Mashreq, one of the UAE’s leading National financial institutions reported a net profit of AED 820 million for the year ended 31st December 2011 on operating income of AED 3.9 billion over the same period.
Mashreq’s total assets witnessed a moderate decline of 6.6%, reaching AED 79.2 billion compared to AED 84.8 billion at the end of 2010, due to the bank’s balance sheet management strategy. The bank continued to maintain high liquidity. The liquid assets of AED 24.9 billion led to a healthy liquid to total asset ratio of 31% as of December 31st, 2011.
In addition to specific provisions, Mashreq maintains a healthy general provision (collective impairment allowance) which at year end stood at 2% of net loans and advances.
As a result of proactive risk management, Loans & Advances reported AED 37.7 billion, a decrease of 8.5% from AED 41.2 billion at the end of 2010.
Commenting on the financial results, H.E. Abdul-Aziz Al Ghurair, Chief Executive Officer of Mashreq, said: “The 2011 annual financial results reflect our policy of balancing prudence with profitability. Although 2011 was a challenging year for the Region, we continue to maintain high levels of capitalization and liquidity and remain fully committed to the markets across the GCC.”
Given the elevated level of liquidity, Mashreq could afford to rationalize its liability structure by shedding some high-cost deposits, leading to an 11.4% reduction from December 2010 to AED 45.4 billion. However, the bank continues to maintain a robust loan-to-deposit ratio of 83% as at December 2011.
Abdul-Aziz Al Ghurair added, “Our single minded goal is to deliver sustainable financial results while adapting to rapidly changing market conditions by focusing on customer centricity across our businesses. Meeting and exceeding the needs of our customers is the corner stone of our business philosophy.”
The total income for 2011 of AED 3.9 billion represents an 11.7% drop relative to 2010; Net interest income and income from Islamic products net of distribution to depositors for the year 2011 reported at AED 1.9 billion was down 15.1% while Net fee, commission and other income at AED 1.9 billion was down 8.0%. However the ratio of Net fee, commission and other income to operating income stood close to 50%, which is one of the best in its class.
General and Administrative expenses for the full year 2011 remained stable at AED 1.8 billion, showing a slight increase of 1.7%.
Mashreq provisions for loans and advances continued its downward path in 2011, decreasing by 32% to AED 1.2 billion from AED 1.8 billion in 2010, while the efficiency ratio increased modestly to reach 46.3%.
The bank continued to maintain a very healthy capital adequacy ratio which stood at 22.6% as of December 2011, while the Tier 1 ratio went up to 16.2% for the same period.
Mashreq launched ‘Mashreq Majestic’, a one of a kind offer for customers in UAE which bundled a wide selection of banking products and services, specifically tailored to meet the unique requirements of our varied customer segments. The Salary, Loan, Mortgage and SME Finance packages are custom made to offer unmatched value for money, ease and accessibility – another trailblazing innovation in the market.
As part of the bank’s commitment to customers to provide the highest quality of service in personal banking, Mashreq has completed a total makeover of its branches, carrying out extensive renovations across the branch network. The new cutting edge design creates a welcoming and comfortable environment for the bank’s valued customers when they visit any of the branches located strategically in the UAE.
During 2011 Mashreq continued its social and community building efforts having launched the first Student Banking Centre (Electronic Banking Unit) at Dubai International Academic City (DIAC) which serves 27 universities and academic institutions. The bank signed an agreement with Higher Colleges of Technology (HCT) to become one of the founding members of the HCT Foundation’s HCT 100 corporate group. In furtherance of its Emiratisation strategy, Mashreq announced the recruitment of the second batch of UAE Nationals from Abu Dhabi. Recently, the bank recruited graduates of Mashreq Al Mustaqbal Management training programme as Branch Managers, demonstrating its commitment to employ more and more UAE Nationals.
The bank continues to reinforce its online and mobile banking services with the latest enhancements which allows Mashreq customers to enjoy world class remote banking from the comfort of their homes with additional service features and improved security measures, with complete financial freedom.
Reflecting its on-going SME development strategy, Mashreq opened a call centre to facilitate service queries such as account maintenance, updating trade license, cheque book issuance, inward and outward remittances; the call centre acts as the single point of contact for all Small & Medium Enterprises customers for service queries. Mashreq also signed a partnership agreement with Dubai SME, the agency of the Department of Economic Development (DED), Government of Dubai, to offer benefits to the top 100 SMEs in recognition to the importance of supporting startup companies.
From a corporate standpoint, Mashreq witnessed a good business year with improvement in revenue and net profit. Traditional areas of business contracting finance and trade finance performed well. Relatively new services offered under Global Transaction Services Unit (GTS), particularly cash management services did particularly well in providing innovative solutions to customer needs.
To reflect the bank’s renewed commitment to the Abu Dhabi market, Mashreq announced the appointment of Karim Mahmoud as the CEO of the bank’s operations in the Capital.
Mashreq’s Corporate Investment Banking group facilitated clients’ access to the debt market. In 2011, the bank successfully closed two syndicated term loans for Sri Lanka’s largest bank, Bank of Ceylon (BOC) for USD 175 million and USD 140 million facilities. Moreover, Mashreq effectively led USD 403 million syndicated facility for the engineering, construction and procurement works of the Borouge 3 expansion project, which was awarded to the Tecnimont S.p.A - Samsung Engineering joint venture.
Through a sophisticated 24 hour dealing room, Mashreq provides traditional and complex treasury products like options, swaps and other hedging products to customers to accommodate their business needs.
Internationally and in line with its strategy to be a leading regional financial institution, Mashreq’s presence in significant markets such as Qatar, Kuwait, Bahrain and Egypt is a clear indication of its constant endeavor to provide accessibility to its customers across the Region. With the completion of it’s first year in business, Mashreq Kuwait reported a healthy and profitable performance during 2011.
During 2011, Mashreq announced the opening of its representative offices in Nepal. Additionally, in a path breaking move, the bank signed an exclusive agreement with the Bank of China to establish a ‘China Desk’ in the UAE.
Mashreq also signed a Memorandum of Understanding (MoU) with the Export-Import Bank of Korea (Korea Eximbank). Under the agreement, Mashreq will facilitate various investments and comprehensive banking solutions for projects implemented by Korea Eximbank in the UAE and the Middle East region.
The Correspondent Banking facility had a particularly good year offering trade and payment products to correspondent banks through dedicated branches in London, New York, Hong Kong and India.
In recognition of his demonstrated commitment to excellence in the banking industry, H.E Abdul-Aziz Al Ghurair, CEO of Mashreq received a clutch of awards for his accomplishments: the Outstanding Contribution to the Industry Award from The Banker Middle East Industry Awards 2011, the MEED Leadership Award 2011; The Arab Banker of the Year in the Private Sector Award 2010-2011from The Union of Arab Banks (UAB) in Rome, Italy.
Furthermore, the industry recognized Mashreq’s achievements and commitment to offer customers the highest form of banking through constant innovation. The awards include Best Call Centre of the year Award - strategically aligned category from Middle East Call Centre awards 2011 organized by INSIGHTS and the Best Islamic Window from The Banker Middle East Industry Awards 2011 for Mashreq Al Islami for the second year in a row. The bank was also awarded the ISO 9001:2008 Certification by the British Standards Institute (BSI) for its Operations Group.
Mashreq’s funds won top three awards at the MENA Fund Manager 2011 Performance Awards; The Newcomer Fund of the year Award went to Mashreq Al Islami Income Fund for having the highest risk adjusted returns, Makaseb Income Fund received the Fixed Income Fund of the Year Award, and Mashreq Capital was awarded the UAE Asset Manager of the Year award.
The bank was also recognized by Dubai Women’s College when it was given the Employer of the Year Award in the private sector for Mashreq’s Emiratisation strategy and due to Mashreq’s constant efforts to empower Emirati students by providing the necessary training to develop their skills. Moreover; the prestigious Lipper Fund Award 2011 for the Best Equity Fund over 3 years and 5 years under Equity, UAE category was given to Mashreq’s Makaseb Emirates Opportunities Fund (MEOF).