RakBank 2017 profits grow 22% on decline in provisons

Dubai - The National Bank of Ras Al-Khaimah's (RakBank) net profit for 2017 grew 22 per cent or Dh148 million to Dh811 million due to substantial decline in provisions.
Total assets stood at Dh48.5 billion, an increase of 14.2 per cent compared to December 31, 2016. Gross loans and advances closed at Dh33.2 billion, up by 11.6 per cent over the previous year. Total operating income decreased by 0.8 per cent due to the rebalancing of the loan portfolio, while operating expenses increased by Dh77.8 million, up by 5.7 per cent over the previous year.
The provision for impairment on loans and advances decreased by Dh254.8 million compared to previous year, which is due to the lower payment defaults in all business segments compared to year 2016 and higher recoveries in auto loans.
Total impairment provision for the year dropped to Dh1.55 billion compared to Dh1.8 billion in 2016.
The non-performing loan ratio declined to four per cent as at 31st December 2017 compared to 4.2 per cent as at the previous year end.
"The increase of Dh148 million in the net profit is mainly due to a decrease of Dh255 million in the provision for impairment in loans. 2017 was a year where we continued with our diversification strategy gradually reducing risk in the Balance sheet which was reflected in improving provisions. We continued to attract quality business relationships as evidenced by the growth in our Customer Deposits and Loans and Advances by 9.4 per cent and 11.6 per cent respectively," said Peter England, CEO, RakBank.
Total operating income declined by Dh29.5 million to Dh3.8 billion which was mainly due to a decrease of Dh101.9 million in net interest income and income from Islamic finance net of distribution to depositors compared to the previous year.
Non-interest income grew by Dh72.4 million to Dh1.1 billion. This was mainly due to increases of Dh62.0 million in fee and commission, Dh19.4 million in Insurance underwriting profit and Dh24.1 million in foreign exchange and derivative income.
This was offset by a decrease of Dh38.4 million in investment income compared to 2016.
Operating costs were up by Dh77.8 million, an increase of 5.7 per cent on 2016. This was mainly due to an increase of Dh42.9 million in staff costs and Dh36.7 million in legal and collection costs offset by a reduction in outsourcing costs of Dh14.8 million.
"Having restructured our core business divisions in 2016, this year our strategy focused on consolidating efforts to deliver a service and product portfolio that would deliver 'Simply Better' banking for all stakeholders. The strategy is focused on building the performance of the new and improved business units, by continuing to innovate through the introduction of a more diverse range of activities. In 2017, a particularly strong emphasis was placed on the growth of our Treasury and Wholesale Banking divisions, whilst SME customers have remained a high priority for our Business Banking unit. These customers continue to be of immense importance to the economic growth in the UAE, and of special importance to RAKBANK, as one of the country's leading SME lender. Looking to 2018 and beyond, we will build on the successes that were achieved in 2017 to maintain growth across our principal business divisions, whist at the same time adapting and expanding our product range to exceed the expectations of our customers."
The bank's directors recommended a cash dividend of 30 per cent.
-waheedabbas@khaleejtimes.com