The National Bank of Ras Al Khaimah (RAKBank) reported a consolidated net profit Dh154.7 million, down 38.1 per cent compared to the first quarter of 2016.
On a quarter on quarter basis, the bank’s net profits were up by Dh46 million or 42.3 per cent over the last quarter of 2016.
Loans and advances increased by 5.7 per cent year on year and 2.2 per cent from year end 2016 to Dh30.4 billion on the back of strong growth in the wholesale banking book.
Compared to the first quarter of 2016, the bank’s total operating income was down by Dh43.4 million to Dh964.6 million. Net interest income and income from Islamic products net of distribution to depositors was Dh663.3 million at the close of the quarter, down 10.9 per cent from the first quarter of 2016.
Interest income from conventional loans and investments was down by 7.4 per cent compare to the first quarter of 2016 while interest costs on conventional products increased by 17.1 per cent. Net income from Sharia-compliant financing was down by 18.5 per cent.
The bank reported an increase of Dh37.6 million (15.3 per cent) in non-interest income to Dh283.3 million year on year in the first quarter on the back of Dh19.6 million in investment income and Dh13.2 million in net fees and commissions.
“The trends for the first quarter 2017 are showing positive signs. We had a very strong quarter on fee income as our efforts in building the Wholesale Banking and Treasury franchise are really beginning to bear fruit. Our year on year net interest income has been affected by our change of business mix, however the efforts in this area put us in a much better position for net earnings growth over the coming quarters,” said Peter England, RAKBank CEO.
In the first quarter of 2017 total assets of the bank increased by Dh1.9 billion or 4.6 per cent to Dh42.9 billion compared to the end of first quarter 2016. Loans and advances in increased 5.7 per cent year on year to Dh30.4 billion compared to Dh28.8 billion in the first quarter of 2016. Total deposits were up 4.9 per cent to Dh29.8 billion from Dh28.4 billion at the end of the first quarter of 2016.
Provision charges for loan impairments increased year on year by Dh42.4 million (10.7 per cent) in the first quarter of this year compared to the same quarter last year as a result of larger payment defaults from unsecured SME and commercial loans. Provisions charges declined quarter on quarter by Dh19.9 million or 4.3 per cent from the fourth quarter of last year.
“After peaking in the third quarter of 2016 provisions have continued to come off in the last 2 quarters and our forward looking indicators give us comfort that this trend should continue during the course of 2017,” said England.
The bank’s capital adequacy ratio stood at 22.2 per cent at the end of the first quarter of 2017. The regulatory eligible liquid asset ratio at the end of the quarter was 15.5 per cent compared to 16.9 per cent at the end of 2016. The advances to stable resources ratio stood at 86.7 per cent compared to 85.5 per cent at the end of 2016.