RAKBANK Q1 profit jumps 105% to Dh450m

The National Bank of Ras Al Khaimah (RAKBANK) delivered a net profit of Dh450 million for Q1 2023, an increase of 105 per cent, driven by a robust and diversified growth on both sides of the balance sheet. This was underpinned by strong sales momentum and lower cost of funds.

Total income performance was supported by a strong net interest income of Dh788.8 million, up 46.0 per cent year-on-year (YoY)). Net interest margins increased to 4.9 per cent against 3.8 per cent (Q1’22) and continues to be among the highest in the industry. First quarter non-interest income of Dh284.4 million, up 52.5 per cent YoY. The growth in non-interest income was driven by higher forex and derivative income.

Gross loans and advances stood at Dh38.7 billion, reflecting a 1.4 per cent increase compared to December 31 2022, on the back of a changing balance sheet mix in line with the strategic direction of the bank.

Customer deposits stood at Dh46.4 billion, an increase of 3.3 per cent compared to December 31, 2022. The bank has a strong current and saving Account (CASA) franchise with the CASA ratio of 70.5 per cent.

Cost of risk remained low due to the bank’s diverse business mix and resilient UAE economic environment, leading to a 30.9 per cent reduction in impairments as against Q4 2022. Impaired Loan provision coverage ratio increased to 192.1 per cent against 137.8 per cent in Q1’22, remaining one of the strongest in the industry.

RAKBank’s gross assets (including lending to banks) of Dh19.8 billion, are up 13 per cent YoY and +1 per cent against FY’22, mainly driven by higher FI bank lending of more than 2 per cent.

Customer deposits, at Dh9.9 billion, are up 13 per cent YoY and more than 7 per cent during the quarter.

First quarter income was supported by net interest income of Dh224 million, a growth of 68.0 per cent YoY and non-interest income of Dh84 million against a loss of 8 million in Q1’22.

RAKBANK delivered strong shareholder returns during the quarter, with return on equity (ROE) of 19.4 per cent and return on assets (ROA) of 2.8 per cent, and remained highly liquid and well capitalised.

The bank’s capital adequacy ratio (CAR) was at 16.8 per cent. The regulatory eligible liquid asset ratio stood at 14.8 per cent, compared to 12.8 per cent as at 31 December 2022, and the advances to stable resources ratio stood comfortably at 81.8 per cent compared to 79.7 per cent at the end of 2022.

Cost-income ratio improved to 36.2 per cent, driven by strong cost discipline, automation and digitisation.

The bank’s non-performing loans ratio improved to 3.0 per cent against 3.6 per cent in Q1’22.

“I am very pleased with the progress we are making in laying the foundation for sustainable growth. In diversifying our income sources, we achieved robust growth on both sides of the balance sheet, across interest and fee incomes, and in all our segments,” Raheel Ahmed, CEO of RAKBANK said.

The bank is investing heavily in technology while maintaining cost discipline to digitize customer journeys, upgrade core data architecture, and revamp compliance and risk infrastructure. “This investment will enable RAKBANK’s journey to provide a superior customer experience. The recent launch of our first fully digital accounts opening capability with straight-through processing is a good example of how we are digitising our customer journeys,” Ahmed said.

The bank’s outlook for FY 2023 remains positive yet cautious, with the buoyant UAE economy and uncertain global macro set up as backdrops. “While we closely monitor the headwinds of inflation, rising interest rates, geopolitical developments, we will continue building on the bank’s strengths and remain committed to delivering on our strategy,” Ahmed said.

• Business