Mashreq posts 4% profit growth, sees assets fall by $735m

BANKING RESILIENCE: Dubai's Mashreq posts profits but has to increase charge for non-performing loans in view of global crisis. (ITP Images)

Dubai’s Mashreq bank have posted a four percent growth in profts fpr the first quarter of 2009, conapred with the same period in 2008, a statement reported on Sunday.

Net profit for the period up until March 31 hit AED484m against AED465m for Q1 last year.

However, the banks total assets fell around AED2.7bn ($735m) from AED93.3bn at the end of 2008, to AED90.66bn as a result of the financial crisis, the satetement said.

Customer deposits increased by six percent over last year-end, while customer advances declined by two percent, resulting in improvements in the banks deposit to loan ratio.

This has been reduced to 98.8 percent compared with the 106.9 percent figure seen at the end of 2008.

"The UAE banking sector remains resilient in the face of the international financial crises. Positive financial results, in addition to ongoing development of alliances both locally and regionally, reflect Mashreq's strength and soundness to maintain operations and accessible services even when the economic tide turns,” said the banks CEO Abdul Aziz Al Ghurair.

“Our main focus now is on our basic banking operation and further cementing our relationship with our clients and partners," he added.

However, the bank has seen its operating costs increase by 16.4 percent because of a need to increase its loan loss reserves in the face of on-going uncertain in the world economy.

In Q1 2009 the costs were AED1.22bn compared with against AED1.05bn for the same period last year, of which AED232m more has been set aside in loan loss reserves.

The bank has a general provision for performing advances of AED1.28bn, providing 264 percent coverage to non-performing portfolios, the statement added.

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