Dubai-based Mashreq's net profit soared to AED2 billion ($544.54 million) in the first quarter of 2024, marking a substantial 25% increase year-on-year, the bank said.

 

It said the results are despite the new 9% corporate tax imposed from January 1, 2024.

 

The bank's operating profit rose from AED1.8 billion to AED2.3 billion in 1Q 2024, a 31% increase compared to the same period in 2023.

 

This growth in operating income and net profit is primarily attributed to a 23% year-on-year surge in net interest income. The main drivers include exceptional business growth, healthy client margins, the current interest rate environment, and low risk costs. Additionally, non-interest income reached nearly AED1 billion, representing an impressive 29% growth year-on-year, it said.

 

Some highlights are:

• The cost-income ratio improved by 3.5% year-on-year, reflecting the bank's robust performance. This improvement is characterised by stringent control over operating expenses alongside continuous investments in client experience enhancements, risk management, and business expansion.

• Risk costs decreased by 61% to AED38 million, attributed to last year's accounting change concerning general provisions and prudent risk management.

• The Return on Equity (ROE) reached 28.0% in 1Q 2024, highlighting management's continued focus on driving efficiencies, accretive capital deployment, and creating optimal value for its shareholders.

 

Liquidity & Capital position

• Mashreq's solid liquidity position is indicated by a Liquid Assets ratio of 35.6% and a Liquidity Coverage Ratio of 154% as of March 2024.

• The bank's capitalisation level is very strong and has further improved from the end of 2023, with a Capital Adequacy Ratio of 17.7%, a Tier 1 Capital Ratio of 15.5%, and a CET1 Ratio of 14.9% as of March 2024.

 

Credit Environment & Asset Quality 

• The Non-Performing Loans to Gross Loans ratio declined to 1.3% as of end of March 2024 (1.9% as of March 2023) and is one of the lowest in the market. 

• The coverage ratio has increased to 249.8% as on 31st March 2024 (231.3% in March 2023).

 

Abdul Aziz Al Ghurair, Chairman of Mashreq, said: "The UAE’s economy continues its upward trajectory, buoyed by robust policies and a conducive environment for investment. The recent projection by the International Monetary Fund underscores the resilience and potential of our nation's economy. As highlighted in the World Economic Outlook, the UAE is poised for a GDP growth of 4.2% in 2025, reflecting confidence in the country’s policies and ability to attract talent and foreign direct investment across key sectors such as real estate, travel and tourism, and retail. Additionally, the current high oil prices further support our economic growth.

 

"Mashreq, has demonstrated remarkable strength and adaptability amid global challenges, maintaining solid asset growth, financing, and capital adequacy ratios. These indicators reflect the sector's flexibility and resilience to adapt to the changes the world is witnessing," he said. 

 

"The 2024 Brand Finance report recognises Mashreq as the fastest-growing banking brand in the Middle East, with our brand value increasing by an extraordinary 200% over the past three years. This growth underscores our strategic foresight, adaptability, and dedication to customer-centric innovation. The distinction of Mashreq NEO as the strongest digital banking brand in the UAE further underscores our capability to provide leading-edge solutions to our clients.

 

"Mashreq's strategic positioning within the banking ecosystem aligns with the broader banking outlook across the Gulf Cooperation Council region, which reflects continued growth in the non-oil economy and supportive operating conditions. As Mashreq continues to navigate and contribute to this dynamic environment, we remain steadfast in our commitment to driving sustainable growth and delivering exceptional value to our stakeholders," Al Ghurair added.

 

Ahmed Abdelaal, Group Chief Executive Officer, said: “Our Q1 2024 financial results have provided a robust start to the year, showcasing a significant 25% increase in net profit to AED2 billion, despite the new Corporate Income Tax of 9% in the UAE. On pre-tax basis our Net Profit stood at AED2.3 billion representing an increase of 36% like for like. This remarkable growth is fueled by substantial income expansion and reduced risk costs, highlighting our unyielding commitment to operational resilience and efficiency. Our net interest income has experienced a substantial 23% growth, demonstrating the effective expansion of our balance sheet and resilient client margins. Additionally, our non-interest income has surged by an impressive 29% year-on-year, representing 32% of our total income reflecting the versatility and revenue resilience of our bank.

 

"As we continue to expand, our operational resilience remains a cornerstone of our growth and expansion strategies. It has allowed us to adapt swiftly to economic shifts, maintain service excellence during rapid expansion, and manage risks effectively. 

 

"Our efforts to launch our Digital Retail Bank in Pakistan remain afoot, which will mark a significant step in our international expansion. Additionally, the initiation of corporate banking operations in the United Kingdom and the opening of a new branch in Mumbai are pivotal in our mission to deliver innovative banking solutions across diverse markets. In Egypt, the launch of Mashreq NEO represents a key development in offering simplified and innovative banking experiences, which align with our goals to enhance customer satisfaction," he said.

 

"In our pursuit of environmental stewardship and community engagement, we are proud to advance our Climb2Change initiative. Having completed the first phase of our mountain clean-up and partnering with Emirates Nature-WWF, we are committed to protecting to protect the biodiversity in the UAE.

 

"As we navigate 2024, our focus on leveraging our core strengths, nurturing a culture of innovation, and pursuing sustainable growth remains unwavering. Our employees are key to our success, and we look forward to seizing new opportunities, continuing to deliver significant value to all stakeholders," added Abdelaal. - TradeArabia News Service