Mashreq Q1 profit down but shares see gains

• Net profit down 12%
• Net income interest falls
• Mashreq shares up 11%

Tighter net interest margins and increased expenses have hit first quarter profits at Mashreq, the fifth-largest lender in the UAE by assets.

The Dubai-listed bank said net profit after tax decreased 12 percent annually in the three months to March to AED1.8 billion ($490 million). 

Mashreq’s shares, which closed at AED242 on Wednesday, are nonetheless up 11 percent year to date.

Operating income declined by 1 percent year-on-year to AED3.1 billion, primarily due to a decline in net interest income and income from Islamic financing, the bank said in a statement. 

Net interest income declined by 8 percent year-on-year to AED2 billion due to a contraction in the bank’s net interest margin, which was driven by a 100 bps rate cut by UAE Central Bank, the lender said.

Operating expenses also grew 9 percent, which the bank attributed to “investment in digital innovation and strategic business expansion”.

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“While ongoing geopolitical uncertainties and trade tensions continue to test global economic confidence, their direct impact on the GCC has remained limited thanks to strategic oil exemptions and the region’s prudent macroeconomic policies,” Abdulaziz Al Ghurair, chairman of Mashreq, said.

The bank’s non-performing loan (NPL) ratio improved to 1.3 percent, which remains the “lowest in the industry” the bank said.