RAKBank reaped double-digit earnings growth last year after switching focus from consumer lending to small business loans, dodging a bigger impact from regulation of retail banking.
The bank, based in Ras Al Khaimah, reported full-year net profit of Dh1.2 billion (US$326.7 million) for last year, an increase of 20 per cent on the previous year.
The bank performed strongly despite difficult trading conditions, said Graham Honeybill, its chief executive.
"RAKBank's profitability is the result of the bank's prudent policies and underwriting processes and, more importantly, the bank's successful foundation in excellent customer service delivery, which has helped by retaining and expanding our customer base," he said.
The year's biggest challenge came in the form of a regulatory drive against excessive fees in retail banking, which affected many of RAKBank's product lines.
"Earnings were impacted as a result of the Central Bank's recently introduced guidelines on personal lending but the bank swiftly refocused its business towards [small and medium enterprises] and other lending opportunities within the consumer banking segments," the bank said.
The Central Bank moved last May to curtail fees on personal lending and limit the amount that could be lent.
Net loans and advances increased 12.1 per cent during the year to Dh18.4bn. The burst of new lending led to a 23.4 per cent increase in net interest income.
But lending cooled during the last quarter of the year, increasing only 2.1 per cent.
Bad debts also continued to creep upwards as a more conservative stance on provisioning towards the end of the year led to credit losses of Dh301m, an increase of 11.6 per cent on a year earlier.
RAKBank intends to open three new branches this year, taking its total to 34, and to roll out 59 new ATMs.
The bank also announced a 25 per cent cash dividend and a 10 per cent distribution of bonus shares.