Mashreq, one of the UAE’s leading financial institutions, has registered a 60 per cent growth in its 2012 profits which soared to Dh1.3 billion ($354 million) compared to Dh820 million the previous year, on the back of lower provisioning for bad loans.

Announcing the results for the year ended December 31, 2012, the top Dubai lender said the Dh492 million increase in profit was mainly due to the rise in operating income, net profit and the reduction of provisions by 31 per cent.

Mashreq's total operating income for 2012 rose 5.5 per cent to Dh4.1 billion over the same period in 2011, while the fourth quarter's operating income increased by 10.1 per cent on a QoQ basis to reach Dh1.1 billion compared to last year.

The annual increase was mainly due to the rise in fee income and investment income.

The net fee and commission income recorded a growth of 20.8 per cent as compared to 2011 while investment income for 2012 climbed by 131.6 per cent, said the Dubai lender in its statement.

Mashreq’s best-in-class net fee, commission and other income to operating income ratio further improved from 49.8 per cent in 2011 to a high of 53.4 per cent in 2012. General and Administrative expenses for 2012 increased by 3.4 per cent over the previous year to reach Dh 1.9 billion, it added.

According to Mashreq, the earnings per share increased from Dh4.85 in 2011 to Dh7.76 in 2012. Impressed with the results, the board has proposed a cash dividend of 38 per cent subject to Central Bank and shareholder approval.

Mashreq CEO Abdul-Aziz Al Ghurair dubbed 2012 as a watershed year, both for the UAE economy at large and the bank.

"Mashreq has made an impressive showing on all the essential performance parameters - operating income, net profit and in the reduction of provisions. I believe that the UAE Banking industry is poised for a strong comeback from the rough patch that it passed through in the recent past," he remarked.

"The recovery of the banking sector bodes well for the overall Economy and will restore the Nation to the growth path that it has been pursuing," he stated.

The 2012 results, he said, once again demonstrate the tremendous success achieved by the bank's long term strategy of commitment to customer centricity and staying at the leading edge of banking innovation. "The very satisfying results also reflect the indomitable spirit of our people and the very capable leader-ship that we have in place," he added.

Mashreq’s total assets witnessed a moderate decline of 3.6 per cent, reaching Dh76.4 billion compared to Dh79.2 billion at the end of 2011. Liquid assets to total assets stood at 27 per cent at the end of 2012, with cash and due from banks at Dh20.9 billion.

According to Al Ghurair, the loans and advances grew by 9.9 per cent in 2012 to reach Dh41.4 billion at year end, compared to Dh37.7 billion at the end of 2011.
 
During 2012, the bank grew its deposit base leading to a 4.5 per cent increase in customer deposits compared to 2011, reaching Dh47.5 billion, he noted.

A higher growth in loans versus deposits led to an optimum level of loan-to-deposit ratio  of 87 per cent in December 2012, and loan-to-total asset ratio improved from 48 per cent to 54 per cent.
 
Mashreq's provisions for loans and advances decreased by 31 per cent as compared to 2011 and stood at Dh826 million at the end of 2012. The bank's efficiency ratio improved during 2012 to reach 45.4 per cent by the end of the year, said the bank chief.
 
The bank’s capital adequacy stands at a healthy 19.3 per cent in 2012, while Tier 1 capital ratio improved to reach 17.2 per cent at year end, he added.-TradeArabia News Service