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Dubai’s Mashreq Q3 net profit slumps 24.8 per cent on bad loans

* 24.8 per cent fall in third-quarter net profit, weighed by bad loans

* Bank made a net profit of AED414.95 million vs. AED551.44m in Q32015

* Impairments jumped by 82 per cent over the period to reach AED470m

 

Mashreq continued its earnings slump on Sunday as Dubai’s third-biggest lender by assets posted a 24.8 per cent fall in third-quarter net profit, weighed by putting aside more cash to cover for bad loans.

 

The lender made a net profit of AED414.95 million in the three months to Sept. 30, it said in a statement, a decrease on the AED551.44m recorded for the corresponding period of 2015.

 

Mashreq, which had reported falling profits in the preceding four quarters, suffered in the latest quarter as allowances for impairments jumped by 82 per cent over the period to reach AED470m.

 

Banks in the United Arab Emirates are facing a more difficult operating environment as the more-than-two-year collapse in oil prices feeds through into higher levels of soured loans and compressed net interest margins.

 

Net interest income from traditional banking operations rose 0.9 per cent on the same three months of last year to AED875m, while net fee and commission income sank to AED399m, down 2.3 percent year on year, the statement said.

 

For the first nine months of the year, the bank posted a net profit of AED1.49 billion, lower than the AED1.85bn it reported a year ago, according to the statement.

 

Loans and advances at the end of September were AED62.30bn, up 6.7 per cent on the same point of 2015, while deposits over the same period grew 3 per cent to AED75.28bn.

 

“I am pleased with the progress the bank has made in the context of the external market conditions in 2016. I had previously emphasized the need for us to adopt rigorous business practices to respond to the challenging market environment. This meant that we had to make conscious yet realistic choices on where to focus, in order to achieve sustainable long-term growth for the bank,” said AbdulAziz Al Ghurair, CEO of Mashreq.

 

“I am confident we are going to finish 2016 on a relatively strong note and will be well poised and ready to take advantage of the multiple growth opportunities in 2017,” added Al Ghurair.

(With inputs from Reuters)