Rakbank achieves 28% growth in first quarter profits

"The Bank's first quarter net profit reflects the growth in Rakbank's customer base across a wide range of personal and small business segments, which is largely driven by our continual focus on excellent customer service," said Graham Honeybill, Rakbank General Manager.

Rakbank's net interest income grew by 19.4% to Dhs445.2m compared to 31st March 2010. Gross Loans and Advances stood at Dhs17.6bn an increase of 4.8% over 31st December 2010 and an increase of 19.3% compared to 31st March 2010. Fee and commission income was up by 34.9% compared to 31st March 2010 to Dhs186.6m, a reflection of increased volumes of processed business year-on-year.

The Bank has taken adequate provisions on its loan portfolio during the three months. Total impairment charge for the quarter, which stood at Dhs78.6m, was lower by Dhs2.6m compared to 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 policy, while actively seeking new opportunities in the market such as the launch of Rakbank Prepaid Cards and the expansion of the Bank's e-solutions portfolio to include rakbankdirect.ae and, more recently, Mobile Banking," added Honeybill.

Total assets as at 31st March 2011 were Dhs22.3bn, an increase of 4.3% over 31st December 2010 and a 22.3% increase compared to 31st March 2010. The growth in the asset book has been supported by a combination of increases in customer deposits and shareholders' equity. Customer deposits were up by Dhs1bn, a 6% increase from 31st December 2010 and a 28.6% increase compared to 31st March 2010 from a combination of term and transaction deposits.

During the quarter, Rakbank purchased investments worth Dhs225.9m, and investments totalling Dhs55.1m matured leaving an outstanding portfolio of Dhs944.7m at the end of March. 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 names of domestic institutions.

Rakbank's advances to deposits ratio stood at 92.5% as per the Central Bank of UAE guidelines and the Bank's liquid asset ratio was comfortable at 18.1% of total assets.

The Share capital of the Bank increased to Dhs1.39bn from Dhs1.15bn after distribution of a 20% stock dividend. Total shareholder's Equity stood at Dhs3.78bn at the end of March.

Rakbank's capital adequacy ratio as per Basel I at end of the quarter was 18.9% composed entirely of Tier 1 capital against a current minimum of 12% of Tier 1 capital prescribed by the Central Bank of the UAE. If the 7 year loan of the Ministry of Finance is taken into account, which is eligible to be treated as Tier 2 capital, then the overall capital adequacy ratio stands at 22.6%.