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Mashreq, the UAE’s leading bank, posted a net profit of AED 1.6 billion (US$ 436 million) for the first quarter (Q1) of 2023, a 96% increase in operating profit, while its total assets rose to AED 200 billion.
The bank posted an operating profit of AED1.8 billion ($490.2 million), a 96% increase compared to the first quarter of 2022, driven by healthy growth in operating income in the UAE and elsewhere. The bank’s efficiency has improved, with a cost-to-income ratio of 30.2% in the first quarter of 2023, compared to 40.3% in the first quarter of 2022.
Mashreq’s noninterest income to operating income ratio continued to be one of the best in the industry at 30.7%. Credit costs fell 58% YoY. Combined with solid operating income growth, Mashreq delivered strong net income.
Loans and Advances
Total loans and advances increased by 5.6% year-on-year to AED91.1 billion, with a loan-to-deposit ratio of 75.8% at the end of March 2023 (79.4% at December 2022).
The ratio of non-performing loans to total loans fell to 1.9% by end-March 2023 (2.2% as of December 2022).
The bank’s year-to-date customer deposits grew by 5.6% to AED120.2 billion, with a liquidity ratio of 35.6% as of March 2023 (33.5% in 2022). As of March 2023, the capital adequacy ratio is 17.4%, the tier-1 capital ratio is 15.1%, and the capitalization level has been significantly improved.
Impairment allowances were significantly reduced to AED 96 million in Q1 2023, representing only 0.1% of net loans, due to improved asset quality, while As of March 31, loans and advances totaled AED4.9 billion, increasing coverage to 231.3%.
Improve efficiency
Abdul Aziz Al Ghurair, Chairman of Mashreq, said: “Mashreq delivered an outstanding financial performance in the first quarter of 2023, with operating profit nearly doubling year-on-year and surpassing the total Asset Milestone of AED 200 billion.
“As a challenger bank, Mashreq actively participated in the UAE’s innovation ecosystem during the first quarter, becoming a founding member of Launchpad, DIFC’s venture building programme. and further support for the introduction of digital journeys.
“The effectiveness of Mashreq’s digital strategy is evident through a substantial increase in customer deposits, an improvement in cost-to-income ratio, and a significant increase in net profit. These achievements are driven by factors such as improved asset quality, reduction in non-performing loans and Favorable ratio of non-interest income to operating income.”
product development
In addition, progress in product expansion and geographic coverage in the first quarter marked a major milestone for the bank, with the approval of a digital license in Pakistan and a sizeable expansion in Egypt. He said Mashreq’s performance in these and other international markets had won numerous awards during the first quarter, not only in the UAE but also in Egypt, Kuwait and Qatar.
Mashreq takes sustainability very seriously, especially as the UAE is about to host COP 28, further emphasizing the country’s commitment to environmental and social responsibility. Al Ghurair said that in the first quarter, the bank made significant progress on its sustainability journey, with its sustainability report receiving third-party assurance in line with international standards.
“We expect that through our active participation in the innovation ecosystem, technology-driven customer personalization and unwavering focus on efficiency, Mashreq will continue to support the UAE’s economic growth throughout 2023 through economic cycles and global uncertainties.”
adapt to changing conditions
Ahmed Abdelaal, Group Chief Executive Officer, said: “This is a testament to our ability to adapt to changing market conditions and our unwavering commitment to deliver continued value to our stakeholders. Compared to Q1 2022, we Focusing on healthy operating income growth and improving efficiencies resulted in an impressive 96% increase in operating profit. We maintained a strong liquidity and capital position, demonstrating our ability to generate diversified revenue streams.
“Our loan portfolio continued to deliver steady growth while maintaining a prudent risk management approach, as reflected in our reduced impairment allowances and decline in non-performing loans to total loans ratio.
“Going forward, we will continue to focus on developing and building experiences that positively impact our customers’ everyday lives, not just products and services.” — trade arab news agency
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