“RAKBANK’s rise in profit for the first nine months of 2013 from funded and non-funded income streams is a result of the Bank’s prudent underwriting policies and efficient growth strategy,” said Graham Honeybill, RAKBANK Chief Executive Officer.

Net interest income plus net income from Islamic finance grew to AED 1.75 billion during the nine months ended September 30, 2013, a 5.5 per cent increase compared to 30th September 2012. “We are pleased to see the Bank’s Islamic Banking division, AMAL, starting to contribute to the Bank’s bottom line,” said Honeybill. Launched at the beginning of 2013, AMAL recently added Business Finance to its portfolio of products, which include Current and Saving Accounts, Deposits, Personal and Auto finance, Credit and Debit Cards, and Takaful programmes.

Non-interest income increased by 20 per cent compared to the same period last year to AED 587.8 million for the nine months of 2013, boosting total operating income to AED 2.33 billion. “The 8.8 per cent growth in total operating income over the same period last year is due to a rise in loans, Islamic financing, and investments, plus strong performances in non-funded income streams including loan origination fees, Bancassurance commission and fees from wealth management products, and income from foreign exchange transactions,” explained Honeybill.

Due to the increasing investment in the bank’s branch network and information technology, operating costs increased by 6.8 per cent for the year. During the third quarter, RAKBANK launched its first branch in the emirate of Fujairah to complement its existing branch network in the country’s East Coast region, which includes Khorfakkan and a newly refurbished branch in Kalba. The Bank also launched Fast Lane, the first dedicated Islamic Auto Finance Centre in Al Barsha in Dubai to offer AMAL Auto Finance solutions to car buyers in just 60 minutes.

Furthermore, RAKBANK added new services on Mobile Banking throughout the year as the Bank continues to add convenience to the customers’ banking experience by expanding web-based solutions and prioritizing customer service. Even with the investments in these developments, operating costs remained below the total operating income growth of 8.8 per cent, indicating healthy profitability levels.

The total impairment charge stood at AED 183.1 million for the nine months ended September 30, 2013 compared to AED 157.4 million at the end of the same period last year. As always, the Bank is well provisioned against loan losses with a conservative loan loss coverage ratio of 60 per cent by the end of third quarter of 2013. Nonperforming loans made up only 2.3 per cent of the loan and Islamic Finance portfolio, which is a testament to the bank’s high underwriting standards and asset quality.

Total assets increased by AED 1.6 billion over 31st December 2012 and stood at AED 28.9 billion as at 30th September 2013, reflecting the increase in the Bank’s investment portfolio which is entirely denominated in AED or USD. The Bank’s advances to deposits ratio and liquidity ratio stood comfortably at 92.2 per cent and 19.2 per cent respectively.

The bank’s capital adequacy ratio as per Basel II requirement at September 30, 2013 was 26.6 per cent comprising entirely of Tier 1 capital. As a conservative measure the bank does not take into account the September interim profits of AED 1.14 billion in arriving at the above capital ratio. The current minimum total capital ratio as prescribed by the Central Bank is 12 per cent.

*This article was published by CPI Financial. Read the original article here.