Mashreq posts 9.4% growth in operating profit

Mashreq bank's operating income jumped to Dh32 billion, driven by strong growth in both interest and non-interest income. Its operating profit increased to Dh2 billion in the first half of the year.

Mashreq on Wednesday declared a 9.4 per cent growth in its operating profit while operating income increased by 5.1 per cent for the first half of the year compared to same period last year.
The Dubai-based bank said its net profit for the first six months of 2016 was stable at Dh539 million compared to Dh532 million in the same period in 2015.
The bank's operating income jumped to Dh32 billion, driven by strong growth in both interest and non-interest income. Its operating profit increased to Dh2 billion in the first half of the year.
Mashreq's CEO AbdulAziz Al Ghurair, said: "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 . we achieved a respectable year-on-year increase in operating income of 5.1 per cent for the first half 2016 along with a reduction in net operating expenses by 1.3 per cent, leading to a net profit of Dh1.1 billion."
Al Ghurair added: "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."
Net Interest Income, income from Islamic Financing and interest earned on marketable securities at Dh1.8 billion was up by 7 per cent compared to 1H 2015, driven by 5.7 per cent year-on-year increase in loan volume.
On a quarterly basis, it has increased by 3.6 per cent from Dh0.9 billion in Q1 2016. There has been a slight increase of 4 bps in net interest margin from 3.09 per cent in H1 2015 to 3.13 per cent in H1 2016 (3.21 per cent in 2Q 2016 vs 3.09 per cent in 1Q 2016).
Net fee and commission increased by 0.6 per cent year-on-year to reach Dh894 million. Net fee and commission income represented 65.4 per cent of total non-interest income in H1 2016 as compared to 66.7 per cent in H1 2015.
Mashreq's total assets decreased by 0.4 per cent to reach Dh114.7 billion in H1 2016, compared to Dh115.2 billion at the end of 2015. Loans and Advances increased by 2.6 per cent YTD to end at Dh61.8 billion. On a year-on-year basis, Loans and advances grew by 5.7 per cent driven by 46.8 per cent growth in Islamic finance. Liquidity continues to remain healthy with a high liquid asset to total assets ratio of 26.6 per cent. Loan-to-Total Assets Ratio at 53.9 per cent increased slightly as compared to 53.8 per cent at the end of March 2016 (52.2 per cent in December 2015).
Though conventional deposits increased by 3.2 per cent, customer deposits decreased slightly by 0.4 per cent YTD to Dh73.3 billion driven by a fall in Islamic deposits. Loan-to-Deposit ratio stood at 84.2 per cent vs 81.7 per cent in December 2015.
Non-Performing Loans stood at Dh2.6 billion in June 2016 leading to a Non-Performing Loans to Gross Loans ratio of 3.5 per cent at the end of June 2016 (2.8 per cent in December 2015). Net Allowances for impairment for H1 2016 were Dh838 million compared to Dh424 million in H1 2015. Total Provisions for Loans and advances reached Dh3.4 billion, constituting 134.1 per cent coverage for Non-Performing Loans as of June 2016.
- abdulbasit@khaleejtimes.com