Mashreq Q2 profit falls 86 pc to AED85 mn as impairment allowance soars

DUBAI: Mashreq, one of the oldest private sector financial institutions in the UAE, witnessed one of its lowest quarterly profits in its history when it closed the second quarter ending June 30, 2020 with a net profit of just AED85 million.

This represents 85.7 per cent decline compared with AED593 million the bank reported for the same period last year. Cumulatively, the bank closed the first half (H1) with a net profit of AED535 million – a decline of 56.2 per cent compared with AED1.222 billion the bank turned in for the first half of 2019.

The huge impairment allowances – AED570 million for Q2 and AED978 million for HI, thanks to the prolonged COVID period, have impacted the bottom line severely, pulling the profits for both the periods down markedly.

Mashreq could still boast an encouraging non-interest income to operating income ratio of 47.1 per cent as of June end.

Customer deposits at AED98.6 bn; CAR at 17 pc

While the customer deposits reached AED 98.6 billion, the capital adequacy ratio (CAE) and Tier 1 capital ratio stood at 17 per cent and 15.9 per cent respectively during the said period.

Pointing to the tough period the banking industry has been going through, the non-performing loans (NPLs) to gross loans ratio increased slightly from 4.4 per cent to 4.6 per cent as of end of June 2020.

Ahmed Abdelaal, Group CEO, Mashreq Bank, said that despite headwinds caused by unprecedented challenges, Mashreq remains resilient.

“Our robust approach to business continuity ensured our operations were unimpeded throughout the first half of the year and our customers were able to stay connected with uninterrupted access to all our services,” he added.

AbdulAziz Al Ghurair, Chairman of Mashreq, said that Covid-19 sent tremors of uncertainty across the global and regional economy, as lockdowns were imposed across most of the world during the first half.

“Despite this, Mashreq maintained adequate liquidity to meet our business needs, and ensure we were able to effectively serve our customers, clients and communities during this unprecedented situation, while prioritising the health and safety of our people,” Al Ghurair added.

 

 

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