National Bank of Ras Al-Khaimah (RAKBank) has reported a consolidated net profit of Dh153.5 million for the first quarter of 2020. Image Credit: Supplied

Dubai: The National Bank of Ras Al-Khaimah (RAKBank) on Sunday reported a consolidated net profit of Dh153.5 million for the first quarter of 2020, a decrease of 43.2 per cent compared to the first quarter of 2019.

The bank attributed the decline Q1 profits to higher IFRS 9 provisions that are set as precautionary measures to combat the economic impact of the novel coronavirus.

“RAKBANK had an exceptional January and February and we were on track for one of our best quarters on record until the events around COVID-19 began to unfold. Despite this, our operating performance for the first quarter remained strong. However, like most banks globally we have taken the pre-emptive judgemental overlays in our IFRS 9 provisions to factor in the challenges that lie ahead,” said Peter England, CEO of RAKBank.

For the first quarter of 2020, the bank reported a total income of Dh1 billion remained flat on a year-on-year basis and increased by 2.1 per cent compared to the fourth quarter of 2019.

The net interest income and net income from Shariah-compliant Islamic financing increased by 1.8 per cent year-on-year and the non-interest income declined by Dh12.2 million to Dh305 million, mainly due to the year-on-year decrease of Dh10.4 million in net fees and commission income and Dh6 illion in forex and derivative income.

Balance sheet

Total assets increased by Dh2.6 billion or 4.6 per cent year-to-date and by Dh6.2 billion year-on-year. The major contributions for the year-on-year growth came from the gross loans and advances that increased by Dh1.6 billion and the bank placements, which grew by Dh3.6 billion. In addition, the cash and central bank balances increased by Dh882.8 million.

Asset quality

Provisions for credit loss increased by Dh134.1 million year-on-year and this is was mainly due to additional provisions taken in view of the expected deterioration in the current economic and operating environment.

The non-performing loans and advances to gross loans and advances ratio closed the quarter at 4 per cent flat compared to 31 December 2019, and the annualised net credit losses to average loans and advances ratio closed at 5.3 per cent compared to 4 per cent in Q1 2019 due to higher provisions under IFRS 9.

Capitalisation and liquidity

The bank’s total capital adequacy ratio as per Basel III, was 16.1 per cent compared to 16.8 per cent at the end of the previous year. After the application of the prudential filter, the capital adequacy ratio as at March 31, 2020 improves to 16.4 per cent.

The regulatory eligible liquid asset ratio at the end of the quarter stood at 12.8 per cent compared to 12.9 per cent as at 31 December 2019, and the advances to stable resources ratio stood comfortably at 88.2 per cent compared to 89.1 per cent at the end of 2019.

"RAKBank is very well positioned to weather the current challenges with very high levels of capital, liquidity and precautionary provisions, leaving us in a very strong position to help our clients through these very challenging times,” said England.