RAKBANK Reports H1 2012 Net Profit of AED668.7m

The National Bank of Ras Al-Khaimah (P.S.C.) (RAKBANK) has reported a net profit of AED 668.7 million for the half year ended 30th June 2012, reflecting a 13.5% growth compared to same period of 2011 and 5.6% over the first quarter of 2012. "We are pleased with the positive results reported for the first six months as they reflect the continued growth in our customer base," says Graham Honeybill, Chief Executive Officer, RAKBANK. "As a leading Retail/SME national bank, we look to develop initiatives that enhance our customers' banking experience. In the last quarter this included upgrading our IT systems to offer customers faster, easier, and more convenient services." The technology upgrade demonstrates the bank's commitment to achieving excellence in customer service, the driving force behind RAKBANK's solid reputation and high levels of customer loyalty.

The bank has continued to follow a measured approach to expansion, with a focus on maintaining a consistent and sustainable level of growth through a careful lending policy and actively seeking new lending in its chosen fields, and has seen solid growth in the small business and personal finance segments. As a result, net interest income grew 17% over 2011 to AED1.1 billion. Gross Loans and advances stood at AED 19.9 billion, an increase of 6.4% over 31st December 2011 and an increase of 11.5% compared to 30th June 2011. Deposit growth and its costs have been managed effectively to maintain the expected margins, and prudent levels of liquidity.

The total impairment charge for the six months at AED 114.6 million and the total provisions held are considered conservatively adequate for the loan portfolio. Non interest income at AED 320.1 million was down by 13% compared to 30th June 2011. This is primarily because of the impact of regulatory restrictions imposed since May 2011 on fees and charges. However the Bank has achieved a steady growth in various other fee income lines such as investment income, foreign exchange and others. As a result it achieved a growth of 7.4% in fee income compared to the previous quarter.

"The Bank will continue its focus on providing a full range of evolutionary products and services to its customers supported by excellent customer service," added Honeybill. "The recent introduction of the core banking system will enhance the Bank's capability to grow its customer base and fee income." Loans and advances, the main drivers of income, grew by AED 1.18 billion during this half year, and this growth has come across small business and personal finance, being the chosen segments. Deposits, on the other hand, have grown by AED 1.99 billion enabling the bank to maintain healthy loans to deposit and liquidity ratios. The Bank's advances to deposits ratio and liquidity ratio stands comfortably at 92.4% and 20.3% respectively. The bank took advantage of investment opportunities as and when it arose. Over AED 640 million of new investments were made in various debt instruments during the current half year. Investment book, as a result grew by AED 423 million, net of maturing instruments.

In the annual general meeting held in April the shareholders decided to retain 70% of 2011 profits. This enabled the bank to boost its capital base by AED 787 million and as a result an amount of AED 300 million of the subordinated debt, categorised as tier 2 capital was repaid to Ministry of Finance after obtaining the necessary regulatory approvals. In the same meeting the shareholders decided to allocate AED 240 million to a non-distributable regulatory credit risk reserve. All the above have improved the quality of the Bank's capital base. Total shareholder's Equity stood at AED 4.96 billion at end of June after distribution of cash dividend of AED 415.6 million for the year 2011. The Bank's tier 1 and total ratio stands at 20% and 21.8% respectively. The interim profit of AED668 million has not been considered in arriving at these ratios as a conservative measure adopted by the Bank.