Mashreq, Dubai’s second-biggest bank by stock market value, yesterday posted an 86% year-on-year jump in net profit for the third quarter of this year, citing a decline in bad loan provisions.
Net profit climbed to 379mn dirhams ($103mn) in the quarter from 204mn dirhams a year earlier, according to Reuters calculations based on the bank’s nine-month earnings statement. For the first nine months of the year, profit rose 28% to 970mn dirhams, Mashreq said.
“The last two quarters in particular have shown very promising trends which have culminated in healthy bottom line growth,” Abdul Aziz al-Ghurair, Mashreq’s chief executive, said in the statement. “We are witnessing increasing stability in the UAE and look forward to continuing this positive growth in the coming quarters.”
A forecast by analysts at Arqaam Capital had put third-quarter net profit at 242mn dirhams.
Mashreq’s provisions for bad loans fell 37% from a year earlier to 533mn dirhams in the first nine months.
Lending throughout the UAE banking sector was flat at the end of August compared to the end of the second quarter, according to central bank figures. It has grown 1.8% since the beginning of the year.
Dubai’s largest bank, Emirates NBD, said on Monday it expected loan growth to remain relatively modest as global uncertainty hits demand. It posted forecast-beating quarterly results due to lower bad loan provisioning.
Fitch Ratings affirmed Mashreq’s ‘A’ rating on September 26, adding the restructuring of some of its larger problem loans and a change in strategy would help boost core earnings.
Mashreq’s loans and advances grew to 40.5bn dirhams in September 2012 from 37.7bn dirhams at the end of 2011. Customer deposits shrank 4.1% to 43.5bn dirhams as the bank shed high-cost deposits.