Mashreq reports net profit of AED 1.6 bn with a 96% increase in operating profits for Q1 2023

Mashreq reports net profit of AED 1.6 bn with a 96% increase in operating profits for Q1 2023

DUBAI, 27th April, 2023 (WAM) – Mashreq, a leading financial institution, has released its financial results for Q1 2023, showcasing a robust performance that has propelled the bank to cross the AED 200 billion in total assets milestone. The bank's operating profit increased by an impressive 96% to AED1.8 billion ($490.2 million) compared to the same period in 2022, due to healthy operating income growth in the UAE and other countries. Furthermore, the bank has shown improved efficiency, with its cost to income ratio declining to 30.2% in Q1 2023 from 40.3% in Q1 2022.

Mashreq's non-interest income to operating income ratio continues to remain one of the industry's best at 30.7%, while credit costs have decreased by 58% year-on-year. This, coupled with solid operating income growth, has enabled the bank to post a strong net profit of AED1.6 billion.

Moreover, Mashreq's total loans and advances increased by 5.6% year-on-year to reach AED91.1 billion, with the loan-to-deposit ratio standing at 75.8% at the end of March 2023 (79.4% in December 2022). The non-performing loans to gross loans ratio also declined to 1.9% as of the end of March 2023 (compared to 2.2% in December 2022).

In terms of customer deposits, the bank saw growth of 5.6% YTD, reaching AED120.2 billion, while the liquid assets ratio stood at 35.6% as of March 2023 (compared to 33.5% in 2022). Capitalisation levels have improved significantly, with the capital adequacy ratio at 17.4% and Tier 1 Capital ratio at 15.1% as of March 2023.

Finally, impairment allowance reduced significantly to AED96 million in Q1 2023, representing only 0.1% of net loans, due to improved asset quality. The total provision for loans and advances reached AED4.9 billion, with a coverage ratio improving to 231.3% as of March 31.

Abdul Aziz Al Ghurair, Chairman of Mashreq, said, “Owing to robust growth in operating income, enhanced efficiencies, and improved risk position, Mashreq concluded the first quarter of 2023 with outstanding financial results, demonstrating nearly double year-on-year operating profits and crossing the AED200 billion in total assets milestone.

“As a challenger bank, Mashreq actively participated in the UAE’s innovation ecosystem during Q1, becoming a founding member of the DIFC’s venture-building programme, Launchpad. The Bank’s performance was further supported by the introduction of numerous platforms and digital journeys, both domestically and internationally, across retail, business, and corporate and investment banking.

“The effectiveness of Mashreq’s digital strategy is evident through the substantial increase in customer deposits, improved cost-to-income ratio, and remarkable net profit growth. These achievements have been driven by various factors, such as enhanced asset quality, a decrease in non-performing loans, and a favorable non-interest income to operating income ratio.”

Moreover, the progress made in product expansion and geographic reach during Q1 marks a crucial milestone for the bank, with the approval of a digital licence in Pakistan and considerable expansion in Egypt. Mashreq’s performance in these and other international markets led to numerous awards in Q1, not only in the UAE but also in Egypt, Kuwait, and Qatar, he said.

Mashreq places a strong emphasis on sustainability, especially as the UAE is set to host COP 28, further highlighting the nation’s commitment to environmental and social responsibility. In Q1, the bank made significant strides in its sustainability journey, obtaining third-party assurance for its Sustainability Report in line with international standards, Al Ghurair said.

“We foresee that through our proactive involvement in the innovation ecosystem, technology-driven customer personalisation, and an unwavering focus on efficiencies, Mashreq will persist in supporting the UAE economic growth across economic cycles and amidst global uncertainties throughout 2023.”

Ahmed Abdelaal, Group Chief Executive Officer, said, “This is testament to our ability to adapt to changing market conditions and our unwavering commitment to delivering sustained value to our stakeholders. Our focus on healthy operating income growth and enhanced efficiency has resulted in an impressive operating profit growth of 96% compared to Q1 2022. We have maintained a strong liquidity and capital position showcasing our ability to create diversified income streams.

“We continue to achieve stable growth in our loan portfolio while maintaining a prudent approach to risk management as reflected in our reduced impairment allowance and declining non-performing loans to gross loans ratio.

“Looking ahead, we remain focused on developing and building experiences that positively impact our clients’ everyday lives, beyond just products and services."