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Wed 28 Apr 2010 08:58 PM

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Dubai's Mashreq Q1 falls 48% on loans and provisions

Bank made $571.7m in provisions in 2009 and posted a loss in Q4 that year.

Dubai's Mashreq Q1 falls 48% on loans and provisions
PROFIT DROP: Dubai based Mashreq bank posted a 48% drop in Q1 net profit due to provisions against bad loans and lower customer deposits. (Getty Images)

Dubai based bank Mashreq on Wednesday posted a 48 percent drop in first quarter net profit, hurt by provisions against bad loans and lower customer deposits.

Mashreq is Dubai's second largest lender by market value. The bank made $571.7 million in provisions in 2009 and posted a loss for the fourth quarter of $32.6 million.

Mashreq's net profit fell to $68.33 million in the first three months of 2010 from $131.7 million in the year ago period. The bank set aside $131.7 million in provisions for impairments during the first quarter.

The UAE banking sector is heavily exposed to indebted state owned conglomerate Dubai World, with estimates of potential exposure ranging up to $15 billion, according to Moody's, the majority believed to be held by Dubai banks, including Mashreq.

Fitch Ratings downgraded Mashreq in March to reflect the lender's deteriorating asset quality from its "substantial exposures to the troubled Saudi groups which are now impaired," as well as defaults in the UAE retail banking sector.

Customer deposits declined to $12.9 billion, a 12 percent drop compared to the previous quarter.

Mashreq's shareholders in March approved plans to raise the size of the bank's euro medium term note programme to $5 billion from $2 billion, sparking speculation the lender could issue bonds in the near future. (Reuters)

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Saeid 9 years ago

Fall on 'loans and provisions' You might add horrible customer service to that also. It is very common for all ATMs in one location to be down. And a complaint to the branch manager will do no good.

Maanu 9 years ago

Now i know why I got a sms yesterday saying that even if I go to the branch to pay my creditcard bills i would be charged an amount between Dhs3-25...Keep it up one day you would be closing if you keep levying and find new ways of levying charges to your customers. Two cheers to Mashreq