RAK Bank profit up 42% as focus stays on financing

Dubai: The National Bank of Ras Al Khaimah (Rak Bank) has reported a net profit of Dh228.07 million, beating analysts expectations and the overall market trend in profits and loan growth.

For the first quarter, the bank's profit grew 42.2 per cent compared to the first quarter of 2009 and 16.7 per cent over the fourth quarter of 2009.

"Although economic recovery is subdued, there remain good lending opportunities.

"The bank has continued its focus on those products which are core to its business model, namely SMEs [small and medium enterprises], small business financing, mortgages, personal lending and cards, and the success of our marketing efforts is reflected in the first quarter's results," Graham Honeybill, General Manager of Rak Bank, said in a statement.

Positive growth

Rak Bank's net interest income for the first quarter grew 48 per cent to Dh372.8 million compared to the same period last year.

"Despite the current economic conditions the bank has reported very positive growth in profits while maintaining healthy growth of its loan books," said Deepak Tolani, an analyst with Al Mal Capital.

The bank's gross loans and advances grew to Dh14.8 billion, an increase of 6.5 per cent over the previous quarter while it was up 25 per cent compared to the same period last year.

"The bank has continued to follow a measured approach to expansion, with a focus on maintaining a consistent and sustainable level of growth through a careful lending policy and actively seeks new lending in its chosen fields and has seen growth in the small business and personal finance segments," the bank said in a statement.

During the first three months of this year the bank provided for a total impairment charge of Dh81.3 million, 49.7 per cent higher than Dh54.3 million in the first quarter of last year. Investments totalling Dh56.3 million matured in the first quarter while the bank continued to hold a portfolio of Dh352 million.

The bank did not make any impairment charges on the portfolio as it intends to hold it to maturity.

Assets

The bank's total assets in the first quarter were at Dh18.22 billion, up 6.5 per cent over the previous quarter and 26 per cent compared to the same period last year..

On the liability side, customer deposits increased by Dh1.2 billion from the close of the fourth quarter and the bank's loans to deposits ratio stood at 91.6 per cent.

In the first quarter, the bank purchased $53.5 million of its own bonds from the market due to favourable liquidity conditions.