the nation’s commitment to environmental and social responsibility. In Q1, the bank made significant strides in its sustainability journey, obtaining third-party assurance for its Sustainability Report in line with international standards, Al Ghurair said.
“We foresee that through our proactive involvement in the innovation ecosystem, technology-driven customer personalisation, and an unwavering focus on efficiencies, Mashreq will persist in supporting the UAE economic growth across economic cycles and amidst global uncertainties throughout 2023.”
Adapting to changing conditions
Ahmed Abdelaal, Group Chief Executive Officer, said: “This is testament to our ability to adapt to changing market conditions and our unwavering commitment to delivering sustained value to our stakeholders. Our focus on healthy operating income growth and enhanced efficiency has resulted in an impressive operating profit growth of 96% compared to Q1 2022. We have maintained a strong liquidity and capital position showcasing our ability to create diversified income streams.
“We continue to achieve stable growth in our loan portfolio while maintaining a prudent approach to risk management as reflected in our reduced impairment allowance and declining non-performing loans to gross loans ratio.
“Looking ahead, we remain focused on developing and building experiences that positively impact our clients’ everyday lives, beyond just products and services.”-- TradeArabia News Service
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