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Mon 30 Apr 2007 02:38 PM

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Dubai's Mashreqbank Q1 profit rises

Net income in the three months to March 31 rose 30% to $121.2m.

Mashreqbank, Dubai's second-worst performing banking stock, posted on Monday its second rise in quarterly profit in a year, helped by more lending and commission revenue.

Net income in the three months to March 31 rose 30% to 445.08 million dirhams ($121.2 million), or 3.95 dirhams per share, compared with 342.2 million dirhams, or 3.04 dirhams per share, in the year-earlier period, the bank said in a statement.

Net interest income climbed 39% to 331.5 million dirhams, and net commission income rose 61% to 120.84 million dirhams due to a rise in trade finance activities, the bank said.

"This is definitely on the back of more lending opportunities in the UAE," said Mihir Marafatia, a financial analyst at Kuwait-based Global Investment House, which had forecast profit at 382.67 million dirhams.

The results were at the upper-end of a range of analyst forecasts in a Reuters survey last month. They said earnings would range between 382.67 million dirhams, an increase of 11.83%, and 455 million dirhams, a rise of 32.96%.

In a statement, Chief Executive Abdul Aziz al-Ghurair said growth could be linked to "the UAE's robust economy". The UAE economy may grow 6.2% this year, 1 percentage point more than the Gulf Arab average, according to HSBC Holdings Plc.

The bank said loans grew 8% to 29.77 billion dirhams in the quarter and customer deposits rose 14% to 36.7 billion dirhams.

RECOVERY

Last year, Mashreqbank profit fell in two quarters, including the fourth, when a crash in Gulf Arab stock markets eroded income from investments.

Dubai's stock market plunged 44.4% in 2006. Oman and Bahrain were the only two to rise.

The bank said expenses rose 47% as it boosted investments in human resources, infrastructure and technology. Assets rose 21% to 61.7 billion dirhams.

Shares of family-controlled Mashreqbank are down 6.35% this year, the second-worst performance after Emirates Bank International, according to Reuters data. The stock, of which 13% is traded on the exchange, was unchanged at 0829 GMT.

Mashreqbank could spend as much as $1 billion buying a bank in India or Pakistan, its chief executive officer said in January. The bank opened in Bahrain this month, it said.

The bank also set up an Islamic finance unit, Badr Al Islami, last year.

Income from Islamic financing and investment products generated new income of 6.87 million in the quarter, the bank said.

Net income after minority interest rose 26.7% to 480.04 million dirhams, the bank said.

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