Dubai's Mashreqbank Second-Quarter Profit Drops 54% as Impairments Rise

Mashreqbank PSC, the United Arab Emirates lender owned by the Al Ghurair family, reported a 54 percent decline in second-quarter profit after setting aside money to cover for bad loans.

Net income fell to 202.2 million dirhams ($55 million), according to Bloomberg calculations based on half-yearly data provided by the bank today. First-half profit was 453 million dirhams, while total operating income dropped 6 percent to 2.3 billion dirhams, according to an e-mailed statement today.

“We see signs of recovery and are optimistic of early economic turnaround,” Chief Executive Officer Abdul Aziz al- Ghurair said in the statement. Mashreqbank set aside 892 million dirhams for impaired loans and financial assets at the end of the second quarter, it said.

U.A.E. banks are recovering from the global credit crisis, which weakened lending and investment banking activity, while provisions for bad loans are rising amid the economic slowdown. U.A.E. economic growth may accelerate to 3.2 percent this year, with oil prices at $85 a barrel, from 1.3 percent in 2009, Economy Minister Sultan Bin Saeed al-Mansouri said in May.

To contact the reporter on this story: Camilla Hall in Abu Dhabi at chall24@bloomberg.net

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