Rakbank reports Dh1.4 billion profit for 2015

Rakbank declared a six per cent decline in its net profit for 2015 on higher provisions. The bank announced a Dh1.4 billion net profit for the year, showing a marginal decrease of Dh49.3 million over the previous year.

Its board believes that the bank is well placed to meet any challenges faced in 2016. Its board recommended a cash dividend of 50 per cent.The dividend recommendations will result in 40 per cent of net profit being retained within the bank's shareholders equity thereby increasing capital and reserves to strengthen the bank's overall position and provide support for future growth.

Rakbank's operating income grew by 10.8 per cent year-on-year to Dh3.939.2 billion as net interest income and income from Islamic products net of distribution to depositors were up by 10.6 per cent to Dh3.05 billion. Non-interest income grew by 11.7 per cent to Dh890.9 million. The bank improved its cost-to-income ratio to 37.5 per cent compared to 42.3 per cent in 2014 by reducing operating expenses by 1.8 per cent. Its focus on cost optimisation resulted in the group's consolidation of some business lines in an effort to enhance synergy and improve efficiency across its operations. As a result, the operating profit of the group before provisions increased by 20 per cent to Dh2.460.7 billion.

Provisions for loan impairments increased by Dh460.1 million over last year due to higher loan provisioning mainly in the unsecured lending portfolios. Non-performing loans and advances to gross loans and advances ratio closed at 3.2 per cent compared to 2.4 per cent at the end of the previous year.

Its year-on-year total retail banking loans grew by Dh1.33 billion, up by 5.4 per cent over the previous year. The major success of the retail banking segment this year was the launch of a new premium banking service 'RAKelite.' Year-on-year total wholesale banking loans grew by 138.1 per cent to Dh2.43 billion. Balance sheet booked a 10.6 per cent increase in gross loans and advances to Dh28.54 billion across the bank's retail and wholesale portfolios. The group's total assets grew by 16.4 per cent to Dh40.55 billion. Customer deposits were up by 12.9 per cent to Dh27.82 billion mainly from an increase of Dh2.5 billion in demand deposits and Dh653.2 million in time deposits.

Within that, Islamic customer deposits grew by Dh899.2 million to Dh3.5 billion compared to the previous year. Rakbank chairman Mohamed Omran Alshamsi said: "We remain committed to generating solid and sustainable growth across our retail, wholesale, treasury and insurance segments." Rakbank chief executive officer, Peter England, said: "The bank has faced stronger than expected headwinds in our retail and small business finance portfolios due to the challenging global and regional environment which is beginning to have an effect on some segments in the UAE." The bank's Tier 1 ratio as per Basel II was 24.4 per cent at yearend after taking into consideration the profit for 2015 and the proposed dividend, compared to 26.5 per cent at the end of 2014, against a requirement of 12 per cent set by the UAE Central Bank.