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RAKBank net profit slips 43% on higher provision

Dubai - The bank is ready to support customers facing financial hardship or loss of income due to its economic impact on individuals, SMEs and corporates.

The National Bank of Ras Al Khaimah (RAKBank) on Sunday announced net profit of Dh153.5 million for Q1 2020, a decrease of 43.2 per cent compared to Q1 2019 due to higher IFRS 9 provisions set as precautionary measures to combat the impact of coronavirus.
Total income remained flat at Dh1 billion on a year-on-year basis. Net interest income and net income from Shariah-compliant Islamic financing increased by 1.8 per cent year on year and the non-interest income declined by Dh12.2 million to Dh305.0 million, mainly due to the year-on-year decrease of Dh10.4 million in net fees and commission income and Dh6 million in forex and derivative income.
Total assets increased by Dh6.2 billion year-on-year to Dh59.8 billion. The major contributions for the year on year growth came from the gross loans and advances that increased by Dh1.6 billion and the Bank placements, which grew by Dh3.6 billion. In addition, the cash and Central Bank balances increased by Dh882.8 million.
"RAKBank had an exceptional January and February and we were on track for one of our best quarters on record until the events around Covid-19 began to unfold. Despite this, our operating performance for the first quarter remained strong," Peter England, CEO of RAKBank.
"Like most banks globally, we have taken the pre-emptive judgemental overlays in our IFRS 9 provisions to factor in the challenges that lie ahead, which has led to additional provisions of just over Dh130 million for the quarter. RAKBank is very well positioned to weather the current challenges with very high levels of capital, liquidity and precautionary provisions, leaving us in a very strong position to help our clients through these very challenging times," he added.
The bank's total capital adequacy ratio as per Basel III, was 16.1 per cent compared to 16.8 per cent at the end of the previous year.
While commenting on the outlook for Q2 202, Peter England said they are continuously monitoring the developments of Covid-19 and ready to support customers facing financial hardship or loss of income due to its economic impact on individuals, SMEs and corporates, including elimination or reduction of many fees and rates. - waheedabbas@khaleejtimes.com