A Mashreq branch on Shaikh Zayed Road in Dubai. Loans and advances increased by 2.6per cent year to date to Dh61.8 billion. On a year-on-year basis, they grew by 5.7 per cent.Picture used for illustrative purposes only.
Operating profit defies surge in provisions to climb 9.4%.
Dubai: Mashreq on Wednesday reported a first-half net profit of Dh1.1 billion, compared to Dh1.3 billion in the same period last year. Net profit for the first half stood stable compared to the normalised net profit for the first half of 2015 adjusted for the impact of recoveries, the bank said in a statement.
For the second quarter of the year the bank’s net profit was Dh539 million, up 1.4 per cent quarter-on-quarter. Adjusting for impact of recoveries in the second quarter of 2015, the bank said its normalised net profit increased by 3.5 per cent.
“Mashreq’s prudent fiscal policies and continued commitment to its focus on placing its customers at the forefront of all decisions has enabled the bank to return a stable performance for the first half 2016,” said Mashreq’s CEO, AbdulAziz Al Ghurair.
Total operating income for the first half of 2016 was Dh3.2 billion, up 5.1 per cent, compared to Dh3 billion in the same period last year. Operating profit was up 9.4 per cent.
Net interest income, income from Islamic financing and interest earned on securities stood at Dh1.8 billion, up by 7 per cent compared to the first half of 2015.
Net fee and commissions increased by 0.6 per cent year-on-year to reach Dh894 million. Operating expenses decreased by 1.3 per cent year-on-year and by 0.5 per cent quarter-on-quarter to reach Dh1.2 billion.
Mashreq’s total assets decreased by 0.4 per cent to reach Dh114.7 billion in at the close of the first half of this year compared to Dh115.2 billion at the end of 2015. Loans and advances increased by 2.6 per cent year to date to Dh61.8 billion. On a year-on-year basis, they grew by 5.7 per cent — driven by a 46.8 per cent growth in Islamic finance.
Liquidity remains healthy with a high liquid asset-to-total assets ratio of 26.6 per cent. The loan-to-total assets ratio stood at 53.9 per cent, having increased slightly when compared to the 53.8 per cent seen at the end of March 2016. Though conventional deposits increased by 3.2 per cent, customer deposits decreased slightly by 0.4 per cent in the year to date, to Dh73.3 billion driven by a fall in Islamic deposits.
The loan-to-deposit ratio stood at 84.2 per cent, compared to 81.7 per cent in December 2015.
Non-performing Loans (NPLs) stood at Dh2.6 billion in June 2016, leading to a NPL-to-gross loans ratio of 3.5 per cent at the end of June 2016.
Net allowances for impairment for the first half of 2016 were up 97.7 per cent to Dh838 million, compared to Dh424 million in the same period last year.
Total provisions for loans and advances reached Dh3.4 billion, constituting 134.1 per cent coverage for NPLs as of June 2016.
“We remain cautiously optimistic for the remainder of 2016 and we are conscious of the challenges we may face. Our focus remains on keeping a strong hand on expenses while allowing flexibility to take advantage of opportunities that present themselves over the remainder of the year and into 2017,” Al Ghurair said.
Mashreq’s capital adequacy ratio stood at 16.8 per cent while its Tier-1 capital ratio stood at 15.8 per cent at the close of the first half of this year.
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