JEDDAH, 10 April 2005 — Dubai-based Mashreqbank Group’s net profit rose 25 percent to a record 751.1 million dirhams ($204.7 million) in 2004.
Chief Executive Abdul Aziz Al-Ghurair said operating income increased 20.5 percent to 1.7 billion dirhams.
The board recommended a cash dividend equivalent to 35 percent of share capital and a stock dividend of 10 percent — a 45 percent distribution for shareholders versus 35 percent last year.
The bank reported a 2003 net profit of 601 million dirhams.
Ghurair said he expected profits to continue to grow in 2005 as the economy of the United Arab Emirates expanded and Mashreqbank entered new fields such as investment banking.
Mashreqbank, with total assets of 31.95 billion dirhams ($8.71 million) as at end of 2004, is the largest private bank in the UAE. At the end of December 2004, the bank had a market share of 10.1 percent in gross loans and 10.3 percent in private sector deposits among the 10 listed banks in the country, according to a report prepared by the Kuwait-based Global Investment House (GIH).
The bank has a paid up capital of 866.2 million dirhams, consisting of 86.62 million ordinary shares of 10 dirhams each.
The main divisions of Mashreqbank are retail banking, commercial banking, treasury and capital markets, and financial institutions, besides other support divisions like credit risk management, risk review and corporate affairs. The diverse range of products and services offered by the bank currently include credit cards, consumer lending, trade finance, project finance, electronic funds transfer at points-of-sales, automated teller machines, call center, treasury, correspondent banking, online banking and GSM banking.
In the early 1990s, Mashreqbank became the first bank in the UAE to launch retail banking. The bank is a strong brand name in retail banking, with nearly one in every two households in the country banking with Mashreqbank.
The GIH report said that Mashreqbank’s primary strategic objective is to continue to develop its profitable business in the UAE, Qatar and other GCC states. Diversification of revenue and faster growth in fee and commission income, enhanced risk management continue to be its major strategic priorities. The bank also plans to aggressively boost its fee-based income by pushing its correspondent banking products, launching mutual fund products and building advisory capabilities.
The bank has indicated that it would be raising about $300 million through the second issue of Floating Rate Notes (FRNs) under its Euro Medium-Term Note (EMTN) Program, in the follow-up to its first issue, in which the bank had raised $300 million in February 2004.
Mashreqbank’s interest income increased by 28.3 percent in 2004 to 1.42 billion dirhams from 1.11 billion dirhams in the previous year. The net interest income accounted for 50.3 percent of the gross operating income in 2004, down from 52.5 percent in the previous year. The net commission income witnessed a CAGR of 17.3 percent during the period and accounted for 14.3 percent of the gross operating income in 2004, while the investment income had a CAGR of 19.7 percent, and constituted 8.8 percent of the gross operating income in 2004.
The report added that Mashreqbank has improved its profitability significantly over the years. The operating profit grew at a CAGR of 23.1 percent, while the net profit grew at a CAGR of 21.0 percent during 2000-2004.
Mashreqbank is the second oldest commercial bank in the country, having originally been established as Bank of Oman Ltd. in 1967 in Dubai. The bank currently has 34 branches in the UAE, with branches in all the Emirates - Dubai (13), Abu Dhabi (8), Al Ain (2), Ajman (1), Fujairah (3), Ras Al Khaimah (2), Sharjah (4) and Umm Al Qawain (1). The bank also has branches in Bahrain, Egypt, and Qatar. In addition, it has correspondent banking centers in Bangladesh and Pakistan, and branches which function as correspondent banking centers in Hong Kong, India, the UK and the US. The bank also has a network of 94 ATMs spread across the UAE. The employee strength of the bank as at the end of 2004 was 1,913.
