Dubai bank Mashreq Q2 net profit falls on impairments

Mashreq, Dubai’s third-biggest lender by assets, posted on Wednesday a 16.1 percent fall in second-quarter net profit as impairments for bad debt more than doubled and fee and commission income edged lower.

Against a backdrop of trickier operating conditions for banks in the United Arab Emirates (UAE), Mashreq has now reported falling profit for four quarters in a row.

The lender made a net profit of 539.4 million dirhams ($146.8 million) for the three months to June 30, it said in a statement, down on the 643.3 million dirhams recorded for the corresponding period of 2015, according to the statement.

Arqaam Capital had forecast the bank would make a net profit of 588 million dirhams for the period. Banks in the UAE have been adapting to the increasingly-challenging business environment, as the impact of the fall in oil prices from their mid-2014 peak hits wider economic activity.

Most banks to have reported second-quarter earnings this year have posted either flat or lower profit.

“We remain cautiously optimistic for the remainder of 2016 and we are conscious of the challenges we may face,” said Mashreq chief executive Abdulaziz al-Ghurair. “Our focus remains on keeping a strong hand on expenses, while allowing flexibility to take advantage of opportunities that present themselves over the remainder of the year and into 2017.” (RTRS)