Dubai: The National Bank of Ras Al-Khaimah (RAKBank) has reported a full year consolidated net profit of Dh505.4 million, down by Dh589.9 million or 53.9 per cent over the previous year.
The Board of Directors recommended a distribution of cash dividend of 15 per cent of the share capital (15 fils per share) for the shareholders’ consideration and approval at the Annual General Meeting (AGM).
“The efforts of recent years to diversify our balance sheet and revenue stream delivered strong results in the first couple of months of 2020. Our Treasury business displayed an increase in operating profits year on year. Additionally, our income from investments recorded significant revenue growth as compared to the previous year,” said RAKBank CEO, Peter England.
Total income for the financial year ended December 31, 2020 amounted to Dh3.6 billion, which decreased by 10.4 per cent as compared to the same period of the previous year.
Net interest income and net income from Islamic Finance stood at Dh2.5 billion for the year 2020, decreasing by 9.9 per cent year-on-year. Non-interest income decreased by Dh138.4 million year-on-year to Dh1 billion, mainly due to a decrease of Dh139.9 million in net fees and commission income.
Operating expenses decreased 11.1 per cent year-on-year and the cost to income ratio closed at 39.2 per cent for the year.
Balance sheet
The bank’s results reflect the impact of the pandemic on our customers and the economy whereby total assets stood at Dh52.8 billion, decreasing by 7.6 per cent over 2019, and gross loans and advances closed at Dh32.2 billion, down by 11.2 per cent over the previous year.
Loans & advances decreased by Dh4.1 billion to Dh32.2 billion, which is a decline of 11.2 per cent year-on-year resulting in a reduction in bank’s total assets by 7.6 per cent Dh52.8 billion compared to the end of 2019. Customer deposits grew by Dh118 million to Dh36.9 billion, a 0.3% increase compared to the end of 2019.
Asset quality
Provision charges for credit loss increased by Dh350.1 million in 2020 which is a 26.7 per cent increase year-on-year however this increase is mainly related to additional precautionary provisions under IFRS 9.
The Non-Performing Loans and Advances to Gross Loans and Advances ratio closed at 5.2 per cent compared to 4 per cent as at 31 December 2019. RAKBank is well provisioned against loan losses with a loan loss coverage ratio of 129.4 per cent, excluding mortgaged properties and other realizable asset collateral available against loans.
Capitalization and liquidity
The bank’s total capital adequacy ratio stood at 18.6 per cent at the end of December 2020. The common equity Tier 1 ratio of the bank stood at 17.5 per cent. The regulatory eligible liquid asset ratio was 14.5 per cent at the end of December 2020 well above the minimum requirement. The advances to stable resources ratio stood comfortably at 80.6 per cent compared to 89.1 per cent at the end of 2019.
