Posted on January 19, 2015

Mashreq, one of the leading financial institutions in the Region, today reported its financial results for the full year ended 31st December 2014.

Key highlights [2014 vs 2013]:

  • Double digit growth in Operating Income and Net Profit
    • Net profit increased by 33.0% to AED 2.4 billion
    • Operating Income up 20.8% to AED 5.8 billion driven by growth in both Net Interest Income and Net fee and commission income
    • Net Interest Income up by 28.9%, driven by 15.1% increase in loan volume and 26 bps improvement in net interest margin
  • Consistently high proportion of net fee and commission income
    • Mashreq’s best-in-class Net Fee, Commission and Other Income to operating income ratio remained high at 48.0%
    • Net Fee and Commission Income grew by 18.7% while Investment Income rose by 11.8%
  • Continued improvements in efficiency
    • Growth in Operating Expenses was contained at 8.2%
    • Efficiency Ratio improved from 42.2% in December 2013 to 37.8% at the end of December 2014
  • Sustained growth in Loans and advances and Deposits
    • Loans and advances increased by 15.1% to AED 58.0 billion
    • Customer Deposits increased by 16.9% to reach AED 68.5 billion
    • Loan-to-Deposit ratio and Loan-to-Total Assets Ratio remained stable at 84.8% and 54.8% respectively at the end of 2014
  • Strong liquidity and capital position
    • Liquid Assets to Total Assets stood at 27.7% with Cash and Due from Banks at AED29.4 billion
    • Capital adequacy ratio and Tier 1 capital ratio continue to be significantly higher than the regulatory limit and stood at 16.6% and 15.3% respectively
  • Significant improvement in asset quality
    • Non-Performing Loans to Gross Loans ratio reduced from 5.1% in December 2013 to 3.7% at the end of December 2014
    • Total Provisions for Loans and advances reached AED 3.19 billion, constituting 120.4% coverage for Non-Performing Loans

Mashreq bank delivered strong financial results for the year ending 2014, reporting a net profit of AED 2,401 million, an increase of 33.0% as compared to 2013. Earnings per share strengthened to AED 14.20 at the end of December 2014 compared to AED 10.68 a year earlier.

Mashreq's CEO, H.E. AbdulAziz Al Ghurair, said: “2014 has been a watershed year for Mashreq. I say that because the impressive 33% growth in net profit was a result of intrinsic growth in our core business – our Loans have grown by 15.1% and our Customer Deposits have grown even faster than Loans as it grew by 16.9% beating overall market growth. This matchless growth was produced by best in class customer service and breakthrough product innovations that delivered customer delight.”

He continued, “Our Retail business has had a banner year of innovations and awards – nearly doubling their profits in the process; our Corporate banking division has emerged an absolute winner in orchestrating and leading domestic financing and our International banking division has helped Mashreq build a diversified business model with over 18% of our revenues coming off overseas business. But we did not let this growth overtake our prudence – we have increased total Provisions for Loans and Advances to reach 120.4% coverage for Non-Performing Loans.”

Operating Income

  • Total operating income for 2014 was AED 5.8 billion, an increase of 20.8% compared to last year operating income of AED 4.8 billion. On a quarterly basis, operating income was AED 1.5 billion in Q4’14, which represented an increase of 13.5% year on year and 3.0% quarter on quarter. [refer Appendix 1: 2014 Financial Highlights]
  • Net Interest Income at AED 3.0 billion was up by 28.9% compared to a year earlier, driven by 15.1% year-on-year increase in loan volume and 26 bps improvement in net interest margin from 2.94% in December 2013 to 3.20% this year, which was predominantly led by change in balance sheet structure and composition of loans.
  • Net fee and commission income grew by 18.7% in the year to reach AED 1.7 billion; net investment income was up by 11.8% and other income also rose by 4.2% in the year leading to a best in class non-interest income to operating income ratio of 48.0% for 2014 (2013 ratio stood at 51.3%). Net fee and commission income represented 60.9% of total non-interest income in 2014 as compared to 58.1% in 2013.
  • Operating expenses for the period increased by 8.2% to reach AED 2.2 billion; however, Efficiency Ratio improved from 42.2% in December 2013 to 37.8% at the end of December 2014. On a quarterly basis, operating expenses was AED 597 million in Q4’14, which represented an increase of 11.6% year on year and 8.5% quarter on quarter. [refer Appendix 1: 2014 Financial Highlights]

Assets and Asset quality

  • Mashreq’s Total Assets increased by 18.1% to reach AED 105.8 billion in 2014, compared to AED 89.6 billion at the end of 2013. Loans and Advances grew by 15.1% during 2014 to reach AED 58.0 billion, compared to AED 50.4 billion at the end of December 2013 predominantly led by 18.0% growth in conventional loans. On a quarterly basis, Loans and Advances grew by 1.3% driven by 6.3% growth in Islamic finance and Investment products. Liquid Assets to Total Assets stood at 27.7% with Cash and Due from Banks at AED 29.4 billion at the end of the fourth quarter and Loan-to-Total Assets Ratio remained stable at 54.8%.
  • Customer Deposits increased by 16.9% during the same period, driven by both conventional and Islamic deposits to stand at AED 68.5 billion at the end of December 2014 leading to Loan-to-Deposit ratio of 84.8% at the end of 2014 (86.1% in December 2013). On a quarterly basis, customer deposits grew by 2.5% from AED 66.8 billion in September 2014. [refer Appendix 1: 2014 Financial Highlights]
  • Asset quality continued to improve as Non-Performing Loans decreased to AED 2.7 billion in current year from AED 3.2 billion last year leading to a reduction in the Non-Performing Loans to Gross Loans ratio from 5.1% in December 2013 to 3.7% at the end of December 2014. Net Allowances for impairment for 2014 was AED 1,075 million as compared to AED 873 million in 2013. Total Provisions for Loans and advances reached AED 3.19 billion, constituting 120.4% coverage for Non-Performing Loans as on December 31, 2014. (96.1% coverage as on December 31, 2013)

Capital and Liquidity

  • Mashreq’s Capital adequacy ratio stood at 16.6% (regulatory minimum of 12%) as at 31 December 2014 compared to 18.1% as at 31 December 2013. Tier 1 capital ratio at 15.3% continues to be significantly higher than the 8% regulatory minimum stipulated by the UAE Central Bank (16.4% as at 31 December 2013)

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2014 Full Year Operational Update:

In 2014, Mashreq Qatar continued to progress on its mission to provide all its customer segments with the most rewarding banking relationships.

Wealth Management Solutions:

Mashreq Qatar continued to remain the leading wealth management bank in the country, with a dedicated team of Relationship Managers, all of whom are certified by the Institute of Securities & Investments, UK. The Mashreq Gold launched innovative investment & insurance products for Mashreq Gold customers including standalone Mutual Funds, Sunlife Insurance, Delta Trackers and Mashreq Securities. The industry leading Makaseb Arab Tigers Fund generated double digit returns for Mashreq Gold customers during 2014.

Small & Medium Enterprise Banking:

This year Mashreq Qatar became the first bank in Qatar to offer the MasterCard Platinum credit card to businesses, offering unique features like cash-back, multiple cards, discounts on office equipment, and much more. The Business Banking Bundled offering was also introduced, where a customer who applies for an account, lending facility and Business credit card will receive a guaranteed free Rado watch.

Personal Banking:

The bank started the year with the revolutionary Majestic III bundle, which offers customers a 1-stop-banking solution that meets their transactional and borrowing needs and offers them a guaranteed free gift of a Blackberry, a Samsung SII or an iPad Air. Qatar enhanced the savings proposition by introducing the DreamSaver account – a unique account opened instantly through MashreqOnline which lets customers identify a dream and the account auomatically helps them in savings towards that dream every month. Mashreq Qatar launched Loan Fairs where, for the first time in Qatar, customers could walk into a branch with their salary transfer letters and their loan would be paid into their account the next morning. Mashreq continued to expand its trademark Mashreq Privileges campaign, which offers Mashreq Platinum cardholders discounts and buy 1 get 1 free offers at over 100 restaurants and lifestyle partners. A significant development was the introduction of the Salaam Loyalty Program – the only loyalty program in Qatar that offers customers loyalty points on their entire banking relationship. Customers can visit over 20 outlets and instantly use their Salaam points for free shopping – no vouchers and no papers. 

Corporate Banking

The corporate banking department at the bank remains committed to supporting Qatar in its growth and in the achievement of Qatar Vision 2030 The unit continued to be a banking partner in key infrastructure projects in Qatar including Qatar Rail, Asghal and more. Mashreq Qatar has the honor of executing the largest syndicated transaction in Qatar during 2014. The superior service and skillset offered by the corporate bank ensured that Mashreq Qatar was recognized as the Best Corporate Bank in Qatar 2014 by the Global Banking & Finance Review and Best Commercial Bank in Qatar 2014 by World Finance Magazine. 

Customer Service & Electronic Channels

Mashreq remained committed to remaining customer focused during 2014. It expanded its online banking proposition by offering mobile phone topup in 100+ countries and automatic monthly utility bill payment. These innovations resulted in another feather in the bank’s cap – it won the Best Consumer Internet Bank award from Global Finance Magazine for the 6th year in a row as well as Best Customer Service Bank 2014 by Global Banking & Finance Review. The bank continued to excel in providing e-channels to customers by introducing Mashreq Qatar upgraded itself to the Microsoft customer relationship management system, which goes a long way in ensuring the bank is able to deliver better sales and service quality to customers

2014 Full Year Awards:

  • Gallup Great Workplace Award
  • Banker Middle East Industry Awards - Best Regional Retail Bank
  • Islamic Business & Finance Awards - Best Islamic Window
  • Arabian Business Startup Awards - SME Bank of the Year
  • CSR Label – Dubai Chambers – 2014
  • Super brands 2014
  • EMEA Finance Middle East Banking Awards

Best Local Bank in the UAE

Best Regional Investment Bank in the ME

Best Loan House in the UAE

  • Banker Middle East Product Awards

Best Call Centre

Best Corporate Account

Best Customer Service – Retail

Best Fixed Income Fund

Best Web/Mobile site

  • Global Banking & Finance Review Awards

Most Innovative Islamic Banking Solution Provider

Best Corporate Bank Qatar 2014

Best Customer Service Bank Qatar 2014

Best Retail Bank UAE 2014

Most Innovative Banking Product (Mashreq Max) UAE 2014

  • IAIR Banking Awards - Best Bank in UAE
  • International Finance Magazine

Best Internet Bank in UAE

Best Online Bill Payment in UAE

  • World Finance Banking Awards

Best Investment Bank - UAE

Best Commercial Bank – Qatar

  • The Middle East Excellence Awards 2014

Financial Market Trading Automation and System Excellence Award

  • MasterCard Innovation Forum 2014

The Best Use of Innovative Technology’ in the Middle East & Africa

  • EMEA Finance – Middle East Banking Awards - Best Cash Management in the Middle East
  • Celent Awards - Best Cash Management and Trade award
  • Gulf Business Industry Awards - Innovator of the Year – H.E. AbdulAziz Al Ghurair
  • Global Finance – World’s Best Banks

Best Consumer Internet Bank – Mashreq Qatar

Best Web Site Design – Mashreq

Best Integrated Consumer Bank Site – Mashreq

  • First Bank in UAE to achieve IIA Conformance
  • Smart Card Awards 2014

Best Debit Card – Supplementary Debit Card

Best mPayment Innovation – PayPort

  • The Asian Banker - Excellence in Retail Financial Services International Awards

Best Improved Retail Bank in the Middle East

Best Mobile Phone Banking

Best Retail Banking Branch Innovation

  • MENA Fund Manager Awards 2014

Best Equity Fund - Makaseb Arab Tigers Fund, for both the one year performance category and the three year performance category.

Best Fixed Income Fund award - Makaseb Income Fund won the in both the one year and three year Fixed income categories.

  • RERA Best Practice - Top Trustee Bank
  • Daman Corporate Health Awards - Corporate Wellness Team of the Year
  • Insights - Best Customer Retention Unit
  • Emirates Institute for Banking and Financial Studies

3 individual awards for Emirati staff

  • Asian Business Leadership Forum - Business Excellence Award
  • Tatweej Academy Awards

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