Mashreq tastes loss after more than a decade

Q3 loss at AED183mn; 9M profit falls 80 pc to AED352 mn

DUBAI/November 10-2020: Mashreq bank, the leading Dubai-headquartered private sector bank, has reported a loss of AED183.11 million for the quarter ending September 30, 2020 as against a profit of AED535.75 million for the same period last year.

This is the first quarterly loss in more than a decade since the bank reported AED119 million loss for the fourth quarter ending December 31, 2009, when the economy was yet to see off the global recession that gripped the world in 2008.

For the nine months ending September 30, 2020, Mashreq bank posted 80 per cent decline in profit to AED352.02 million compared with AED1.76 billion the bank logged for the same period last year.

Large impairment allowance

In fact, the allowances for impairment dwarfed whatever income the bank generated as the former surged almost three-fold from AED223.05 million to AED664.53 million for the three-month period, pushing the bank into loss, which is a rare phenomenon to have witnessed by any major bank in the UAE.

For nine months, the impairment allowances soared from AED704.77 million to AED1.64 billion – an increase of 133.13 per cent compared with the same period in the earlier year, pushing the profit down by 80 per cent for the said period.

Total assets

The total assets of the bank grew to AED169.72 billion from AED159.43 billion during the nine-month period ending September 30, whereas the loans dropped from AED76.17 billion to AED73.94 billion.

At the Annual General Meeting (AGM) of the shareholders held on March 9, 2020, the shareholders had approved a cash dividend of 40 per cent for the year ended December 31, amounting to AED 710 million.

Operating income for 9M 2020 declined by 12.3 per cent to AED4 billion on the back of tough operating environment and decline in interest rates.

Digital push

AbdulAziz Al Ghurair (seen in the picture), chairman of Mashreq, said the bank will continue to look at capitalising on opportunities in the digital and technology space, with the ultimate aim of serving its customers better.

Ahmed Abdelaal, Group CEO, Mashreq Bank, said the bank’s emphasis this year has been on guiding the bank through an exceptionally difficult period by focusing unwaveringly on its customers – businesses, individuals, and SMEs.

“Despite proactively managing the bank’s liquidity position and capital adequacy ratio (CAR), the continued market volatility and uncertain economic climate has led to a 12 per cent reduction in our operating income, which is primarily due to the prevailing environment of low interest rates,” Abdelaal said.

 

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