RAKBANK achieved a net profit of Dhs 334.6 million for the quarter ended 31st March 2014.
Total assets stood at Dhs 31.5 billion growing 11.3% year on year. Asset growth year to date has been 4.6% which is attributed to a rise in the investments portfolio of AED 862 million and gross loans and advances by Dhs 680 million.
Gross loans and advances stood at Dhs 23.0 billion, up 12.3% year on year. Gross Islamic financing assets increased by Dhs 465 million compared to 31 December 2013. Customer deposits grew by Dhs 447 million to Dhs 23.5 billion compared to 31 December 2013. The growth was mainly in Sharia compliant deposits which grew by Dhs 342 million.
At Dhs 334.6 million net profit dropped by Dhs 33 million over the same period last year, however improved by Dhs 41 million over the 2013 fourth quarter results, reflecting better operating income, lower impairment charges and lower cost over the last quarter of 2014.
Net interest income plus net profit from Islamic financing grew by 7.4% compared to 31st March 2013 to Dhs 639.2 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 which increased by Dhs 22.2 million to Dhs 22.8 million in line with its growing Islamic finance portfolio that commenced operations in 2013.
Total operating income increased by Dhs 72.3 million to Dhs 824.7 million, an increase of 10% compared to 31st March 2013. This growth was mainly due to an increase of Dhs 44.3 million in net interest income and income from Islamic financing and Dhs 28.0 million in non-interest income, which went up by 17.8% from the same period last year.
Operating costs increased by 11% to Dhs 359.8 million compared to the same period last year mainly due to increases in employment costs. However, it dropped compared to fourth quarter 2013 operating cost of Dhs 364.7 million.
The total impairment charge for the quarter stood at Dhs 130.3 million compared to Dhs 61.4 million at the end of the same quarter last year, however reduced by Dhs 27.2 million from the fourth quarter 2013. Non-performing loans were steady at 2.4% of the loan portfolio and the annualized net credit losses to average loans and advances closed at 2.3%.
“Our first quarter performance is in line with the message we have been sending to markets,” explained 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 2 years of abnormally low credit losses. We expect to see solid increases in top line performance over the next 3 quarters as the full impact of our loan pipeline starts to come through. 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,” said England.
During the first quarter of 2014, RAKBANK launched AMAL Home Finance solutions, Ijarah, to join AMAL’s growing portfolio of Islamic banking products which includes Debit and Credit Cards, Savings and Current accounts, and Personal, Auto and Business Finance.
The Bank’s capital adequacy ratio as per Basel II requirement at the end of the quarter is 27.6% comprising entirely of Tier 1 capital. This is against a current minimum total capital ratio of 12% prescribed by the Central Bank in the UAE. At the end of the quarter, the regulatory liquid assets ratio was 18.9% and advances to stable resources ratio was 91%. Total shareholder’s equity totaled AED 6 billion including current quarter profit.
The Bank is currently rated by following leading rating agencies. The following ratings have remained unchanged during the quarter.