National Bank of Ras Al Khaimah (RAKBank) reported a 19 per cent year-on-year rise in its 2019 full-year net profit, beating analysts' estimates as provisions for bad loans fell and net interest income rose.
Net profit for the 12 months ending December 31 climbed to Dh1.1 billion, the lender said in a statement on Wednesday to the Abu Dhabi Securities Exchange, where its shares trade. The full-year income beat the highest estimates of analysts polled by Bloomberg.
On year-on-year basis, net interest income and net income from Islamic financing grew by 1.2 per cent to Dh2.8bn. Non-interest income also improved by Dh118.6 million to reach Dh1.2bn. A Dh84m jump in foreign currency and derivative income coupled with a Dh43m rise in fee and commission income boosted non-interest income.
Provision charges for credit losses declined 7.6 per cent year-on-year to Dh108m, maintaining the downward trajectory, RAKBank said.
“The results of our significant shift in strategy that we set out on in 2015 to diversify the bank’s earnings base continue to deliver market-leading results,” said Peter England, RAKBank chief executive.
The drop in provisions charges “again demonstrates the effectiveness of our diversification strategy and continual focus on asset quality”, he added.
RAKBank's total income surged to Dh4bn for the first time in the lenders history as gross loans and advances customer deposits also climbed to a record by the end of last year.
The loan book increased by Dh1.4bn to reach Dh36.3bn at the end of last year. Loan growth was largely driven by the lender’s wholesale banking and financial institutions businesses as it continued to focus on lending to smaller businesses. Customer deposits grew 7.9 per cent year-on-year to reach Dh2.7bn at the close of the last financial year.
RAKBank said its assets increased 8.4 per cent to Dh57.1bn, supported by growth of Dh1bn in investments portfolio.
In November, Mr England told The National the bank sees growth in lending to small and medium-sized enterprises and mortgages in 2020, despite tougher market conditions as it plans to spend Dh100m on digitalisation.
Majority-owned by the government of Ras Al Khaimah, the bank expected to close its mortgage loan book at about Dh5.5bn and its SME financing portfolio at Dh8.5bn in 2019, Mr England said at the time. The lender did not give separate figures for mortgage or SME lending on Wednesday.