Mashreqbank reports 13% profit fall for 2008

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PROFITS FALL: Mashreqbank has become the second in Dubai to post net profit losses for last year. (Getty Images)

Mashreq Bank Group, one of the UAE's leading financial institutions, has reported a 13.6 percent fall in net profit for last year to AED1.64 bn ($447bn), according to a press statement on Saturday.

Mashreqbank blamed the global economic downturn and a lack iof liquidity in the UAE banking sector as reasons for the profit decline.

The news comes just three days after another of Dubai's banks reported a fall in annual net profits, with Emirates NBD posting a seven percent drop.

Investment activity at Mashreqbank also fell from a profit of AED488m in 2007 to a loss of AED335m in 2008.

"The market conditions indicate that 2009 will be a challenging year for the UAE banking sector. While the liquidity crunch is expected to continue for most part of the year, we expect the banking sector to resume normal growth levels as the global economy stabilizes," said Abdul Aziz Al Ghurair, CEO of Mashreq.

"Liquidity and capital management will be our top priority. Soundness, not revenue growth, will be the key theme for Mashreq in 2009 as we invest to further fortify our foundation,” he added.

However, Mashreq's net interest income went up by 39 percent, fee and other income, excluding investment income, grew by 19 percent, the statement said.

The bank had no exposure to either Lehman Brother or Madoff, two high-profile casualties of the global economic downturn, it added.

Mashreq has made further provisions for the uncertain conditions ahead in 2009 by adding AED107m to general provisions, bringing the total to AED762m.

This is the equivalent of 1.36 percent of the performing loans and advances portfolio and continues to be the highest among UAE banks, Al Ghurair pointed out.

The bank had also taken a strong focus on the country’s Emiratisation policy, he added.

"As a leading UAE national bank we take our commitment to Emiratization very seriously. During the year, we again exceeded our target by hiring over 400 Nationals to take our UAE national percentage of the bank to 37 percent,” Al Ghurair said.

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