Second biggest lender in Dubai says performance helped by big drop in provisions
Mashreq, Dubai's second-biggest lender by market value, posted an increase of 11.7 percent in second-quarter net profit, helped by a significant drop in provisions.
Mashreq made a second-quarter net profit AED320m ($87.1m), Reuters calculated, based on previous statements from Mashreq, compared to a profit of AED286.3m in the prior-year period.
The bank reported a net profit of AED591m for the six months to June 30 in a statement on Sunday, up 7.1 percent from the corresponding period in 2011.
A 45 percent drop in provisions was the main reason for the profit increase. Impairments at the end of June stood at AED352m, compared with AED637m in the same period a year ago.
"The second quarter has seen a marked progress in performance. Revenue and net interest income both recorded an improvement over the first quarter, reflecting the increasing level of confidence in the UAE and regional economies," said Abdul Aziz al-Ghurair, chief executive of Mashreq.
Revenue increased 2.2 percent quarter-on-quarter, while net interest income rose 6.4 percent compared to the first quarter.
Total assets at the bank dropped 3.5 percent between the beginning of the year and June 30, the statement said, and deposits fell 3.8 percent in the same period - which the bank attributed to the shedding of high-cost deposits.
Loans and advances increased 5.1 percent during the first half of the year to AED39.6bn, the statement said. This compared with a 0.3 percent increase across the entire banking sector in the UAE up to May, the latest figures from the country's central bank.
In June, al-Ghurair urged the central bank to sharply cut some of its reserve requirements to spur corporate lending, according to an Arabic-language newspaper.
Al-Ghurair was appointed in April as chairman of the board of Dubai International Financial Centre Authority (DIFCA), the governing body of the emirate's offshore financial district.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.