Dubai: RAKBank’s net profits for the first quarter of 2015 increased 8.3 per cent year on year to Dh362.2 million.
Gross loans and advances grew by 15.8 per cent year-on-year and stood at Dh26.7 billion by the end of the quarter.
“Our first quarter financial results reflect stable earnings, healthy liquidity, and a strong capital base,” said Peter England, RAKBank CEO.
Total operating income for the three months ended March 2015 increased by 13.1 per cent year-on-year to Dh932.3 million due to a rise in net interest income. Non-interest income was up by 7.2 per cent to Dh198.8 million compared to the same period last year mainly due to an 11.4 per cent increase in fees and commission income.
“The key contributing factor is growth in gross loans and advances, which were up by Dh863.9 million year-to-date as a result of strong signs of growth during the quarter across most business units especially RAKFinance, auto loans, and business banking,” said England
Traditional working capital and trade loans to the SME and commercial banking segment grew by around 130 per cent year-on-year and trade finance portfolio surpassed Dh2 billion.
Total assets of the bank grew by 2.5 billion year to date as a result of loans and advances and deposits with other banks. This includes the un-deployed funds from the bank’s own Euro Medium Term Note (EMTN) which raised a further $300 million (Dh1.1 billion) in February.
In addition to the ordinary growth in assets, the bank received Dh3.7 billion in funds from a business banking customer on 31 March 2015, which was parked with other banks on an overnight basis. As a result, total assets stood at Dh41 billion by the end of the quarter.
Ongoing investments
Customer deposits were up by Dh1.5 billion year-to-date on the back of an increase in current and saving accounts as well as Islamic banking deposits, which grew by 11.5 per cent to Dh2.9 billion. Total deposits stood at Dh29.9 billion by the end of the quarter.
Ongoing investments in technology, distribution network and a rise in employment costs, the bank’s operating expenses increased by 4.8 per cent year-on-year to Dh377 million. Nevertheless, cost-to-income ratio dropped to 40.4 per cent as at March 31, 2015 from 43.6 per cent as at March 31, 2014.
The total impairment charge for the first quarter of 2015 increased by Dh62.7 million year-on-year to Dh193.1 million as the provision coverage ratio closed at 84.6 per cent.
“This rise is largely due to an increase in provisions in Personal and RAKFinance loans, the overall growth in our loan book, and the bank’s commitment to a long-term sustainable performance as we continue to take further precautionary provisions on our restructured book,” said England
As of March 31 2015, RAKBank’s non-performing loans (NPL) stood at 2.7 per cent of the gross loan portfolio and the annualised net credit loss (NCL) to average loans and advances closed at 2.98 per cent.
The Bank’s capital adequacy ratio as per Basel II requirement at the end of the quarter is 24.2 per cent against a current minimum total capital ratio of 12 per cent. At the end of the quarter, the regulatory liquid assets ratio (LAR) was 16.6 per cent.
