RAKBANK announces financial results

The first half years increase reflects the Bank's recent history of solid growth performance and is a 27% increase compared to second half of 2004.

Funded income grows by 31 percent

Net interest income of AED 147 million registered an increase of 31% over 30 June 2004 due to the significant increase in the credit cards, Auto Loans and mortgage finance portfolio of the bank.

Gross loans and advances closed at AED 4.9 billion, an increase of 26% over 31 December 2004 and an increase of 48% compared to that of 30 June 2004. The Personal Banking portfolio continued to grow throughout the first half in line with targeted expansion. Mortgage loan portfolio saw a significant increase of 231% over December 2004, while the bank also launched its first co-branded credit card and RAK finance the SME Product. The portfolio mix of loans and advances represents 89% personal banking and 11% corporate.

Commission and fee income grows by 61 per cent

Fee and commission income at AED 71 million registered a 61% increase over 30 June 2004. Fee income from Credit Card jumped by almost 90% compared to the same period in 2004. This demonstrates the bank's strategic shift in enhancing its fee income from providing quality services to its customers.

The Bank also experienced significant income from disposal of some of its investments while the forex income grew by almost 55% due to increased forex and trade finance transactions.

Expenses

Expenses in the first half at AED 116 million were up by 44% compared to the same period in 2004. This was due to growth in staff numbers, launch of various new products and promotions. The bank has also introduced state of the art Electronic Deposit Machines at its major branches and offsite locations. Premises also increased to support growth in card operations, telesales and phone banking divisions, NRI service unit, Investment and bancassurance units.

The Bank continues to invest in marketing, technology and other delivery channels and remains in the forefront of Emiritisation in the banking industry.

Assets & liabilities

Total assets as of 30 June 2005 were AED 6.18 billion, an 18% increase from 31 December 2004 (AED 5.2 billion) resulting mainly from the growth in gross loans and advances by AED 1 Billion. The bank's investment portfolio is also being diversified and closed at AED 145 million compared to AED 151 million in December 2004.

The growth in the asset book has been supported by a combination of increases in medium term inter bank borrowings and increase in shareholders funds. Customer deposits increased by AED 762 million during the first half.

The net charge for loan impairment amounted to AED 20.1 million in the first half compared to AED 20.4 million in first half of 2004. The Bank has adopted a very conservative lending policy and given the growth in the loan portfolio these provisions are well below industry standards and indicate the quality of the Bank's lending book.

The 30 June 2005 interim condensed financial information as reviewed by our auditors and can be found on the Bank's website: www.rakbank.ae

Capital adequacy

The Bank's liquidity position continues to be strong. The capital adequacy ratio at the end of first half stood at 15.1%, against a minimum of 10% as prescribed by the Central Bank.

Ratings

The Bank is currently rated by two of the leading rating agencies. The current ratings stand as follows:

Moody's:

Deposits: Baa1 / P-2
Financial Strength: D+

Capital Intelligence:

Foreign currency: L/T: BBB - S/T: A3
Financial Strength: BBB
Outlook: Stable
Support: 3