Mashreq, the Dubai lender controlled by the Al Ghurair family, reported a 14-fold jump in its first-quarter profit as impairment allowances dropped amid the UAE’s economic recovery.
Net profit attributable to owners for three months to the end of March surged to Dh606 million ($165m), the lender said in a statement on Wednesday to the Dubai Financial Market, where its shares are traded.
Impairment allowances during the period slid 64.5 per cent to Dh252m ($68.7m), while net interest income and income from Islamic financing rose 19 per cent to Dh829m.
“Mashreq has delivered a strong start to the new year, with first-quarter 2022 showing robust year-on-year growth across key metrics, significant risk cost reductions and increased operating income,” Mashreq chairman AbdulAziz Al Ghurair said.
“The bank’s digital and operational strategies were also fundamental to our improved performance in the first quarter, with the launch of new services and platforms that reflect Mashreq’s expertise in shaping the future of payments across the region and its commitment to unleashing the enormous benefits of the digital economy.”
Established in 1967, Mashreq, like its peers in the Middle East, is pivoting towards digital banking and is reducing the number of physical branches to cater to a young, tech-savvy demographic that typically opts to complete its transactions online.
The UAE has recovered from the effects of the pandemic on the back of surging oil prices and a bounce-back in its tourism and travel sectors as Covid-19 restrictions ease globally. The Arab world’s second-largest economy introduced fiscal and monetary stimulus worth Dh388 billion that has supported the economic rebound.
The stimulus includes the Dh50bn Targeted Economic Support Scheme (Tess) launched by the Central Bank of the UAE to boost liquidity in the banking and financial sector, parts of which have been extended to mid-2022.
The Emirates' gross domestic product is expected to grow 5.7 per cent in 2022, up from 3.8 per cent in 2021, helped by an increase in oil production, Emirates NBD says. Japan's largest lender MUFG projects the UAE's economy to grow 4.9 per cent this year, while Abu Dhabi Commercial Bank estimates a 5.4 per cent expansion.
Mashreq’s total assets grew 12.5 per cent annually to Dh182.5bn, while loans and advances rose 14 per cent to Dh86.3bn. Customer deposits during the period climbed 15.5 per cent to Dh104.2bn.
Mashreq is also investing in the FinTech sector. The lender this year acquired a stake in banking-as-a-service provider NymCard as cashless transactions increased during the pandemic. The bank is investing in NymCard through its venture fund that was created to support the growth of the FinTech ecosystem in the UAE, Mashreq said in February.
