Mashreq Quarterly Profit Drops 18 Percent as Provisions Doubleby
Mashreqbank PSC said first quarter profit fell 18 percent as non-performing loans increased and provisions almost doubled.
Net income fell to 532 million dirhams ($145 million) from 651 million a year earlier, according to a statement from the Dubai-based lender posted on the stock exchange website. The ratio of non-performing loans to gross loans rose to 3.2 percent from 2.8 percent in December and provisions rose to 366 million dirhams from 196 million in the first quarter of 2015.
Defaults among small and medium-sized companies have caused several banks in the country to boost provisions. The issue has prompted the United Arab Emirates Banks Federation to agree on measures to help small firms struggling with debt payments amid an economic slowdown and debt laws that can lead to people fleeing the country to avoid punishment for defaulting. The plan allows for the temporary suspension and restructuring of debt, the federation said last month.
“Given the challenging market conditions, Mashreq has approached the 2016 fiscal year with a pragmatic outlook,” Chief Executive Officer Abdulaziz Al Ghurair said in the statement. “We responded quickly to the early signs of the market softening by deciding to moderate our growth strategy accordingly.”