Wednesday, Apr 30, 2014
Dubai: RAKBank on Tuesday reported a net profit of Dh334.6 million for the first quarter of 2014, down 9 per cent compared to the same period in 2013.
On a quarter-on-quarter basis, compared to the fourth quarter of 2013, the bank’s net profits were up by Dh44 million on better operating incomes, lower impairment charges and lower costs over the last quarter of 2014.
“Our first-quarter performance is in line with the message we have been sending to markets,” said Peter England, RAKBank Chief Executive Officer. “The focus for 2014 is to strongly grow the bank’s top line to help buffer a level of net credit losses, which is more representative of the on-going position for a loan book like ours after two years of abnormally low credit losses.”
The bank’s total assets stood at Dh31.5 billion growing 11.3 per cent year on year. Asset growth year to date has been 4.6 per cent, which is attributed to a rise in the investments portfolio of Dh862 million and gross loans and advances by Dh680 million.
At the end of the first quarter, RAKBank’s gross loans and advances stood at Dh23 billion, up 12.3 per cent year on year. Gross Islamic financing assets increased by Dh465 million compared to 31 December, 2013. Customer deposits grew by Dh447 million to Dh23.5 billion in the same period, mainly due to growth in sharia-compliant deposits, which grew by Dh342 million.
Net interest income plus net profit from Islamic financing grew by 7.4 per cent compared to March 31, 2013 to Dh639.2 million, mainly due to a reduction in the cost of deposits as the bank focused on accumulating low-cost transaction accounts and income from Islamic financing.
In the first quarter of 2014, total operating income increased by Dh72.3 million to Dh824.7 million, an increase of 10 per cent compared to the same quarter last year. Operating costs increased by 11 per cent to Dh359.8 million compared to the same period last year mainly due to increases in employment costs.
The total impairment charge for the quarter stood at Dh130.3 million compared to Dh61.4 million at the end of the same quarter last year. However, it was reduced by Dh27.2 million from the fourth quarter of 2013. Non-performing loans were steady at 2.4 per cent of the loan portfolio and the annualised net credit losses to average loans and advances closed at 2.3 per cent.
The bank’s capital adequacy ratio as per Basel II requirement at the end of the quarter is 27.6 per cent comprising entirely of Tier 1 capital.
“We expect to see solid increases in top-line performance over the next three quarters as the full impact of our loan pipeline starts to come through,” said England. “We are seeing good solid growth in almost all of our lines of business and have managed to slow down the level of attrition through re-financing on our National loan portfolio.”
By Babu Das Augustine Deputy Business Editor
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