Mashreq, the Dubai lender controlled by the Al Ghurair family, swung to a Dh1 billion ($278 million) net profit in 2021 from a Dh1.3bn loss the previous year as operating profit increased and impairments fell.
Impairment allowances during the period dropped about 39 per cent to Dh2.1bn, the bank said on Monday.
Its operating income in the 12-month period increased by 12.8 per cent on an annual basis to Dh5.8bn last year.
The jump was primarily due to the “increased net interest income and income from Islamic financing coupled with improvements in fees and commission”, Mashreq said.
Mashreq’s operating profit rose about 45 per cent annually to Dh3.2bn last year as a result of higher operating income and lower operating expenses, the lender said.
The combination of a steady return to growth across the national economy, and the successful application of the bank’s digital and operational strategies provided a strong platform for growth in 2021, Abdul Aziz Al Ghurair, chairman of Mashreq, said.
“We recorded significant improvements in operating income and net profits by year end, driven in part by robust growth across the loan portfolio and an improved credit environment characterised by reduced impairments and a slight reduction in our non-performing-to-gross loan ratio.”
Mashreq posted strong earnings as the UAE’s economy continues to recover from the coronavirus pandemic as the government steps up its vaccination campaign to curb its spread.
The bank’s customer deposits rose 15 per cent yearly, reaching Dh101.5bn by the end of last year. Its liquid assets ratio stood at 29 per cent with cash due from banks at Dh46.3bn as of December 31.
In the near term, Mashreq will maintain a “conservative risk appetite” and leverage its digital capabilities to ensure that all its customers receive “the very best services and solutions possible”, Mr Al Ghurair said.
“To achieve sustainable growth, our focus will remain on the delivery of an enhanced customer experience through existing growth platforms and continued investment in digitisation and transformation programmes,” he said.
The bank’s loan-to-deposit ratio remained stable at 80.3 per cent at the end of last quarter. Its total provision for loans and advances reached Dh6.7bn.
Growth in customer deposits also played an important role in the delivery of a healthier balance sheet in 2021, Ahmed Abdelaal, group chief executive of Mashreq, said.
“As we look ahead to 2022 and beyond, Mashreq Bank will leverage its investments in new digital solutions to deliver revenue growth, more enhanced customer journeys and geographic expansion across high-growth markets,” he said.