Mashreq, the Dubai lender controlled by the Al Ghurair family, reported a more than six-fold jump in its third-quarter net profit driven by organic growth across all business activities.
The bank’s net profit attributable to owners for three months to the end of September surged to more than Dh1.1 billion ($321.5 million) from Dh180m in the prior year period, the lender said in a statement on Tuesday to the Dubai Financial Market, where its shares are traded.
“With the rapid adoption of our innovative digital services by our customers in the UAE and beyond, these figures are a true testament to the hard work, commitment and dedication of the entire team at Mashreq,” said AbdulAziz Al Ghurair, chairman of Mashreq.
“Our recent launch of the new brand identity ‘Rise Every Day’ reflects our new direction that aims at building deeper and more personalised connections with our customers and partners."
The bank’s net profit for the first nine months of the year surged to nearly Dh2.6bn from Dh265m during the same period last year. Total revenue for the January-September period jumped 24.3 per cent to Dh5.3bn.
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 transactions online.
In June, Mashreq launched a digital bank, called Neo NXT, for which parents of Generation Z aged between 12 and 18 can open an account on their behalf.
Last month, it launched its new brand identity as part of efforts to realign its offerings as a digital-first financial institution.
Mashreq’s net interest income rose 56.7 per cent to more than Dh1.2bn, in the third quarter while its operating income increased 42.9 per cent over the previous year period to Dh2bn mainly due to increased net interest income, the bank said.
The bank’s customer deposits increased 7.8 per cent year-to-date to reach Dh109.4bn, while the liquid assets ratio stood at 29.5 per cent as of September compared with 29 per cent in December last year.
The bank said its total loans and advances increased by 12.1 per cent year to date to Dh91.3bn.
Higher interest rates and a broad-based recovery of the UAE’s economy from the Covid-19 pandemic-induced slowdown are expected to boost the profitability of the UAE lenders, Egyptian investment bank EFG Hermes said in a recent report.
The expected 300-basis points (bps) rise in US interest rates will drive up the net interest income of lenders, the bank said in a report on the UAE banking sector.
A 25 bps rate increase translates into a net interest margin expansion of about 5 bps and earnings per share growth of 3 per cent for lenders.
“The latest positive results were achieved largely by a 24.3 per cent increase in operating income over the same period last year to reach Dh5.3bn [January-September period] driven by robust results from both our domestic and international operations,” said Ahmed Abdelaal, group chief executive of Mashreq.
“Despite the financial headwinds enveloping the world, the bank remains on point to build on the robust results achieved so far in 2022."