RakBank posts strong results for 2012

"2012 marks a very successful year for RakBank," said Graham Honeybill, RakBank's Chief Executive Officer.

"Not only did it see the Bank's implementation of its revamped core banking system, but 2012 also witnessed the preparations for the launch of RakBank's Islamic Banking window," he added.

With these achievements and many others, it is no surprise that RakBank was voted Bank of the Year in 2012 by an independent jury during the Arabian Business Achievement Awards.

In review, the Bank's net interest income increased in 2012 by 12.5% over 2011 to Dhs2,233m. This was mainly a result of a 10.4% growth in loans and advances, which stood at Dhs20.3bn for the year. Fee income for 2012 exceeded 2011 levels despite the tariff restrictions imposed by the UAE Central Bank in May 2011, with total revenues climbing by 9.7% to Dhs2.9bn.

Meanwhile, credit losses were 30% lower than 2011 as the Bank continued to apply a conservative strategy to loan underwriting and provisioning. Consequently, non-performing loans remained steady, at a rate of 2.5% of gross loans. Deposits grew by 13.3% to Dhs20.7bn which, along with retained profits, was sufficient to support the growth in loans, investments and the repayment of the Dhs684m in debt to the Ministry of Finance.

Operating costs increased by 13% as RakBank expanded its branch and ATM network throughout 2012 by adding a branch in Sharjah, another in Abu Dhabi, and over 50 ATMs around the country. The Bank also launched 3 dedicated SME banking centres to ensure a convenient banking presence where small and medium sized companies are located.

In the meantime, the Bank continued to invest in online media channels including Online Banking, Mobile Banking, and RakBank Direct and RakBank Deals on rakbank.ae. Besides its online innovations, RakBank is committed to taking advantage of opportunities in the marketplace that grow its customer base.

The Bank recently introduced Islamic Banking services through a separate brand, RakBank AMAL, to take advantage of the growing local demand for Islamic finance. RakBank is aligning itself with the country's efforts to be at the forefront of Islamic Finance by bringing its trendsetting products, online solutions, and award-winning customer service into the local Islamic Banking market.

Finally, the regulatory liquidity ratio at year end was 20% compared to 19% by end of 2011. RakBank is well positioned to comply with the new liquidity rules as and when they become effective. The Bank's Tier 1 ratio as per Basel II is 28.78% as against the requirement of 12% set by the UAE Central bank and this level of capital provides the Bank ample room for growth during 2013.

Dividend
The Directors have recommended a stock dividend of 10% and a cash dividend of 40%. The dividend recommended will result in over 56% of the net profit being retained, thereby increasing capital and reserves to strengthen the Bank's overall position and provide support for future growth.