Mashreq Bank, the Dubai lender controlled by the Al Ghurair family, reported a 90 per cent slide in its first-quarter profit but said it is "cautiously optimistic" about an economic recovery in the second half of this year.
Net profit for the three-month period ending March 31 declined to Dh43 million ($11.7m), the lender said in a statement on Thursday. Impairment allowances during the period climbed 74 per cent to Dh711m, while investment income slid 77.5 per cent to Dh29m.
Net interest income and income from Islamic financing also dropped 11 per cent to Dh698m.
“The bank has continued to follow a prudent risk policy, which is reflected in the level of provisions,” AbdulAziz Al Ghurair, chairman of Mashreq, said. “While we still expect the first half of the year to remain challenging, we continue to be cautiously optimistic about an economic recovery in the second half of the year.”
The UAE’s economy continues to recover from the coronavirus pandemic as government steps up its vaccination campaign to curb the spread of the pandemic.
The IHS Markit UAE PMI jumped to 52.6 in March from 50.6 in February, the sharpest uptick in 20 months and the fourth consecutive month of expansion fuelled by new business inflows and a sharp pick-up in the construction sector.
“Looking ahead, we remain focused on expanding the bank’s digital offering through enhancing our operating model and continuing to strategically invest in key technology platforms to offer a seamless experience to our customers,” Mr Al Ghurair said. “This will ensure that we continue to generate solid returns for our shareholders and remain ahead of the existential change impacting our industry.”
Total assets of the bank slid 0.2 per cent year-on-year to Dh162.2 billion, while customer deposits climbed 1.9 per cent to Dh90.2bn. Loans and advances dropped 3.2 per cent to Dh75.7bn.