RAKBANK announces financial results as of September 30, 2005

The current increase in the net profit continues the Bank's recent history of solid growth performance.

Funded income grows by 27 per cent

Net interest income of AED 228 million registered an increase of 27% over 30 September 2004 due to the significant increase in the credit card, mortgage finance and Auto Loans portfolio of the bank.

Gross loans and advances closed at AED 5.3 billion an increase of 38% over 31 December 2004 and an increase of 48% compared to the 30 September 2004. The Personal Banking portfolio continued to grow throughout the first nine months in line with targeted expansion. Mortgage loan portfolio saw a significant increase over December 2004, while the bank has also initiated few innovative products to support needs of NRI's in the UAE through its recently launched NRI Banking Product. The bank also has an alliance with HDFC Ltd for providing home loans in India and with State bank of India to facilitate IMD redemptions for the NRI community in UAE. The portfolio mix of loans and advances represents 93% personal banking and 7% corporate.

Commission and fee income grows by 48 per cent

Fee and commission income at AED 127 million registered a 48% increase over 30 September 2004. Fee income from Credit Card jumped by 85% 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.

Bank also realised significant income from disposal of some of its investments while the forex income grew by almost 53% due to increased forex and trade finance transactions.

Expenses

Expenses in the first nine months at AED 183 million were up by 41% compared to the same period in 2004. This was due to growth in staff numbers, launch of various new products and promotions. The bank continued to replace ATM's with state of the art Electronic Deposit Machines at its major branches and offsite locations. The bank has also upgraded its credit card management system to enhance customer service to its fast growing customer base. 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 at 30 September 2005 were AED 6.46 billion, a 24% increase from 31 December 2004 (AED 5.2 billion) resulting mainly from the growth in gross loans and advances by AED 1.5 Billion.

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 990 million compared to December 2004. The Bank's inaugural Euro Medium Term Notes (EMTN) program was launched during third quarter of 2005 and had received an extremely positive response from institutional investors in Europe, Asia and the Middle East. The Bank has received USD 200 Million (AED 735 million) in the month of October by way of Bond issue priced at 55 bp over the 6 month LIBOR for a tenor of five years.

The net charge for loan impairment amounted to AED 33.38 million in the first nine months compared to AED 40.03 million in same period in 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.

Capital adequacy

The Bank's liquidity position continues to be strong. The capital adequacy ratio at the end of first nine months stood at 14.1%, against a minimum of 10% as prescribed by the Central Bank.