DUBAI — Mashreq, one of the UAE’s leading financial institutions, on Sunday declared a net profit of Dh647.4 million for the first nine months of the year and said it sees growth in the coming period.

The bank’s net interest income and income from Islamic products net of distribution increased by 10.3 per cent to Dh1.74 billion in the first nine months of year 2010 compared with Dh1.58 billion for the same period last year. The growth in net interest income was achieved by improvement in net interest margins through strategic management of the balance sheet and reduction in cost of funding. The net interest margin improved from 2.24 per cent for full year 2009 to 2.6 per cent for the first nine months of 2010.

“We have seen stability and growth in Q3 2010 in general, and the bank’s current position is ensuring that we remain optimistic of further growth in the coming period,” Mashreq Chief Executive Officer Abdul Aziz Al Ghurair said.

The bank reported an operating income of Dh3.2 billion. The core fees and other income, after excluding certain one time gains recorded last year has dropped by 13 per cent due to the reduction in banking products fees and foreign exchange income. However, the fee and other income to gross income ratio at 46 per cent remained one of the highest in the market.

“In spite of the difficult global financial environment, Mashreq has delivered a robust performance during the first nine months of the year. Our well diversified and stable revenue streams highlight the sustainability of our operating strategy in these uncertain times,” Al Ghurair added.

During the period under review, the bank has undertaken significant expansion, however proactive cost management has enabled Mashreq to maintain the same levels of operational expenses year on year, while being able to fund its continued growth and investment in strategic projects. Mashreq continues with prudent provisioning policies and the bank has set aside Dh317 million for the third quarter. The total provisions for the first nine months of 2010 at Dh1.21 billion is lower by 12.3 per cent as compared to Dh1.38 billion for the same period of 2009, reflecting improvement in portfolio quality.

In line with the Bank’s strategy of re-positioning the Balance Sheet, Loans and advances as of 30 September 2010 have declined from Dh47.7 billion in December 2009 to Dh43.3 billion, a drop of 9.4 per cent. Customer deposits as of September 2010 were Dh49.2 billion a decline of 8.2 per cent from December 2009 levels. This ensured that Advances to Deposits ratio remained at an optimum level of 88 per cent and Liquid Assets comprising of cash and due from banks were strong at 31 per cent of Total Assets, even after repayment of the Dh1.1 billion of EMTN tranche that matured during the first quarter of 2010.