The National Bank of Ras Al Khaimah (“RAKBANK”) has announced consolidated Net Profit of AED 270.2 million for Q1 2019, an increase of 31.7% on Q1 2018 and by 10% on the previous quarter. Total Income of AED 1.0 billion increased by 8.5% on a year-on-year basis and by 0.9% on Q4 2018. As at 31 March 2019, Total Assets stood at AED 53.5 billion, increasing by 9% year-on-year and by 1.6% year-to-date.
Commenting on the results, Peter England, CEO of RAKBANK, said: “Total income for the first quarter 2019 exceeded AED 1 billion, which is only the second time in RAKBANK’s history that we have achieved such a result. This is a clear outcome of the Bank’s diversification strategy which commenced 4 years ago and is now delivering solid results. Non- interest income particularly was very strong for the first quarter rising to AED 317 million which is an all-time high, and was achieved by impressive results across all business lines especially our Treasury and Wholesale Banking / Financial Institutions units. Our diversification strategy has also helped our provision line to graduate down by 5% year-on-year whilst retaining a coverage ratio in excess of 130%. Cost to income remained stable at 38.4% despite being impacted by an annual true-up of VAT and some other timing differences.
Q1 2019 highlights
- Net Profit increased by 31.7% year-on-year
- Total Income increased by 8.5% year-on-year
- Total Assets increased by 9% year-on-year
- Improved asset quality resulted in a decline in provisions
- Annualized Return on Assets stood at 2.1% and Return on Equity at 15.1%
On a year-on-year basis, Total Operating Income improved by AED 78.4 million to AED 1.0 billion. Total Operating Income was up by AED 8.7 million compared to Q4 2018, mainly due to an increase in non-interest income by AED 27.7 million, which was partly offset by an AED 19.0 million decrease in net interest income and income from Islamic products, net of distribution to depositors, which totaled AED 683.8 million.
Interest income from conventional loans and investments increased by 9.3% year-on-year, while interest costs on conventional deposits and borrowings increased by 41.3%. Net income from Sharia-compliant Islamic financing decreased by 4.0% and non-interest income improved by AED 65.5 million to AED 317.2 million, mainly due to an increase of AED 32.7 million in net fees and commission income and AED 31.6 million in forex and derivative income.
Asset growth
Total Assets increased by AED 822.7 million or 1.6% on a year-to-date basis and by AED 4.4 billion year-on-year. The major contributions for the year-on-year growth came from Gross Loans and Advances, which grew by AED 1.1 billion; investment securities, which grew by AED 1.1 billion; and cash and Central Bank balances, which grew by AED 831.1 million. Lending in the Wholesale Banking segment grew by AED 1.2 billion or 17.8% year-on-year while Business Banking lending increased by AED 173.5 million on the corresponding period.
Asset quality and impairments
Year-on-year, provisions for credit loss decreased by AED 17.9 million, mainly due to a decrease in provisions in the Business Banking portfolio. Compared to Q4 2018, provisions for credit loss declined by AED 25 million due to a decline in provisions across business units. The Non-Performing Loans and Advances to Gross Loans and Advances ratio closed the quarter at 4.0% compared to 4.2% on 31 December 2018, and the Net Credit Losses to Average Loans and Advances ratio closed at 4.0% compared to 4.4% in Q1 2018.
Q2 2019 outlook
England concluded: “Beyond our strong financial performance, the Bank delivered a range of important initiatives in the first quarter. We continued to grow and develop our market leading position as the biggest small business bank in the UAE with a number of enhancements to our digital banking proposition and our Innovation Lab continued on the journey of developing exciting new offerings that will be launched through the course of 2019. Our instant remittance product also crossed a new all-time high of 60,000 transactions per month and our Card Acquiring business launched early 2018 produced exceptional results in the first quarter with some very large deals. More recently, in April we returned to the bond market, in line with our funding diversification efforts, which will enable us to continue to harness new technology to deliver best-in-class services across business units. Our outlook for the second quarter continues to be positive, with expectations that the UAE’s financial services sector will continue to improve, and we look forward to reporting on both financial and non-financial achievements in the first half of 2019.”
The Bank’s capital total adequacy ratio as per Basel III stood at 17.4% compared to 17.2% at the end of 2018. The regulatory eligible liquid asset ratio at the end of the quarter was 14.5% compared to 14.5% at the end of 2018. The advances to stable resources ratio stood at a comfortable 89.3% compared to 94.5% at the end of 2018.
