Dubai: RAKBank on Monday reported Dh1.45 billion net profit for the year 2014, up 1.7 per cent compared to Dh1.43 billion in 2013.

Operating profit before provisions increased by 15.7 per cent from the previous year. Total assets grew by 15.6 per cent to Dh34.8 billion compared to Dh30.12 billion at the year-end 2013.

“In 2014 the bank’s top line performance has been very strong. Our net profit growth however was relatively muted as a result of a full year’s impact of increased provisions. Total loan growth for the year was at 15.4 per cent which reflects well for 2015 as we see the full year impact of the loan growth flowing though into our income line,” said RAKBank CEO, Peter England.

Bank’s total operating income went up by Dh404.8 million to Dh3.56 billion as net interest income and net income from Islamic financing grew by 11.8 per cent to Dh2.76 billion. This was due to higher interest income from loans and investments as well as lower cost of deposits.

Non-interest income was up by Dh113.1 million as net fees and commission income was bolstered by strong performances in the income streams of credit cards, RAKFinance (unsecured lending to small businesses), and business banking, in addition to trade finance solutions.

“In addition to our robust retail lending performance, our 2014 strategy saw a renewed focus on the SME and commercial banking segment, with the traditional business banking portfolio more than doubling from 2013 to reach Dh2.2 billion,” said England.

Provisions for loan impairments stood at Dh595.3 million, up by Dh254.7 million over last year due to higher loan provisioning throughout the year. The bank’s loan loss cover with the loan loss coverage ratio improved to 87.2 per cent compared to 73.3 per cent at the end of 2013.

RAKBank’s operating costs were up by 9.2 per cent over 2013, but the cost increase remained below the total operating income growth of 12.9 per cent indicating healthy profitability levels.

Customer deposits grew by Dh6.9 per cent compared to the previous year to Dh24.7 billion and Islamic customer deposits reached Dh2.6 billion by year-end.

The bank’s Tier 1 ratio at the year-end 2014 was 26.5 per cent compared to 29 per cent at the end of 2013. The regulatory liquid asset ratio at the end of the year 2014 was 20 per cent compared to 19.8 per cent at the end of 2013.

The bank’s board has recommended a cash dividend of 50 per cent which will result in 42.4 per cent of net profit being retained within the bank’s shareholders equity thereby increasing capital and reserves.