RAKBANK results

Financial results 31 March 2006

The National Bank of Ras Al-Khaimah (RAKBANK) reported a net profit of AED 55.71 million for the quarter ended 31 March 2006, a 30% increase over the same period in 2005. The current quarter's increase continues the bank's recent history of solid growth performance.

Funded income grows by 43%

Gross interest income of AED 140 million for the current quarter registered an increase of 43% over 31 March 2005 due to the significant increase in the Mortgage Finance, Auto Loan and Credit Card portfolio of the bank.

Gross loans and advances ended the quarter at AED 6.02 Billion an increase of 8% over 31 December 2005 and an increase of 41% compared to that of 31 March 2005. The Personal Banking portfolio continued to grow throughout the quarter in line with targeted expansion. The Mortgage Loan portfolio saw a significant increase of 22% over December 2005.

The bank successfully launched the Titanium MasterCard Credit Card, the first of it kind in the region in February 2006. The portfolio mix of loans and advances represents 92% Personal Banking and 8% Corporate and SME Banking.

Whilst the bank's total equity increased to over AED 1 Billion the annualised ROE (Return on Equity) increased to 21.58%.

Commission and fee income grows by 55%

Fee and commission income at AED 56 million registered a 55% increase over 31 March 2005. This demonstrates the bank's strategic shift in enhancing its fee income by providing quality service to its customers.

The bank continues to invest in marketing, technology and other delivery channels and remains in the forefront of Emiritisation in the banking industry.

Assets and Liabilities

Total assets as at 31 March 2006 were AED 8.23 billion, a 12% increase from 31 December 2005 (AED 7.35 billion) resulting mainly from the growth in loans and advances by AED 463 million. The bank's investment portfolio is also being diversified and closed at AED 540 million compared to AED 371 million in December 2005.

The growth in the asset book has been supported by a combination of increases in customer deposits, Medium Term Borrowings and an increase in shareholder's equity. Customer deposits increased by AED 300 million from 31 December 2005 through a healthy combination of increases in transaction accounts and fixed term deposits.

Following the successful launch of the bank's inaugural Euro Medium Term Notes (EMTN) program in 2005, a further USD 150M was issued in the first quarter of 2006. The response to the issue was extremely positive with investor interest coming in from Asia, Europe and the Middle East.

Capital Adequacy

The bank's liquidity position continues to be strong. The capital adequacy ratio at the end of current quarter stood at 15%, against a minimum of 10% as prescribed by the Central Bank.

Ratings

The Bank is currently rated by two of the leading rating agencies. The current ratings stand as follows: