RAKBank, the Ras Al Khaimah lender that specialises in small and medium-sized enterprises, said its second-quarter net income fell almost 45 per cent as money set aside for loans gone sour almost doubled.
Net profit attributable to the owners of the parent decreased to Dh195.7 million compared with Dh353.9m in the same period the previous year. Provision for impairment of loans and advances rose to Dh437.1m in the second quarter from Dh233.8m in the same period last year. The bank said payment defaults came from unsecured loans and loans to SMEs as well as from its commercial bank lending unit.
“Looking ahead, we expect provisions to settle down in the second half of the year as the trends we are currently seeing indicate that the worst is over for our business banking portfolio,” said Peter England, RAKBank’s chief executive.
“We will continue with our strategy of diversifying our loan book and focus on product innovation while strengthening our branch and ATM network across the country and launching additional digital banking solutions.”
Abdul Aziz Al Ghurair, the chief executive of Mashreq, warned in November that a number of small business owners may have skipped town, leaving about Dh5 billion of unsettled loans.
In May, however, Mr Al Ghurair said the potential fallout from rising levels of bad debt in the small and medium enterprise sector had been contained, as banks restructure some of those loans.
As well as rising provisions, RAKBank also reported dips in income from interest as well as fees and commission. Net interest income and income from Islamic financing fell 5.8 per cent to Dh707.3m in the three months that ended June 30 from Dh750.5m a year earlier.
mkassem@thenational.ae
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