Mashreq Bank Records Increase Of 33% in Net Profit, 2014

Mashreq bank delivered strong financial results for the year ending 2014, reporting a net profit of AED2,401 million, an increase of 33.0% as compared to 2013, and earnings per share strengthened to AED14.20 at the end of December 2014 compared to AED10.68 a year earlier.

"2014 has been a watershed year for Mashreq. I say that because the impressive 33% growth in net profit was a result of intrinsic growth in our core business – our Loans have grown by 15.1% and our Customer Deposits have grown even faster than Loans as it grew by 16.9%, beating overall market growth. This matchless growth was produced by best in class customer service and breakthrough product innovations that delivered customer satisfaction," said Mashreq's CEO, AbdulAziz Al Ghurair.

Total operating income for 2014 was AED5.8 billion, an increase of 20.8% compared to last year's operating income of AED4.8 billion. On a quarterly basis, operating income was AED1.5 billion in Q4’14, which represented an increase of 13.5% year on year and 3.0% quarter on quarter.

Net Interest Income at AED3.0 billion was up by 28.9% compared to a year earlier, driven by 15.1% year-on-year increase in loan volume and 26 bps improvement in net interest margin from 2.94% in December 2013 to 3.20% this year, which was predominantly led by changes in balance sheet structure and composition of loans.

The bank's net fee and commission income grew by 18.7% in the year to reach AED1.7 billion; net investment income was up by 11.8% and other income also rose by 4.2% in the year leading to a best in class non-interest income to operating income ratio of 48.0% for 2014 (2013 ratio stood at 51.3%). Net fee and commission income represented 60.9% of total non-interest income in 2014 as compared to 58.1% in 2013.

Operating expenses for the period increased by 8.2% to reach AED2.2 billion; however, Efficiency Ratio improved from 42.2% in December 2013 to 37.8% at the end of December 2014. On a quarterly basis, operating expenses was AED597 million in Q4’14, which represented an increase of 11.6% year on year and 8.5% quarter on quarter.

Mashreq’s Total Assets increased by 18.1% to reach AED105.8 billion in 2014, compared to AED89.6 billion at the end of 2013. Loans and Advances grew by 15.1% during 2014 to reach AED58.0 billion, compared to AED50.4 billion at the end of December 2013 predominantly led by 18.0% growth in conventional loans. On a quarterly basis, Loans and Advances grew by 1.3% driven by 6.3% growth in Islamic finance and Investment products. Liquid Assets to Total Assets stood at 27.7% with Cash and Due from Banks at AED29.4 billion at the end of the fourth quarter and Loan-to-Total Assets Ratio remained stable at 54.8%.

Customer Deposits increased by 16.9% during the same period, driven by both conventional and Islamic deposits to stand at AED68.5 billion at the end of December 2014 leading to Loan-to-Deposit ratio of 84.8% at the end of 2014 (86.1% in December 2013). On a quarterly basis, customer deposits grew by 2.5% from AED66.8 billion in September 2014.

Asset quality continued to improve as Non-Performing Loans decreased to AED2.7 billion in current year from AED3.2 billion last year leading to a reduction in the Non-Performing Loans to Gross Loans ratio from 5.1% in December 2013 to 3.7% at the end of December 2014. Net Allowances for impairment for 2014 was AED1,075 million as compared to AED873 million in 2013. Total Provisions for Loans and advances reached AED3.19 billion, constituting 120.4% coverage for Non-Performing Loans as on December 31, 2014. (96.1% coverage as on December 31, 2013) Mashreq’s Capital adequacy ratio stood at 16.6% (regulatory minimum of 12%) as at 31 December 2014 compared to 18.1% as at 31 December 2013.

Tier 1 capital ratio at 15.3% continues to be significantly higher than the 8% regulatory minimum stipulated by the UAE Central Bank (16.4% as at 31 December 2013)