RakBank posts Dh250m net profit in first quarter

Dubai - Total income during the quarter grew by 6.2 per cent year-on-year to Dh990 million as net interest.

RakBank Group has announced a net profit of Dh250 million for the first three months ended March 31, 2016.
Total income during the quarter grew by 6.2 per cent year-on-year to Dh990 million as net interest income and income from Islamic products net of distribution to depositors were up by 1.5 per cent to Dh744.3 million. Non-interest income grew by 23.6 per cent year-on-year to Dh245.7 million on the back of income from the insurance segment, from investments, and from fees and commissions.
Operating expenses were down by 9.4 per cent from the same period last year as the group maintained its focus on cost optimisation. Combined with an increase in total operating income, the bank's cost-to-income ratio dropped to 34.5 per cent compared to 40.4 per cent in the previous year. Operating profit before provisions increased by 16.8 per cent to Dh648.3 million, however, provisions for loan impairments also increased over last year by Dh205.2 million due to higher loan provisioning in the bank's unsecured lending portfolios.
The bank remains well provisioned against loan losses with a conservative loan loss coverage ratio of 83.5 per cent compared to 84.6 per cent at the end of the first quarter of 2015 which does not take into consideration mortgaged properties and other realisable asset collateral available against the loans.
"The bank has faced continued headwinds primarily in our small business finance and SME portfolios due to the challenging business environment globally and locally. In the first quarter of 2016 we took the decision to move our SME products into a separate segment - business banking - so we can manage this sector of clients in a more holistic manner. The reorganisation in no way indicates any change from our belief that SMEs are a vital part of the UAE economy and as the largest SME lender in the country we remain firmly committed to helping this segment grow, particularly during challenging times," RakBank, CEO, Peter England, said.
The first quarter of 2015 also saw an escalation in the bank's diversification strategy as it continued to become increasingly active in the wholesale banking segment, which includes commercial and corporate banking, trade sales, financial institutions lending, and asset based financing. This segment grew by Dh1,806.6 million or 140.1 per cent year-on-year.
- business@khaleejtimes.com