UAEs Mashreq has reported a 24.8 per cent slump in its third-quarter net income as a rise in impairment allowances to cover bad loans weigh on the profitability of Dubai-listed lender.
Net profit for three-month period ending on 30 September declined to AED414.95m ($112.98m) from AED551.44m recorded for the corresponding period of 2015, Mashreq, the third largest bank by assets in the emirate, said in a statement to Dubai Financial Market (DFM), where its shares are traded.
The bank has reported declining income in the preceding four quarters. Allowances for impairments jumped to AED470m, an 82 per cent rise in 2016 compared with the third quarter of last year, according to the financial statement released by the lender. Total provisions for loans and advances reached for the first nine months of 2016 reached AED3.6bn, constituting 136 per cent coverage for non-performing loans, it said in the statement.
Banks in the UAE are showing signs of depressed income as lower oil prices is slowing economic growth and asset quality deteriorates with a rise in provisions for non-performing loans.
Mashreq posted net profit of AED1.486bn for the nine-month period, a decline from AED1.85bn recorded for the similar period a year ago, it said in the statement.
The total assets grew to AED119.62bn at the end of September, a rise from AED115.15bn from a year earlier while deposits over the same period grew 3 per cent to AED75.28bn. Loans and advances increased by 3.5 per cent to AED62.3bn as compared to the December-end 2015
I am pleased with the progress the bank has made in the context of the external market conditions in 2016, chief executive Abdulaziz al-Ghurair said in the statement, adding that emphasis is on how to respond to the challenging market environment. This meant that we had to make conscious yet realistic choices on where to focus, in order to achieve sustainable long-term growth for the bank.