The National Bank of Ras Al-Khaimah (RAKBank) reported a 43 per cent drop in first-quarter net profit on higher provisions for expected loan losses as a coronavirus-linked economic slowdown ensues. Net profit attributable to owners of the bank for the three months ending March 31 declined to Dh153 million, the lender said in a statement to the Abu Dhabi Securities Exchange, where its shares trade. Profit for the period fell “due to higher IFRS 9 provisions that are set as precautionary measures to combat the economic impact of the novel coronavirus", the lender said. Net provision for credit loss climbed 39 per cent year-on-year to Dh480.4m. Net interest income and net income from Islamic financing also rose almost 2 per cent to Dh696m, while non-interest income dropped 4 per cent to Dh305m during the period. “Like most banks globally we have taken the pre-emptive judgemental overlays in our IFRS 9 provisions to factor in the challenges that lie ahead, which has led to additional provisions of just over Dh130m for the quarter,” RAKBank chief executive Peter England said in a statement. “RAKBank is very well positioned to weather the current challenges with very high levels of capital, liquidity and precautionary provisions, leaving us in a very strong position to help our clients through these very challenging times.” General and administrative expenses of the bank dropped 4.49 per cent year-on-year to Dh367.2m. Total assets at the end of the first quarter grew 4.6 per cent to Dh59.8bn, but loans and advances dropped almost 1 per cent from the end of the last year to Dh34.3bn. Customer deposits increased 3 per cent to Dh37.8bn during the first three months of 2020. Lenders worldwide are facing a decline in profitability as loan growth slows and interest rates fall as central banks embark on monetary easing measures to support their economies. The global economy is facing its deepest recession since the Great Depression in the 1930s and is projected to shrink 3 per cent in 2020, the International Monetary Fund said last month. The outlook is worse than the 2008 financial crisis and the IMF does not expect a recovery to take place before 2021. The UAE, the second-biggest Arab economy, has rolled out Dh282bn in fiscal and monetary support, including a Dh256bn package of measures from the central bank, which has provided zero interest funding to banks to encourage lending growth, as well as relaxing capital and liquidity buffers. Other government initiatives range from discounted utility bills to postponement and waivers of various fees. “We are continuously monitoring the developments of Covid-19 and are always prepared to support our customers facing financial hardship or loss of income due to its economic impact on individuals, SMEs and corporates, including elimination or reduction of many fees and rates,” Mr England added. “These measures were made possible with the support of the Central Bank of the UAE’s financial stimulus packages that directly benefitted customers by relieving them of their financial burdens during the health crisis.”