Dubai: Third quarter profits at RAKBank were down to Dh132.02 million, from Dh284.48 million a year ago, with higher provisions being the main factor in the decline. For the first nine months, provisions went past Dh1 billion to Dh1.28 billion against Dh983.89 million.
This weighed down nine-month net profits to Dh438.64 million, against Dh839.41 million a year ago. In a statement, the CEO, Peter England, seems to suggest the worst is behind it.
"Since the gradual reopening of the business, we are seeing signs of improvement in the UAE economy,” he said. “However, customer demand for loans has declined considerably as many SMEs and individuals continue to take a cautious stand.
“This combined with a low interest rate environment is providing challenges for the Bank’s top-line income. To help cushion some of this impact, RAKBank has taken a very proactive approach to cost optimisation.
“Other than the continued precautionary loan loss provisions being taken under IFRS 9, the underlying asset quality of our book remains in decent shape.”
Total income was down 8.1 per cent to Dh2.756 billion, mainly due to lower non-interest income - by Dh114 million – and of net interest income. There was also lower contribution from its Islamic products “because of a declining balance-sheet and lower margins”.
"The third quarter remained challenging, and we have to expect this trend to continue for next few quarters at least as it takes time for the gradual recovery to flow through the economy and begin to translate into improved performance," the CEO added. "In the meantime, however, we have used this time to make significant progress in our digital transformation including launching our new mobile app and a host of digital initiatives in the SME space in the third quarter."