Mashreq's Q3 net profit falls by 42%

Mashreqbank, Dubai's second-largest lender by market value, made a third-quarter profit of AED201 million ($54.72m), a 42 percent drop from a year earlier, after booking hefty provisions.

The lender posted a 26 percent year-on-year decline in the nine months to Sept. 30 to AED1.12 billion without giving quarterly figues which Reuters calculated based on previous statements.

The bank booked provisions of 849 million dirhams in the third quarter as a cushion against bad loans, more than four times its net earnings for the period.

Provisions at the end of the nine months to Sept. 30 stood at 1.4 billion dirhams, the lender said in a statement on Thursday.

The bank has said it has $400 million exposure to heavily indebted Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi & Bros.

"Whilst net profits are below those recorded for the equivalent period last year, this is largely due to our ongoing policy of prudent financial management which has seen us increase our provisions for loans, advances and other financial assets," chief executive Abdul-Aziz al-Ghurair said in the statement.

Earlier this month, the lender filed a case in the United Arab Emirates to claim $398 million owed by AHAB.

The lender said its Tier 1 ratio, or core capital, stood at 15 percent at June 30, comfortably above the central bank requirement of 11 percent. (Reuters)

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