Mashreq’s full-year (FY) 2023 net profit has surged 130% year-on-year to record AED8.6 billion ($2.34 billion) thanks to its net interest income soaring by 69% year-on-year. 

 

The main drivers for the bank were significant business growth with robust client margins, the continuation of the prevailing high-interest rate environment as well as positive one-offs relating to loan loss provisioning. 

 

Additionally, its non-interest income reached AED3.1 billion, marking a notable 13% year-on-year growth in FY 2023.

 

Client centrism

The company’s dedication to client centrism and operational excellence is evident in the noteworthy Earnings per Share (EPS) of AED42.82, a testament to its resilience and ability to create substantial value for shareholders.

 

The bank has demonstrated positive jaws of 31.4% in FY 2023, and the cost-to-income ratio has improved by over 8% year-on-year. This indicates strong business performance with effective control over operating costs while enabling continued investments in enhancing our client experience, risk management, and supporting business growth.

 

Operating profit has surged from AED4.4 billion to AED7.5 billion in FY 2023, representing almost 70% increase compared to the same period in 2022.

 

The allowance for impairments has experienced a net release of AED1.4 billion, driven by prudent risk management, high recoveries from non-performing loans (NPLs) and a one-off release of the general provision.

 

Return on equity

Return on equity (ROE) was at record-high of 34.3% in FY 2023, doubling compared to FY 2022, while the cost-to-income ratio decreased to 30.9%.

 

The bank exhibited high liquidity denoted by a liquid assets ratio of 33.6% and an efficient liquidity coverage ratio of 134% as of December 2023

 

Capitalisation level (excluding proposed dividend) remains robust with the Capital adequacy ratio at 16.5%, Tier 1 Capital ratio at 14.3% and CET1 ratio at 13.7% as of December 2023.

 

The overall loan portfolio quality has improved significantly with gross impairments to gross advances at just 0.3% (0.9% in FY 2022). The non-performing loans to gross loans ratio declined to 1.3% as of end of December 2023 (2.2% as of December 2022) and is one of the lowest in the market. The coverage ratio has improved to 247.5% as on December 31, 2023 (190.8% in December 2022)

 

Consistent performance

AbdulAziz Al Ghurair, Chairman of Mashreq, said: “In recent years, our track record of consistent performance and profitability improvement has been nothing short of impressive. Our franchise continues to yield outstanding results, bolstered by the addition of a substantial number of new clients and the deepening of existing relationships across the bank. This remarkable achievement mirrors the nation’s significant economic expansion and the resilience and dynamic growth of the UAE’s financial services, setting a precedent in the global banking arena.

 

“Our steadfast dedication to delivering exceptional omnichannel customer experiences remains unwavering, underpinning our pursuit of focused, profitable, and sustainable growth.

 

“Simultaneously, our unceasing investments in enhancing operational efficiency and fortifying risk controls underscore the enduring strength and resilience of our business model. This success owes much to the exceptional talents that grace Mashreq.

 

“Our mantra, “Rise Every Day,” has transcended mere words to become an intrinsic part of our organisational DNA. It serves as a guiding beacon, illuminating our path and influencing our actions and decisions in every facet of our business. With the UAE banking sector reaching a historic high and total assets crossing the AED4 trillion mark, we look forward to 2024 with a sense of optimism and readiness to uphold and extend this trajectory of dynamic and continued growth.”

 

Strategic direction

Ahmed Abdelaal, Group Chief Executive Officer, Mashreq, said: “Our performance this year serves as a testament to the success of our strategic direction within the ever-evolving global economic and political landscape. As a modern, digitally empowered challenger bank, we have firmly cemented our position in the market.

 

“Our strategy and robust operational execution have been pivotal in achieving this growth which spans across all businesses and geographies. Our consistent recognition by prestigious institutions like Euromoney Market Leaders across local, regional, and international levels, driven by votes from our clients, reaffirms our commitment to delivering superior customer experiences and pioneering innovative technology.

 

Our AED110 billion ($30 Billion) 2030 commitment to sustainable finance announced during COP28, is part of our “Climb2Change” global initiative, which integrates the bank’s wide spectrum of ESG milestones and its impactful contributions to facilitating the finance required to combat climate change and a net zero inclusive future.”

 

Internationally, the benefits of Mashreq’s diversified business model have become notably evident. The bank achieved robust growth in its international operations, notably expanding into new markets such as Pakistan and Oman. Additionally, its intensified efforts in well-established markets like the UK, Hong Kong, and the US is primed to fuel future growth. Furthermore, its heightened focus on established markets, within the GCC, India and Egypt, is further solidifying its growth prospects, he said.

 

Resolute position

“Looking ahead, our course and position remain resolute, even in the face of ongoing uncertainty. We possess a stable, robust, and resilient business model, characterised by high-quality earnings and a well-diversified loan portfolio spanning our various markets. It is imperative, however, that we brace ourselves for the normalisation of interest rates, which will necessitate adjustments in operational strategies to align with this new reality. Nevertheless, our formidable presence within the banking sector, underpinned by a wealth of intellectual capital, an unwavering commitment to leveraging technology to enhance clients experience, and a prudent approach to risk management, will empower us to maintain our prominent market position.”--TradeArabia News Service