Mashreq reports 6% increase in net profit for Q1 2011
27 April 2011
Dubai - UAE, 27 April 2011: Mashreq, one of the UAE’s leading national financial institutions reported a 6% increase in its net profit in Q1 2011 to AED 265.3 million compared to AED 250.8 million for the same period in 2010, on operating income of AED 1.1 billion.
In its first quarter results statement, Mashreq also announced that its total assets remained flat at AED 84.8 billion compared with 31st Dec. 2010. Percentage of Liquid assets to Total assets remained stable at 32% with Cash and due from banks at AED 27 billion. Total customer deposits including Islamic deposits during the 1st quarter of 2011 stands at AED 50.2 billion reporting a decrease of 2% as compared to AED 51.25 billion in 31st Dec. 2010.
Net interest income and income from Islamic products, net of distribution to depositors, decreased by 5.9% to AED 558 million compared to the same period in 2010. Net fee, commission and other income stood at AED 535 million, against AED 645 million for the same period last year. However, fee and other income to gross income ratio at 49% continues to be one of the best in its class.
The Provisions for loan losses declined by 33% reporting AED 325.3 million, demonstrating Mashreq’s continuous efforts on improving the asset quality. As part of Mashreq’s prudent financial management expenses are under control and well arranged, with general and administrative expenses reduced by 1.9% compared to the same period in 2010.
Commenting on the financial results, H.E. Abdul Aziz Al Ghurair, CEO of Mashreq - said, “Mashreq’s outlook remains positive as the region’s economy continues to witness steady growth. The results achieved highlight our strategy to continue operating prudently and profitably. We look forward to maintain a momentum in growth in the coming period across the bank’s division, whilst ensuring that our business objectives are met.”
Al Ghurair continued, “Our strategic plan for 2011 – 2013 is to continue to operate as a leading financial institution in the UAE and the region, keeping in mind the requirements of our customers and how can we evolve. We constantly look at adapting and changing our business model to meet various market conditions.”
Maintaining a cautious approach towards liquidity management, credit expansion and capital management, Mashreq strengthened its balance sheet with strong capital adequacy, high liquidity and low advances to deposits ratio. Mashreq’s capital adequacy ratio remained strong at 22.05% with its tier one ratio at 15.44%. The advances to deposit ratio continues to be a healthy at 80%.
Operational updates:
Lately, Standard & Poor’s revised its outlook on Mashreq to stable from negative. At the same time, affirmed the rating to 'BBB+/A-2' long and short-term counterparty credit ratings on the bank.
At a Retail level, during the first quarter 2011, Mashreq continued to strategically expand in the UAE, with the opening of its 54th branch, located in Umm Suqeim area, which includes a Mashreq Gold centre. The bank’s premiere banking service, Mashreq Gold expanded to Al Ain, with the objective to offer customers sophisticated banking services and products tailor-made for their financial requirements.
The bank continues to strengthen its online banking with the upgrade of its enhanced Online Banking System, which has additional security enabled. This upgraded system will equip customers with additional banking functionality, improved security measures and financial freedom. The launch of the enhanced platform is part of Mashreq’s commitment to provide customers with convenient, safe and secure online banking services.
On the international expanding side, earlier this year, Mashreq announced the opening of its representative offices in Nepal. Over the last few years, Mashreq has been offering a range of correspondent banking services to various banks in Nepal, which led to the opening of its offices.
From a corporate angle, Mashreq successfully led USD 403m syndicated facility for the engineering, construction and procurement works of the Borouge 3 expansion project, which was awarded to the Tecnimont S.p.A (Maire Tecnimont Group) – Samsung Engineering joint venture. Mashreq successfully led this deal as the Coordinator of this facility while First Gulf Bank acted as the Facility Agent and the Issuing Bank.
In addition, Mashreq along with partner banks; Doha Bank, Habib Bank Limited and United Bank Limited anchored and successfully closed a syndicated term loan for Sri Lanka’s largest bank, Bank of Ceylon (BOC). The USD 175 Million facility has a tenor of one year. Mashreq is the first UAE financial institution to arrange a syndicated loan facility for a Sri Lankan bank.
Mashreq also signed an agreement with Higher Colleges of Technology (HCT) to become one of the founding members of the HCT Foundation’s HCT 100 corporate group. With this agreement, Mashreq sponsors a Professor in Banking and provides HCT students with opportunities to develop skills and careers in the growing UAE banking sector.
In line with its Emiratisation strategy, Mashreq announced the recruitment of the second group of UAE Nationals from the Capital, Abu Dhabi. The group consists of aspiring UAE Nationals with strong academic performance from the Higher Colleges of Technology and Zayed University.
Awards:
The bank was awarded the ISO 9001:2008 Certification by the British Standards Institute (BSI) for its Operations Group in recognition of Mashreq’s efforts to implementing to international quality standards.
Mashreq’s funds recorded outstanding performance amidst tough market conditions by winning top three awards at the MENA Fund Manager 2011 Performance Awards organized by MENA Fund Manager Magazine. The ‘The Newcomer Fund of the year’ Award was given to Mashreq Al Islami income Fund, for having the highest risk adjusted returns. The Fixed Income Fund of the Year’ award was given to the Makaseb Income Fund. The UAE Asset Manager of the Year’ was given to Mashreq Capital.
Mashreq’s Makaseb Emirates Opportunities Fund (MEOF) won the prestigious Lipper Fund Award 2011 for the best equity fund over 3 years and 5 years under Equity, UAE category. The award highlights Mashreq’s capability to manage top-class funds efficiently and effectively.
In March 2011, Mashreq was recognized with two awards by the Banker Middle East Product Awards, the "Best Current Account" and the "Best Retail Banking Promotion" for the Etisalat Credit Card campaign.