Mashreq, Dubai’s third-biggest lender by assets, posted a 25.7 per cent rise in second-quarter net profit on the back of higher fee income, the latest bank in the United Arab Emirates to report strong quarterly numbers.
The bank made a net profit of Dhs402.6 million ($109.6 million) for the three months to June 30, it said in a statement on Thursday, up from Dhs320.3 million in the same period last year.
Banks in the UAE were expected to report strong second-quarter earnings thanks to an economic recovery in key sectors, primarily real estate, and lower provisions as the Gulf state recovers from debt troubles at Dubai’s state-linked entities.
Emirates NBD, First Gulf Bank and Abu Dhabi Islamic Bank all beat estimates with increases to net profit. National Bank of Abu Dhabi missed expectations but still increased profit by 15.8 per cent.
Mashreq’s second-quarter profit was boosted by a 23 per cent year-on-year advance in net fee and commission income.
The profit increase came despite a 20.9 per cent jump in impairments compared with the second quarter of 2012. Provisions for the three months to June 30 were Dhs213.6 million.
Profit for the first six months of 2013 rose 40.1 per cent over the same period last year to Dhs828 million. The increase was expected after a 57 per cent hike in first-quarter net profit year-on-year.
Mashreq CEO Abdulaziz Al Ghurair said in February that he was “optimistic” about the bank’s performance this year and expects profits to grow by 10-15 per cent, with provisions continuing to recede.
Loans and advances at the end of June were up 14.6 per cent on the end of 2012, while deposits over the same period grew 7.4 per cent.
In May the Dubai-based bank settled a lawsuit it brought in the United States, accusing Netherlands-based ING Groep NV of losing 40 per cent of a $108 million investment by improperly putting the money in risky debt.