Mashreq Q3 profit lifted by higher interest income

Mashreq, Dubai's third-biggest lender by assets, on Monday posted a 26.1 per cent rise in third-quarter net profit, driven by a jump in income from its core business.

Mashreq is the latest UAE bank to report a healthy set of third quarter earnings, as lenders benefit from an economy forecast by the IMF to grow at 4.3 per cent this year.

The lender made a net profit of Dh596.8 million ($162.5m) for the three months to September 30, it said in a statement, a increase on the Dh473.2m recorded for the corresponding period of last year.

Mashreq's performance was bolstered by a rise in net interest income, with profits from the segment swelling to Dh785.6m, up by 25.6 per cent from the year earlier period. This was aided by strong loan growth, with total loans up 14 per cent since the start of 2014 to Dh57.3 billion.

Net fee and commission income rose to Dh425.4m, up 5.8 per cent year on year, the statement said.

The bank is one of an increasing number of local lenders looking to snap up banking stakes in other countries to diversify in the face of intense competition at home, where 51 lenders battle for market share. Mashreq is targeting Egypt and Turkey for acquisitions, Chief Executive Abdul Aziz Al Ghurair said on September 17.

"While the banking industry in the UAE remains a crowded and competitive arena, there are huge opportunities too," the CEO said in Monday's statement.

Profit for the first nine months of 2014 reached Dh1.76bn, compared to Dh1.3bn in the same period of 2013.

The bank's allowances for impairments rose during the third quarter to Dh304.2m to the end of September, up from Dh242.3m in the corresponding period of last year.

Most local banks have in recent years had to raise buffers against soured loans after a spate of debt restructurings linked to a property and financial downturn, although reviving asset quality has helped lenders' earnings performance in the last two years as they set aside less cash and reclassified some bad loans as performing.