RAKBANK achieved a net profit of AED 1.1 billion for the nine months ended 30 September 2014. Total assets stood at AED 34.8 billion, growing 20.5% year-on-year and 15.5% on a year-to-date basis. Gross loans and advances stood at AED 24.9 billion, up 13.5% year-on-year and 11.5% on a year-to-date basis. Gross Islamic financing assets increased by AED 1.7 billion compared to 31 December 2013.
Total operating income for the nine months ended September 2014 was up by AED 291.5 million to AED 2.6 billion, an increase of 12.5% compared to the nine months ended 30 September 2013. This growth was mainly due to an increase of AED 198.9 million in net interest income and income from Islamic financing, and AED 92.6 million in non-interest income, which climbed by 18.3% over the same period last year.
Net interest income plus net profit from Islamic financing for the nine months ended 30 September 2014 grew by 10.9% compared to the nine months ended 30 September 2013 to AED 2.0 billion. This was a result of higher interest income on loans and investments, a reduction in the cost of deposits as the Bank focused on accumulating low cost transaction accounts, and an increase in net income from Islamic financing to AED 109.8 million in line with the growing Islamic finance portfolio launched in 2013.
The nine month profit dropped by AED 64 million over the same period last year due to more normal levels of provisions for bad debts which started from the last quarter in 2013. The total impairment charge for the nine months stood at AED 425.1 million compared to AED 183.1 million for the same period last year. Non-performing loans were steady at 2.3% of the loan portfolio and the annualized net credit losses to average loans and advances closed at 2.4%.
“Given our loan mix, we are now seeing more normal levels of bad debt after a period of abnormally low credit losses last year. However our underlying business is very robust as operating income continues to grow strongly quarter on quarter,” said Peter England, RAKBANK CEO. “In addition to our top line growth in our Personal Banking business, the Business Banking segment, which covers traditional SME and commercial lending, has become a major engine of growth for RAKBANK, with our loan book more than doubling over the previous year to a total of AED 1.8 billion”.
Net profit for the three months ended 30 September 2014 was up by AED 7.2 million over the quarter ended 30 June 2014 to AED 373.1 million which reflects strong earnings contributions from most of the Bank’s business units.
Customer deposits grew by AED 1.6 billion to AED 24.7 billion compared to 31 December 2013. The growth came mainly from a rise of AED 1.9 billion in conventional demand deposits and AED 344 million in savings deposits. Despite a decrease of AED 1.1 billion in conventional time deposits, there was a healthy growth in Islamic deposits of AED 456 million over the first nine months of 2014.
Operating costs increased by 11.2% to AED 1.1 billion compared to the same period last year mainly due to increases in employment costs to support business growth. However, the Bank’s cost-to-revenue ratio during the first nine months of the year inched down to 42.9% from 43.4% during the same period in 2013.
The Bank’s capital adequacy ratio as per Basel II requirement at the end of the quarter is 25.07% 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 21.7% and lending to stable resources ratio was 86.4%. Total shareholder’s equity totalled AED 6.8 billion including nine months profit.
“Looking ahead, we see more potential for growth by diversifying into fee-generating products and growing our commercial lending and treasury segments. We also see a tremendous opportunity for growth by expanding into complementary industries,” added England. In mid-August 2014, the Bank received approval from its shareholders to acquire a majority stake in Ras Al Khaimah National Insurance Company (RAKNIC) at Dh3.64 per share and is currently awaiting regulatory approvals to proceed with the transaction.
The Bank is currently rated by following leading rating agencies. The below ratings have remained unchanged during the current year.
| Rating Agency | Deposits | Financial Strength | Support |
| Moody’s | Baa1 / P-2 | D+ | – |
| Fitch | BBB+ / F2 | C | 2 |
| Capital Intelligence | A-/ A2 | BBB+ | 2 |
