Mashreq, the Dubai lender controlled by the Al Ghurair family, reported a 50 per cent drop in its second-quarter profit as impairment allowances climbed amid the coronavirus pandemic.
Net profit attributable to owners of the parent for the three months ended June 30 declined to Dh42.3 million ($11.51m), the lender said in a statement to the Dubai Financial Market, where its shares trade, on Wednesday. Impairment allowances climbed 38 per cent year-on-year to Dh785m, while total interest income and income from Islamic financing and investment products slid 12 per cent to Dh1.1 billion.
“As regional and global markets adjust to the dynamics of a partially vaccinated world population and a fast-evolving virus, the near- to midterm outlook remains uncertain,” AbdulAziz Al Ghurair, chairman of Mashreq, said in a statement.
“The extension of Tess [The Central Bank of the UAE’s Targeted Economic Support Scheme] to June 2022 reflects this reality. However, we remain cautiously optimistic that with the continued support of the UAE national government, a continued economic recovery and Mashreq’s ongoing digital transformation, the future looks promising.”
The UAE introduced economic support measures worth Dh388bn after the Covid-19 pandemic tipped the global economy into the worst depression since the 1930s. As part of its support measures, the Central Bank of the UAE introduced Tess as a Dh50bn support scheme to boost liquidity into the financial and banking sector.
The programme, which offered zero-cost collateral funding to banks to encourage lending to the broader economy, has been extended to the end of June 2022 to further support the economy.
Mashreq’s total assets grew 9 per cent to Dh172.7bn on June 30, from Dh158.5bn by the end of last year, the lender said. Customer deposits rose 6 per cent to Dh80.7bn.
Net profit for the half-year period slid 84 per cent annually to Dh85m as impairment allowances climbed 53 per cent to Dh1.49bn, the lender said.
The UAE economy is expected to grow 2.4 per cent this year, as the country gradually recovers from pandemic-induced headwinds, the Central Bank of the UAE said last month.