Rakbank reports 10% growth in profit for first half of the year

Second quarter profit grew by 14.38% over the first quarter of 2009. The bank achieved this strong level of growth notwithstanding adverse market conditions, with the Personal Banking portfolio growing in line with the bank's targeted expansion.

The bank's net interest income during the first half of the year grew by 32%, compared to the same period last year, to reach Dhs530.76m. Gross Loans and advances stood at Dhs12.5bn, a 11% increase over the six month period and a 26% increase from last year's first half figures. The bank has taken adequate provisions on its loan portfolio and has no direct or indirect exposure to Ahmad Hamad Al Gosaibi & Brothers and Saad Group. Fee, commission and other income at Dhs254m was up by 5% from the same period last year.

"Rakbank continues to follow a measured approach to expansion, with a focus on maintaining a consistent and sustainable level of growth through a careful lending and investment policy," said Graham Honeybill, General Manager.

"Even though we have been operating in an environment that has presented considerable challenges to our business and customers, we continue to achieve positive results due to the business model that we have followed both in good times and in difficult conditions. The bank has registered growth across its business units of personal loans, mortgages, credit cards and small business loans, as a result of maintaining a consistent level of lending activity."

he added.

The capital adequacy ratio as at 30th June 2009 stood at 15.81%, against a minimum of 11% mandated by the Central Bank. Deposits received from the Ministry of Finance are not included in this calculation as legal formalities have not yet been completed. Inclusion would boost this ratio to 21.05%.

Total assets were Dhs15.38bn, an 11% increase from year-end 2008 and 18% higher than the same period last year. The main growth in assets was seen in loans and advances.

During the first half, investments totalling Dhs209m matured leaving an outstanding portfolio of Dhs542.31m at the end of June. The bank intends holding all investments to maturity and does not anticipate any loss on any of its investments, all of which are in the name of domestic institutions.

Growth in the bank's asset book has been supported by a combination of increases in customer deposits and shareholders' equity. Customer deposits were up by Dhs1.64bn over the six month period due to a combination of term and transaction deposits.

During the same period, $100m tranche of the medium term notes programme matured and was repaid.

The Share capital of the bank increased to Dhs962.03m from ADhs740.02m after distribution of a 30% stock dividend. Total shareholder's equity stood at Dhs2.41bn at the end of June.