Mashreq Bank, the Dubai lender controlled by the Al Ghurair family, reported a 56 per cent drop in its first-half profit as impairments rose and operating income fell on the back of a “tough operating environment” due to coronavirus pandemic.
Net profit for the six months ending June 30 declined to Dh535 million, the lender said in a statement to Dubai Financial Market, where its shares trade. Impairments more than doubled to Dh978m, while total operating income slid 8 per cent to Dh2.8 billion.
“During the first half of the year, Covid-19 sent tremors of uncertainty across the global and regional economy, as lockdowns were imposed across most of the world," AbdulAziz Al Ghurair, chairman of Mashreq, said. "Despite this, Mashreq maintained adequate liquidity to meet our business needs, and ensure we were able to effectively serve our customers."
Customer deposits rose 8.3 per cent during the six-month period to Dh98.6bn by June 30. Total assets also increased 8.7 per cent to Dh173.3bn as loans and advances remained largely flat at Dh76.5bn.
During the second quarter, net profit dropped 86 per cent to Dh85m as impairment allowance climbed 158 per cent to Dh570m. Total operating income during the period slid 13 per cent to Dh1.3bn.
“As we navigate the ongoing economic uncertainty, we remain well placed to handle a variety of scenarios, and will continue to operate prudently to manage any risks that lie ahead,” Mr Al Ghurair said. “Undoubtedly, significant challenges are on the horizon, but we have every bit of confidence that we will overcome them, and the UAE will prove its strength and resilience to make a robust recovery.”
The world economy is set to slide into its deepest recession since the Great Depression, with the International Monetary Fund projecting a 4.9 per cent contraction this year and a sluggish recovery in 2021.
The economies of the Middle East and Central Asian countries are projected to shrink by an average of 4.7 per cent, according to the fund.