Monday 29, January 2018 by Robin Amlôt

Mashreq posts a 6.5 per cent y–o–y growth in net profit for 2017

UAE-based Mashreq reports net profit for YE 2017 at AED 2.1 billion - a 6.5 per cent increase YoY. The bank said operating expenses were down by almost two per cent and the impairment allowance was down by 14.2 per cent YoY.

Mashreq’s CEO, Abdul Aziz Al Ghurair commented, “We are pleased to report the financial results for Mashreq Bank in 2017. Despite global economic uncertainty and the slight slowdown in the GCC region, we saw steady growth across all divisions of the bank.

“2017 was a milestone year for Mashreq Bank. In addition to consistently reporting strong financial results and continuing to grow our business, we also celebrated our 50 Year Anniversary in the UAE. 2017 also saw the official launch of Mashreq Neo, our full-service digital bank and the first digital bank in the region. We will continue to focus on providing innovative products and services and strengthening our digital capabilities to meet the evolving demands of our customers and maintain our leadership position in the market. Innovation has been at the heart of the Bank for the past 50 years and this will continue well into the future.

“Moving forward, we will also continue to support the ongoing economic agenda of the UAE. While there may be challenges ahead, I am confident that we are well-positioned to capitalize on the improving economic backdrop in the UAE. I look forward to seizing these opportunities and continuing this momentum into 2018.”

Total operating income for FY 2017 was AED 6.0 billion, down by 2.5 per cent compared to FY 2016 due to a fall in non-interest income.

Net Interest Income and income from Islamic Financing remained stable at AED 3.6 billion compared to FY 2016. Net Interest Margin for 4Q 2017 has decreased marginally to 3.47 per cent compared to 3.49 per cent for 3Q 2017. Full year NIMs saw a slight decline from 3.52 per cent in FY 2016 to 3.41 per cent in FY 2017.

Though Investment income increased by 84.9 per cent, total non-interest income fell by 6.3 per cent as Net fee and commission decreased by 7.5 per cent YoY to reach AED 1.6 billion. Net fee and commission income represented 63.9 per cent of total non-interest income in FY 2017 as compared to 64.8 per cent in FY 2016.

Operating expenses decreased by 1.9 per cent YoY to reach AED 2.4 billion; Efficiency Ratio at 39.2 per cent in FY 2017 remained broadly stable with respect to the previous year (39.0 per cent as of FY 2016).

Mashreq’s Total Assets increased by 1.9 per cent to AED 125.2 billion as of December 2017, compared to AED 122.8 billion at the end of 2016. Loans and Advances increased by 2.9 per cent YTD to end at AED 62.7 billion driven by 23.5 per cent growth in Islamic finance. Liquidity continues to remain healthy with a high liquid asset to total assets ratio of 29.6 per cent.

Total Customer Deposits decreased marginally by 1.3 per cent YTD to AED 76.1 billion due to a decline in both Islamic and conventional deposits. Loan-to-Deposit ratio stood at 82.5 per cent in December 2017 vs 79.2 per cent in December 2016.

Non-Performing Loans stood at AED 2.2 billion in December 2017 leading to a Non-Performing Loans to Gross Loans ratio of 2.9 per cent at the end of December 2017 (3.1 per cent in December 2016). Net Allowances for impairment for FY 2017 were AED 1.5 billion compared to AED 1.7 billion in FY 2016, a 14.2 per cent YoY decrease. Total Provisions for Loans and advances reached AED 3.2 billion, constituting 149.7 per cent coverage for Non-Performing Loans as of December 2017.

Mashreq’s Capital adequacy ratio stood at 18.3 per cent (regulatory minimum of 12 per cent) as of 31 December 2017, compared to 16.9 per cent as of 31 December 2016. Tier 1 capital ratio at 17.4 per cent continues to be significantly higher than the 8 per cent regulatory minimum stipulated by the UAE Central Bank (16.0 per cent as at 31 December 2016).

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