RAKBank profit weighed down by bad debts

RAKBank said that its first-quarter profit fell 31 per cent as money set aside for bad debt more than doubled amid slower economic growth. Net income fell to Dh250 million in the three months ended March 31 compared to Dh362.2m a year earlier. Provisions for impairment rose 106.3 per cent to Dh398.3m in the same […]

RAKBank said that its first-quarter profit fell 31 per cent as money set aside for bad debt more than doubled amid slower economic growth.

Net income fell to Dh250 million in the three months ended March 31 compared to Dh362.2m a year earlier.

Provisions for impairment rose 106.3 per cent to Dh398.3m in the same period.

“The bank has faced continued headwinds primarily in our small business finance and SME portfolios due to the challenging business environment globally and locally,” said Peter England, the bank’s chief executive.

“SMEs are a vital part of the UAE economy and as the largest SME lender in the country we remain firmly committed to helping this segment grow, particularly during challenging times.”

Mr England said the bank had reorganised its SME business into a separate segment to manage it better.

RAKBank gets most of its income from individual customers and small businesses where the risks of default are higher, but the rewards can be more lucra­tive.

Corporate customers tend to be more reliable and are therefore offered better rates.

Amid the decline in oil, banks that focus on SME clients have been among the worst hit as difficulties in paying back debt has led to a spate of defaults.

mkassem@thenational.ae

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Source: Business

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