RAKBANK Reports Record Growth in Profits for 2008

- Bank in excellent position to face challenges of current year -

RAKBANK today announced a record performance for the year 2008 and confirmed that it is in a solid position to face toughening economic conditions in the year ahead.

With net profit at AED 635.98 million, an increase of 58% over the previous year, the bank has seen an overall very strong performance for the year – its most profitable yet – despite a global financial crisis and adverse local economic conditions.

"The bank has achieved a record performance for 2008, with very positive growth in Retail Loans, the SME sector, Mortgages and Cards," says Graham Honeybill, General Manager of RAKBANK. "It continues to be one of the leading issuers of credit cards in the UAE and has established a strong presence in the retail mortgage market."

Complementing this growth in assets, other income consisting of fees, commission, foreign exchange, investment and other operating income grew by approximately 37% to AED 469.56 million.

Despite the market being affected by severe liquidity problems in the second half of 2008, RAKBANK continued to actively seek new lending and fee earning opportunities, which resulted in an overall very strong performance for the year.

The bank, which is predominantly a retail institution, also said that the liquidity situation continues to remain one of concern despite the monetary infusions by the Ministry of Finance and the emergency liquidity support provided by the UAE Central Bank.

"The greatest challenge for 2009 is sourcing sufficient customer deposits at a realistic rate in order to be able to grow our loan book," says Honeybill. "That said, the bank is very well-placed to meet the challenges of 2009 and will continue to drive forward and invest in products, services and technology to further improve its offering."

"The role of the Bank is to lend and to lend safely," adds Honeybill. "In the midst of current problems, we still see good lending opportunities and, subject to liquidity considerations, we will continue to lend in our chosen markets, particularly the SME segment, which is a crucial component in the economic health of the country."

In addition to improving the various key performance indicators the Bank has been successful in increasing revenue from non-interest income whilst continuing investment in technology. Its Internet Banking platform was recently launched, and it will continue to be active in developing e-technology, with new services in this area to be introduced in the current year.

The bank also expects the Abu Dhabi mortgage market to be a focus area for the current year, following its tie-ups with Aldar and Sorouh to provide mortgage finance for their properties.

The Bank continues to invest heavily in customer service quality and, for the fourth year running, was judged Top Service Quality Bank in the UAE in the Annual Bank Benchmarking Survey conducted by Ethos Consulting. It currently has 25 branches across the Emirates, with plans to open a further three during 2009.

On the Corporate Banking front, due to the bank’s withdrawal in 2006 from lending in the construction and civil engineering segments outside of its base Emirate, it has a very small residual exposure in those segments and has no exposure to construction involving high rise office or apartment towers.

Total assets as of 31 December 2008 were AED 13.92 billion, a 27% increase over 2007. The principal growth was seen in loans and advances. The Bank’s overall investment portfolio was AED 645 million as of the end of the year.

The Bank’s capital adequacy ratio at the end of the year was 12.3% against a minimum of 10% prescribed by the UAE Central Bank. The ratio will significantly improve after appropriation of profit for 2008.

Rating

The Bank is currently rated by the following leading rating agencies and carries a stable outlook. Their recent ratings are as follows:

Rating Agency Deposits Financial Strength Outlook Support

Dividend

A stock dividend of 30% and a cash dividend of 5% have been recommended by the Bank’s directors. This proposal promotes prudence in the distribution of dividend and the recommendation made will result in 95% of net profit being retained within the Bank’s shareholders’ equity, thereby increasing capital and reserves to strengthen the Bank’s overall position.

The results announced are subject to approval by the Central Bank.

About RAKBANK

RAKBANK, the National Bank of Ras Al-Khaimah, is a leading retail bank in the UAE, serving approximately 330,000 customers. Founded in 1976, the bank is one of the UAE’s earliest local financial institutions and today one of its fastest growing and most dynamic banks, with assets worth Dh13.9billion.

The bank offers a wide range of personal banking services through its 25 branches and telephone and online banking channels. It is a leading provider of credit cards and was first to introduce the concept of ‘Free for Life’ cards, a facility now adopted by many industry players. It is also a significant player in the mortgage finance and small and medium enterprise business sectors.

Customer service excellence is a cornerstone of the bank’s success, with the bank having been voted in 2008 for three years running as #1 Bank in Customer Service in the UAE Annual Bank Benchmarking Study.

For more information, visit www.rakbank.ae

For more information, please contact:

Basma Alwesh, Dir Tel: 04 2130922, mobile: 050-6500743, email: basma@rakbank.ae

Maysoon Merhi, Dir Tel: 04 2130929, mobile: 050-9676173, email: maysoon.merhi@rakbank.ae