Rakbank achieves 13% growth in first quarter profits

The bank's performance during the quarter, which ended 31st March 2009, remains positive despite adverse market conditions, with the Personal Banking portfolio continuing to grow in line with the bank's targeted expansion.

The bank's net interest income increased by 34% from the same period last year to reach Dhs248m. Gross Loans and advances stood at Dhs11.9bn, a 5% increase over end of year 2008 and a 30% increase over the first quarter last year. Fee, commission and other income at Dhs118m was marginally up compared to the same period last year.

Graham Honeybill, General Manager, said:

"Rakbank has continued to actively seek new lending opportunities and has seen growth in a number of segments, including those of small businesses, personal loans, mortgages and credit cards."

"Despite interbank rates easing, the cost of customer deposits has remained high, and this has impacted the level of profitability this year, compared to what the bank has seen in previous years," he explained. "Nevertheless, and in spite of the market's challenging conditions, Rakbank's business has registered very healthy growth in the first quarter across its product offering."

Honeybill also said that the bank will continue to focus on providing its customers with a full range of products complemented by excellent customer service, and that it would continue to invest in technology and other delivery channels. The bank remains at the forefront of Emiratisation in the banking industry.

The bank's capital adequacy ratio at the end of the quarter stood at 16.45%, against a minimum of 10% as prescribed by the UAE Central Bank. Total assets at the end of the quarter were Dhs14.5bn, a 4% increase from the end of 2008 and a 23% increase compared to end of the first quarter last year. The growth in assets was mainly due to a rise of Dhs600m in loans and advances.

Rakbank's investment portfolio was at Dhs520m at the end of the quarter against Dhs645m at the end of last year, the decline being due to maturity of investments. The bank has said that it intends to hold all investments to maturity with no loss expected on any of its investments. The bank has no direct or indirect exposure to any Sub-prime or similarly structured product.

The growth in the asset book has been supported by a combination of increases in customer deposits and shareholders' equity. Customer deposits were at Dhs10.56bn and up by Dhs903m from 31st December 2008 due to a combination of term and transaction deposits.

During the quarter, $100m tranche of the medium term notes programme matured.

The Share capital of the bank increased to Dhs962m from Dhs740m after distribution of a 30% stock dividend. Total shareholder's equity increased to Dhs2.21bn.

The bank carries a stable outlook, according to leading rating agencies.

The 31st March 2009 interim condensed financial information as reviewed by the bank's auditors can be found on the Bank's website.