Dubai: RAKBank on Thursday reported a nine-month net profit of Dh1.1 billion, down 64 million (about 5.3 per cent) compared to Dh1.13 million reported in the corresponding period in 2013.

For the third quarter of the year, the bank reported a net profit of Dh373.05 million, marginally down from Dh377.35 million reported in the same period last year. On quarter on quarter, the third quarter profit was up by Dh7.2 million compared to the second quarter net profit this year.

The bank attributed the decline in profit to more normal levels of provisions for bad debts which started from the last quarter in 2013. The total impairment charge for the nine months stood at Dh425.1 million compared to Dh183.1 million for the same period last year.

For the third quarter of the year the bank’s provisions were up 156 per cent at Dh166.68 million compared to Dh64.93 million in the same quarter last year.

Non-performing loans were steady at 2.3 per cent of the loan portfolio and the annualised net credit losses to average loans and advances closed at 2.4 per cent.

“Given our loan mix, we are now seeing more normal levels of bad debt after a period of abnormally low credit losses last year. However our underlying business is very robust as operating income continues to grow strongly quarter on quarter,” said Peter England, RAKBank CEO.

At the close of the third quarter, the bank’s total assets stood at Dh34.8 billion, growing 20.5 per cent year-on-year and 15.5 per cent on a year-to-date basis. Gross loans and advances stood at Dh24.9 billion, up 13.5 per cent year-on-year and 11.5 per cent on a year-to-date basis. Gross Islamic financing assets increased by Dh1.7 billion compared to year-end 2013.

Net interest income

Total operating income for the first nine months of the year was up by Dh291.5 million to Dh2.6 billion, an increase of 12.5 per cent compared to the same period last year. This growth was largely driven by Dh198.9 million increase in net interest income and income from Islamic financing, and Dh92.6 million in non-interest income, which climbed by 18.3 per cent over the same period last year.

Net interest income plus net profit from Islamic financing for the nine months ended September 30 grew by 10.9 per cent compared to the first nine months of last year.

“In addition to our top line growth in our Personal Banking business, the Business Banking segment, which covers traditional SME and commercial lending, has become a major engine of growth for RAKBank, with our loan book more than doubling over the previous year to a total of Dh1.8 billion,” said England.

On the liability front, the bank’s customer deposits grew by D1.6 billion to Dh24.7 billion compared to year end 2013. The growth came mainly from a rise of Dh1.9 billion in conventional demand deposits and Dh344 million in savings deposits.

“Looking ahead, we see more potential for growth by diversifying into fee-generating products and growing our commercial lending and treasury segments. We also see a tremendous opportunity for growth by expanding into complementary industries,” said England.