RAKBANK delivers highest ever half yearly net profit of Dh901 million

Record net profit in H1 2023 was driven by diversified growth in balance sheet

by

Somshankar Bandyopadhyay

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RAKBANK's total income stoood at Dh2.2 billion,  a rise of 42 per cent year-on-year. — KT File
RAKBANK's total income stoood at Dh2.2 billion, a rise of 42 per cent year-on-year. — KT File

Published: Tue 25 Jul 2023, 7:25 PM

The National Bank of Ras Al Khaimah (RAKBANK) on Tuesday reported a record first-half net rofit of Dh901 million, up 71 per cent year on year.

Total income stoood at Dh2.2 billion, a rise of 42 per cent year-on-year. Deposits hit Dh49 billion, a year-on-year gain of 19 per cent.


The record net profit in H1 2023 was driven by diversified growth in balance sheet, continued sales momentum and strong credit quality, the bank said in a statement. Income rose 42 per cent year-on-year as sustained increase in operating accounts drove low-cost deposits while a well diversified growth on the asset side continued.

Cost increased 7 per cent year-on-year as the bank accelerated its strategic transformation for H1’23 whilst delivering operational efficiencies. Cost to income ratio for H1’23 stood at 36.3 per cent vs. 48.0 per cent in H1 2022.


Gross loans & advances increased to Dh40 billion, up 7 per cent year-on-year. While all segments reflected growth, wholesale banking advances gained 13 per cent year-on-year representing 27 per cent of the asset mix against 25 per cent in H1 2022.

Raheel Ahmed, group chief executive officer, RAKBANK, said: “Our active customer base grew 5 per cent year-on-year. In H1 we supported over 900 customers with home loans. Being the ‘go to’ SME bank of the UAE, we opened 7,800 accounts for budding entrepreneurs and small businesses. We also disbursed over Dh1 billion of business loans. Our wholesale banking business is now well established with strong product capabilities and is growing in double digits. Our deposits grew by 19 per cent year-on-year with robust growth in operating accounts. Spends on our cards are up 20 per cent year-on-year. Our digital banking was accessed over 21 million times in the first half (up 15 per cent) and digital transactions have grown over 10 per cent year-on-year.”

Customer deposits increased to Dh49 billion, up 19 per cent year-on-year with the share of current account savings accounts (CASA) deposits at 68 per cent being one of the best in the industry, reflecting a 10 per cent growth year-on-year.

Portfolio credit quality remains robust with cost of risk at 2.6 per cent and with one of the industry leading impaired loan coverage ratio of ~232 per cent for H1’23 against ~142 per cent for the first half of 2022.

RAKBANK delivered strong shareholder returns with return on equity (ROE) of 19.3 per cent and return on assets (ROA) of 2.7 per cent, whilst remaining highly liquid and well capitalised.

Raheel Ahmed, group chief executive officer, RAKBANK
Raheel Ahmed, group chief executive officer, RAKBANK

Strong profitability and diversified growth on the balance sheet drove healthier Capital Adequacy Ratio (CAR) at 17.7 per cent for H1 2023 as against 16.8 per cent in the first half 2022.

Liquidity remains high at RAKBANK, with regulatory eligible liquid asset ratio at 15.1 per cent for the first half, while the advances to stable resources ratio stood comfortably at 79.9 per cent.

The bank delivered enhanced shareholder value with the Return on Assets improving to 2.7 per cent against 1.8 per cent for the first half of 2022.

The Impaired Loan ratio improved to 2.5 per cent against 3.4 per cent for the first half of 2022.

“Whilst the UAE economy continues to demonstrate positive momentum and growth as we enter the second half of 2023, we do remain cautious about the global macro environment and the downstream impact of rising interest rates and inflation on our customers. We enter the second half of the year with great excitement as we prepare to launch a range of transformational initiatives in the market,” Ahmed said.


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