Dubai’s Mashreq Q3 net profit slips 7.6% as fee incomes fall

Dubai’s third-biggest lender by assets Mashreq posted a 7.6 per cent fall in third-quarter net profit on Wednesday as a drop in income from fees offset stronger profits from loans.

The lender made a net profit of Dhs 551.4m ($150.1m) for the three months to Sept. 30, it said in a statement, a decrease on the Dhs 596.8m recorded for the corresponding period of 2014.

A rise in expenses meant net fee and commission income dropped to Dhs 408.3m dirhams for three months, compared to Dhs 425.4m in the same period of last year.

Banks in the United Arab Emirates have sought to boost fee revenue in recent quarters to ease margin pressures caused by record low interest rates.

Net interest income and net income from Islamic products rose to Dhs 825.9m in the three months to Sept. 30, compared to Dhs 785.6m in the corresponding period of last year.

For the nine-month period, net profit increased by 5.1 per cent in 2015 to Dhs 1.86bn.

For the same period, loans and advances at the end of September were Dhs 58.4bn, up by 1.9 per cent on the same point of 2014, while customer deposits over the same period grew by 9.3 per cent to Dhs 73.1bn.

Credit growth across the UAE banking sector was expected to be around 2 per cent this year, Mashreq chief executive Abdul Aziz al-Ghurair said in July.

He said in January the bank was targeting net profit growth in 2015 of between 6 per cent and 10 per cent.

The bank had received approval from the UAE central bank to open a representative office in Kenya, the statement said. The office should be operational before the year end.