RAKBANK today announced a net profit of AED 362.2 million for the three months ended 31 March 2015. Gross loans and advances grew by 15.8% year-on-year and stood at AED 26.7 billion by the end of the quarter.

The 8.3% increase in profit over same period last year reflects a year-on-year improvement in operating income and improved expense ratios. Total Operating Income for the three months ended March 2015 increased by 13.1% year-on-year to AED 932.3 million due to a rise in net interest income. Non-interest income was up by 7.2% to AED 198.8 million compared to the same period last year mainly due to an increase of 11.4% in fees and commission income.

During the first quarter the Bank continued to invest in its distribution network, product development, and electronic solutions. In addition to opening a new branch in Al Ras area and launching the KALYAN JEWELLERS co-branded MasterCard credit card, RAKBANK was recently recognized during the G-Summit 2015 as one of the very few banks in the world to provide authenticated web chat service to customers on its corporate website and its Online Banking platform. As a result of these investments and a rise in employment costs to support business growth, operating expenses increased by 4.8% year-on-year to AED 377.0 million by the end of the first three months of 2015. Nevertheless, Cost-to-Income ratio dropped to 40.4% as at 31 March 2015 from 43.6% as at 31 March 2014.

“Our first quarter financial results reflect stable earnings, healthy liquidity, and a strong capital base,” said Peter England, RAKBANK CEO. “The key contributing factor is growth in gross loans and advances, which were up by AED 863.9 million year-to-date as a result of strong signs of growth during the quarter across most business units especially RAKFinance, Auto Loans, and Business Banking. Traditional working capital and trade loans to the SME and Commercial Banking segment grew by around 130% year-on-year and our Trade Finance portfolio surpassed AED 2 billion.”

The total impairment charge for the three months increased by AED 62.7 million year-on-year to AED 193.1 million as the provision coverage ratio closed at 84.6%. “This rise is largely due to an increase in provisions in Personal and RAKFinance loans, the overall growth in our loan book, and the Bank’s commitment to a long-term sustainable performance as we continue to take further precautionary provisions on our restructured book. That being said, non-performing loans (NPL) and net credit loss (NCL) remain very reasonable given the fact that we are largely an unsecured lender,” explained England. As of 31 March 2015, NPL stood at 2.7% of the gross loan portfolio and the annualized NCL to average loans and advances closed at 2.98%.

Total assets grew by 2.5 billion year to date as a result of loans and advances and deposits with other banks. This includes the un-deployed funds from the Bank’s own Euro Medium Term Note (EMTN) which raised a further USD 300 million in February 2015 by re-opening the June 2019 bond under the Bank’s USD 1 billion EMTN programme. In addition to the ordinary growth in assets, the Bank received AED 3.7 billion in funds from a Business Banking customer on 31 March 2015, which was parked with other banks on an overnight basis. As a result, total assets stood at AED 41.0 billion by the end of the quarter.  

Customer deposits were up by AED 1.5 billion year to date on the back of an increase in current and saving accounts as well as Islamic banking deposits, which grew by 11.5% to AED 2.9 billion. Taking into account the AED 3.7 billion funds received from a Business Banking customer on 31 March 2015, total deposits stood at AED 29.9 billion by the end of the quarter.

The Bank’s capital adequacy ratio as per Basel II requirement at the end of the quarter is 24.2% against a current minimum total capital ratio of 12% prescribed by the UAE Central Bank. At the end of the quarter, the regulatory liquid assets ratio (LAR) was 16.6% AED and lending to stable resources ratio (LSRR) was 75.1%. Total shareholder’s equity totaled AED 7.5 billion and includes three months profit for the year 2015 and undistributed dividend of AED 838.1 million for the year 2014.