Mashreq Bank, the Dubai lender controlled by the Al Ghurair family, swung to a loss in the third quarter as impairment allowances climbed amid the coronavirus pandemic.
The company declared a Dh183 million net loss in the three months to the end of September, compared to a net profit of Dh536m during the same period year earlier, the lender said in a statement to the Dubai Financial Market, where its shares trade. Impairment allowances during the period almost trebled to Dh665m, while net interest income and income from Islamic financing fell 38 per cent to Dh561m.
“The tough operating conditions saw an increase in our net impairment allowances, driven by specific credit provisions and anticipated credit losses linked to the Covid-19 pandemic,” Ahmed Abdelaal, group chief executive of Mashreq Bank, said. “We have worked hard to support all our clients through the immediate introduction of the UAE Central Bank’s TESS programme, in addition to our own relief programme that has enabled our customers to defer their principal and interest payments.”
The bank’s nine-month net profit dropped 80 per cent to Dh352m as impairment allowances more than doubled to Dh1.64 billion.
Banks globally have reported falling profits and higher provisions in the wake of the pandemic, which disrupted global trade and slowed economic activity as countries enforced lockdowns to contain the coronavirus.
The world economy is in its deepest recession since the Great Depression and is set to shrink 4.4 per cent this year before it rebounds unevenly in 2021, according to the International Monetary Fund.
The UAE has reopened its economy gradually since movement restrictions were introduced in March, and business activity has picked up on the back of monetary and fiscal support.
“At Mashreq, we remain fully aligned to support the UAE economy and our communities, as we together pave the way to recovery,” AbdulAziz Al Ghurair, chairman of Mashreq, said. “We will also continue to look at capitalising on opportunities in the digital and technology space, with the ultimate aim of serving our customers better.