Mashreq, a prominent financial institution, has announced its financial results for the first quarter of 2023, demonstrating a strong performance that helped the bank surpass the AED 200B milestone in total assets.
The bank’s operating profit grew impressively by 96% to AED 1.8B ($490.2M) compared to the same period in 2022, attributed to robust operating income growth in the UAE and other countries. Additionally, the bank’s cost to income ratio improved, decreasing from 40.3% in Q1 2022 to 30.2% in Q1 2023, indicating better efficiency, according to WAM.
Mashreq’s non-interest income to operating income ratio remained one of the best in the industry at 30.7%, and credit costs decreased by 58% year-on-year. These factors, along with solid operating income growth, led to a strong net profit of AED 1.6B.
Furthermore, Mashreq’s total loans and advances increased by 5.6% year-on-year to AED 91.1B, and the loan-to-deposit ratio was 75.8% at the end of March 2023, compared to 79.4% in December 2022. The non-performing loans to gross loans ratio also decreased to 1.9% at the end of March 2023 from 2.2% in December 2022.
Regarding customer deposits, the bank experienced 5.6% year-to-date growth, amounting to AED 120.2B, while the liquid assets ratio was 35.6% as of March 2023, up from 33.5% in 2022. Capitalisation levels have also shown significant improvement, with the capital adequacy ratio and Tier 1 Capital ratio at 17.4% and 15.1%, respectively, as of March 2023.
Lastly, the bank’s impairment allowance decreased substantially to AED 96M in Q1 2023, which was only 0.1% of net loans, due to improved asset quality. The total provision for loans and advances was AED 4.9B, and the coverage ratio improved 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.”
Furthermore, Mashreq achieved a significant milestone in Q1 by expanding its product offerings and geographic reach, as evidenced by obtaining a digital license in Pakistan and making substantial progress in Egypt. The bank’s excellent performance in these and other global markets led to it receiving several accolades in Q1, not only in the UAE but also in Egypt, Kuwait, and Qatar.
Mashreq is dedicated to sustainability, which is especially important given that the UAE will host COP 28, highlighting the country’s commitment to environmental and social responsibility. In Q1, the bank made notable strides in its sustainability journey, obtaining third-party assurance for its Sustainability Report, which aligns with international standards, according to Al Ghurair.
“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.”
