Mashreq posts a 5% y–o–y growth in Net Profit in the first nine months of 2018
Mashreq, one of the leading financial institutions in the UAE, today has reported its financial results for the first nine months ending 30th September 2018.
Key highlights [9M 2018 vs 9M 2017]:
- Steady growth in Net Profit
o Operating Income is up by 3.6% and stands at AED 4.6 billion
o Net profit for the first nine months stood at AED 1.7 billion – a 5.0% increase YoY
o Impairment Allowance down by 8.6% YoY
- Consistently high proportion of non-interest income
o Mashreq’s best-in-class non-interest income to operating income ratio remained high at 39.2%
o Insurance, FX & Other Income up by 47.6% year-on-year
- Strong balance sheet growth
o Total Assets increased by 9.8% in the year to AED 137.4 billion whereas Loans and Advances increased by 10.6% to AED 69.3 billion as compared to December 2017
o Customer Deposits increased 8.1% YTD and are at AED 82.2 billion
o Loan-to-Deposit ratio remained robust at 84.3% at the end of September 2018
- Healthy liquidity and capital position
o Liquid Assets to Total Assets stood at 30.6% with Cash and Due from Banks at AED 39.1 billion
o Capital adequacy ratio and Tier 1 capital ratio continue to be significantly higher than the regulatory limit and stood at 16.9% and 15.8% respectively
- Sustained asset quality
o Non-Performing Loans to Gross Loans ratio remained stable at 2.9% at the end of September 2018
o Total Provisions for Loans and advances reached AED 4.3 billion, constituting 183.4% coverage for Non-Performing Loans
H.E. Abdul Aziz Al Ghurair, Mashreq CEO said: “With a firm focus on fostering innovation in each aspect of our business, Mashreq’s third quarter results are testament to the continuing success of our transformation. We achieved solid growth in our balance sheet with a deposit growth of 8.1% year-to-date, well above market norms. This was complemented by our strong liquidity position with high liquid assets to total assets ratio of 28.4%.”
“As one of the most innovative bank in the region, we remain committed to investing in state-of-the-art technology including robotics, artificial intelligence and machine learning, ensuring our customers benefit from a modern, simplified and intuitive banking experience. We have already accomplished several major milestones in transforming both our front and back-end processes, and will continue to showcase our agility and our thirst for disruption in our goal to be the region’s preferred banking partner.” added Al Ghurair.
- Total operating income for 9M 2018 was AED 4.6 billion, a year-on-year increase of 3.6% compared to 9M 2017 operating income of AED 4.4 billion. Insurance, FX and other Income contributed to AED 230 Mn of the increase; revenue from Net Interest Income and Income from Islamic Financing also saw an increase of AED 120 Mn.
- Net Interest Income and income from Islamic Financing increased by 4.5% YoY and stands at AED 2.8 billion. On a quarterly basis, it remained stable at AED 0.9 billion in 3Q 2018. 9M 2018 Net Interest Margin has decreased slightly by 10 bps compared to 9M 2017.
- Total non-interest income increased by 2.2% – the decline in fee, commission and Investment income was compensated by a 47.6% increase in FX, Insurance and other income. Net fee and commission income represented 58.9% of total non-interest income in 9M 2018 as compared to 66.7% in 9M 2017.
- Operating expenses for 9M 2018 increased by 10.9% year-on-year to reach AED 1.9 billion; Efficiency Ratio at 42.4% in 9M 2018 increased with respect to the previous year (39.6% as of 9M 2017) on the back of increased investment in technology and branch transformation project.
- Net profit for the 9M 2018 increased by 5.0% to AED 1.7 billion from AED 1.6 billion in 9M 2017 (AED 587 million in 3Q 2018 vs AED 563 million in 2Q 2018).
Assets and Asset quality
- Mashreq’s Total Assets increased by 9.8% to reach AED 137.4 billion in 9M 2018, compared to AED 125.2 billion at the end of 2017. Loans and Advances increased by 10.6% YTD to end at AED 69.4 billion driven by 7.7% growth in conventional finance. Liquidity continues to remain healthy with a high liquid asset to total assets ratio of 28.4%.
- Non-Performing Loans stood at AED 2.6 billion in September 2018 leading to a Non-Performing Loans to Gross Loans ratio of 2.9% at the end of September 2018 (2.9% in December 2017). Net Allowances for impairment for 9M 2018 was AED 838 million compared to AED 916 million in 9M 2017. Total Provisions for Loans and advances reached AED 4.3 billion, constituting 183.4% coverage for Non-Performing Loans as of September 2018.
Capital and Liquidity
- Total Customer Deposits increased by 8.1% YTD to AED 82.2 billion due to an increase in both conventional deposits (6.5% YTD) & Islamic Deposits (24.6% YTD). Loan-to-Deposit ratio stood at 84.3% in September 2018 vs 82.5% in December 2017.
- Mashreq’s Capital adequacy ratio as per Basel III stood at 16.9% as of September 2018 (against regulatory minimum of 12.375% for 2018 including Capital conservation buffer) compared to 17.2% as of 31 December 2017. Tier 1 capital ratio at 15.8% (16.2% as of 31 December 2017) continues to be significantly higher than the 8.5% regulatory minimum stipulated by the UAE Central Bank.