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Wed 29 Jul 2009 03:12 PM

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Mashreqbank posts 38% drop in Q2 profit

Dubai's largest lender by market value says net profit is $118.4m, down from 2008 figures.

Mashreqbank on Wednesday reported a 38 percent drop in quarterly net profit, citing increased provisions against bad loans.

Mashreqbank, the largest lender by market value in Dubai, said net profit fell to AED435m ($118.4m) from AED706.86m in the same period in 2008.

Mashreqbank booked provisions of AED319m in the quarter. Total provisions stood at AED551.4m in the first half of 2009, compared with AED200.3m in the same period last year, it said.

A slew of Gulf lenders have been forced to boost provisions as they face an economic downturn, and against their exposure to a pair of troubled Saudi firms.

The provisions "are key to ensuring that the bank operates in a sustainable manner while the ups and downs of the current crisis play out," chief executive Abdul Aziz Al Ghurair said.

Mashreqbank last week confirmed it was suing Ahmad Hamad Algosaibi & Bros, one of the two Saudi companies at the heart of a large financial dispute.

Mashreq's Tier 1 ratio - a measure of financial strength - now stands at 14.8 percent, a level it achieved following help from the government and by reducing risk-weighed assets. (Reuters)

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