Dubai: National Bank of Ras Al Khaimah (RAKBank) on Monday reported Dh716.2 million net profits for the first half of 2015 compared to Dh700.4 million reported in the same period last year.
Modest growth in first half net profits is attributed to higher impairment charges and operating expenses.
The bank’s total income grew by 12.2 per cent to Dh1.9 billion during the half-year compared to the same period last year as a result of an increase of 12.9 per cent in net interest income and 9.8 per cent in non-interest income.
The consolidated operating profit before provision for impairment jumped by 19.2 per cent to Dh1.1 billion in the first half of the year. “Despite rising competition in the UAE banking market, the Group continues to record further improvement in year-on-year operating income and expense ratios,” said Peter England, CEO of RAKBank.
Operating expenses inched up by 3 per cent during the first six months of the year compared to the previous year. However cost-to-income ratio dropped to 40 per cent from 43.6 per cent as the bank continued to grow its income base and focused on cost optimisation.
At the close of the first half of the year, the bank’s total assets were at Dh38.1 billion, up Dh3.2 billion compared to year end 2014 mainly as a result of strong growth in gross loans and advances and partly due to Dh615.8 million added through the consolidation of RAK Insurance in which the bank acquired 79.23 per cent in May 2015.
“Gross loans and advances increased by 16 per cent year-on-year to Dh27.7 billion by the end of the first half of 2015. SME [small and medium enterprises] and commercial lending under our business banking segment, which has been a focus for the bank since early 2014, recorded a jump of 115 per cent in gross loans and advances year-on-year,” said England.
During the first six months of the year customer deposits grew by Dh1.4 billion to Dh26.1 billion from year end 2014.
The bank’s impairment charges for the first half of the year was up 65.2 per cent to Dh426.9 million compared to Dh258.4 million in the first half of 2014. “As a result of this growth in overall lending volumes, our impairment charge was higher than what we saw in the previous year however our non-performing loans remained steady at 2.7 per cent,” explained England.
RAKBank continued to maintain robust capital adequacy ratio as per Basel II requirement 23.7 per cent, comprising entirely of Tier 1 capital. At the end of the quarter, the regulatory liquid assets ratio was 18.6 per cent and advances to stable resources ratio was 87.7 per cent. “Looking ahead, we will continue to aggressively grow the bank’s top line in the second half of the year while strengthening our branch and ATM network across the country and launching additional digital banking solutions,” said England.
