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RAK Bank branch in Bur Dubai. Image Credit: Gulf News Archives

Dubai: National Bank of Ras Al Khaimah (RAKBank) on Wednesday reported a consolidated net profit of Dh270.2 million for the first quarter of 2019, up of 31.7 per cent year-on-year and by 10 per cent on the previous quarter.

Total income increased by 8.5 per cent on a year-on-year basis and by 0.9 per cent on the fourth quarter 2018.

“Total income for the first quarter 2019 exceeded Dh1 billion, which is only the second time in RAKBank’s history that we have achieved such a result. This is a clear outcome of the bank’s diversification strategy which commenced 4 years ago and is now delivering solid results,” said Peter England, CEO of RAKBank.

On a year-on-year basis, total operating income improved by Dh78.4 million to Dh1 billion. Interest income from conventional loans and investments increased by 9.3 per cent year-on-year, while interest costs on conventional deposits and borrowings increased by 41.3 per cent.

8.5%

Increase in RAKBank’s total income on a year-on-year basis

Net income from Sharia-compliant Islamic financing decreased by 4 per cent and non-interest income improved by Dh65.5 million to Dh317.2 million, mainly due to an increase in net fees and commission income and forex and derivative income.

“Non-interest income particularly was very strong for the first quarter and was achieved by impressive results across all business lines especially our Treasury and Wholesale Banking/Financial Institutions units,” said England.

As at March 31, 2019, RAKBank’s total assets stood at Dh53.5 billion, increasing by 9 per cent year-on-year and by 1.6 per cent year-to-date. The bank’s gross loans and advances grew by Dh1.1 billion; investment securities were up by Dh1.1 billion; and cash and Central Bank balances grew by Dh831.1 million. Lending in the Wholesale Banking segment grew by Dh1.2 billion or 17.8 per cent year-on-year while Business Banking lending increased by Dh173.5 million on the corresponding period.

Year-on-year, provisions for credit loss decreased by Dh17.9 million, mainly due to a decrease in provisions in the Business Banking portfolio. Compared to Q4 2018, provisions for credit loss declined by Dh25 million due to a decline in provisions across business units.

Dh53.5b

RAKBank’s total assets as on March 31, a rise of 9% year-on-year

“Our diversification strategy has also helped our provision line to graduate down by 5 per cent year-on-year whilst retaining a coverage ratio in excess of 130 per cent,” said England.

Annualised return on assets stood at 2.1 per cent and return on equity at 15.1 per cent at the close of the first quarter.

The non-performing loans and advances to gross loans and advances ratio closed the quarter at 4 per cent compared to 4.2 per cent on 31 December 2018, and the net credit losses to average loans and advances ratio closed at 4 per cent compared to 4.4 per cent in the first quarter of 2018.

The bank’s capital total adequacy ratio as per Basel III stood at 17.4 per cent compared to 17.2 per cent at the end of 2018. The regulatory eligible liquid asset ratio at the end of the quarter was 14.5 per cent at the close of the quarter while the advances to stable resources ratio stood at a comfortable 89.3 per cent compared to 94.5 per cent at the end of 2018.