Mashreq cut branches from 34 to 10 in an 84% profit slump and went digital-first

Mashreq, founded in 1967 and controlled by the Al Ghurair family, entered 2021 in its worst shape in years: first-half net profit attributable to owners had fallen 84% year-on-year to just Dh85m, impairment allowances climbed 53% to Dh1.49bn, and Covid-era payment deferrals were still eating the loan book. Chairman AbdulAziz Al Ghurair nonetheless framed the bank's 'ongoing digital transformation' as the reason the future looked promising.

The proof came weeks later. In July 2021 the bank filed that it would cut its UAE branch network to 10 in August, down from 34 two years earlier - closing two-thirds of what remained at the bottom of the cycle, while digital-only rivals such as Zand and Al Maryah Community Bank were still finding their feet. The pivot, begun years earlier with the NEO digital platform, turned the collapse in foot traffic into a permanent exit from branch economics rather than a temporary retrenchment.

By early 2025 the shape of the bank had changed: Q1 2025 delivered Dh2.1bn of pre-tax profit (Dh1.8bn after tax), a 21% return on equity, 14% loan growth and a 29% cost-to-income ratio, among the industry's lowest. Operating income reached Dh3.1bn with non-interest income up 16%, evidence of deliberate diversification away from rate dependence. Group CEO Ahmed Abdelaal credited the 'digital and regional focus': Mashreq Oman had launched and a digital retail pilot was running in Pakistan.

The strategy also created sellable infrastructure. In January 2025 Mashreq completed a $385m stake sale of its payments arm Neopay, monetising an asset the pivot had built. NEO was expanding internationally - the branch count was no longer the measure of the bank.

Q1 2025 pre-tax profit of Dh2.1bn on assets of Dh273bn, 21% ROE and a 29% cost-to-income ratio; the NEO platform runs in Oman and a Pakistan pilot.

The 84% profit slump made the branch network's fixed costs indefensible, converting a controversial closure plan into a filing nobody could fight.

Closing to 10 branches in 2021, before fintech licences matured, kept Mashreq ahead of the UAE's digital-only entrants instead of defending share against them later.

The savings flowed into non-interest income - payments, SME services, regional expansion - which is why margins held even after a 100-basis-point rate cut.

Monetising Neopay at $385m showed the strategy created sellable infrastructure assets, not just cost savings.

Cut the legacy cost base hardest when results are worst: crisis downsizing resets cost-to-income permanently, while waiting for recovery re-legitimises the branches you need to exit.

Mashreq carried the playbook through 2025: 65% of deposits in low-cost current and savings accounts, a capital adequacy ratio of 18.5% and a liquidity coverage ratio of 126%, with external assurance for its full ESG data set - a first in the region. The bank that once measured itself in branch count now benchmarks itself on cost-to-income and returns on equity.