Mashreq holds off from new acquisitions

MASHREQ MOVE: CEO Al-Ghurair says Mashreq is holding off from making new acquisitions until the global crisis calms. (ITP Images)

Mashreq, Dubai's largest bank by market value, said on Tuesday it would not seek acquisitions until the global financial turmoil calms but expected 2008 profits to grow by 12 percent.

Chief executive Abdul-Aziz Al-Ghurair told newswire Reuters in an interview that the bank was adjusting its plans in light of the financial crisis.

"Things have changed. We can't ignore the international financial crisis and, of course, we have to review our strategy and business plan," he said.

"We can no longer just continue to drive at 200km/h; there is some rain and we have to adjust our driving because it's rainy now," he added.

"We want to focus on our existing business... We are not looking at acquisitions today because there is none offered. If in six months the climate changes, we will keep our eyes open."

Asked for the full-year profit outlook, Al-Ghurair said: "Twelve percent growth, and yes, we will probably achieve it by year-end... 12 percent growth in profits."

He said the expected profit growth was fuelled by retail and corporate banking as the sector in the Arab world's second-largest economy remains robust.

"The UAE banking system is solid, resilient, and strong... it has done extremely well relative to other markets," he said.

Mashreq, however, posted a third-quarter profit of 346 million dirhams, down 12.5 percent from the same period of last year, due to a decline in investment income.

The lender plans to focus on smaller-size branches to cover a wider area in the UAE, reaching a total of 12 new branches by the end of 2009, Al-Ghurair said.

The bank also plans to have a total of 30 new branches in Egypt over the next three to four years from the current five branches, he said, adding the bank has submitted a request to open a branch in Algeria.

Buoyed by an oil- and real estate-powered economic boom, Gulf Arab banks have been expanding their branches at home and buying stakes into lenders abroad.

Mashreq failed, however, to capture a stake in Egypt's third-largest bank after the North African country cancelled the auction, rejecting a National bank of Greece offer valuing it at $2.025 billion.

"When it comes to the market [again], we will discuss it," Al-Ghurair said.

The bank's shares are up 13.96 percent this year to date. By contrast, Dubai's main index, on which it is not listed, is down almost 65 percent. (Reuters)

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