RAKBank 9-month profit surges 21.9% on improvement in asset quality

The National Bank of Ras Al Khaimah (RAKBank) on Tuesday said its nine-month net profit for 2021 rose 21.9 per cent due to improvement in asset quality of the bank.

In a statement, the bank said its net profits climbed to Dh534.7 million during the January-September period from Dh438.6 million in the same period of last year.

The total assets equated to Dh54.5 billion as at September 30, 2021, increasing by 4.1 per cent year-on-year and by 3.3 per cent year-to-date.

There are several factors that led to the spike in the net profit throughout the year, which include a reduction in the provisions for credit loss along with an increase in non-interest income to Dh258.9 million on the back of a growth in the net fee and commission income by Dh14 million as well as an increase in other operating income by Dh17.5 million.

“We have seen a continual improvement in asset quality at RAKBank especially in the last two quarters, which has led to a significant improvement in profitability. We have already surpassed our full year 2020 profit numbers in the first three quarters of this year,” RAKBank CEO, Peter England, said.

He said the improvement in asset quality has come about due to the change of mix in “our loan book, which we have been gradually implementing over the last few years”, and also the significant improvement in the macro-economic environment due to the exemplary handling of the Covid-19 pandemic by the leadership of the UAE.

“We see these very positive trends continuing into the fourth quarter which will bode well for a strong start to 2022,” he added.

The bank further said total income decreased by 11.5 per cent to Dh2,438.1 million, compared to the same period last year, mainly due to a decrease in net interest income and net income from Islamic financing by Dh342.5 million on account of the lower mix of high yielding assets. This was partially offset by higher non-interest income of Dh24.1 million.

Net interest income and net income from Shariah-compliant Islamic financing weakened by 17.4 per cent year-on-year basis to Dh1,621.3 million and the non-interest income increased by three per cent to Dh816.8 million, as a result of the year-on-year increase of Dh34 million in net fees and commission income, Dh14 million in investment income and Dh19.2 million in other operating income. This was partially offset by lower forex and derivative income by Dh32 million and lower gross insurance underwriting profit by Dh11.1 million.

Total assets increased by Dh1.7 billion or 3.3 per cent year-to-date and by Dh2.2 billion year-on-year basis mainly due to the increase in investment securities by Dh2.1 billion and in gross customer loans and advances increased by Dh884.4 million.

“RAKBank continues to focus very heavily on its digital transformation and we are increasingly focused on delivering simpler and more convenient banking solutions. We are seeing great traction on our ‘Skiply’ app, which is now being used by over 100,000 families in the UAE access 180 educational institutions who don’t even need to be a RAKBank customer to benefit from the proposition,” said Peter England.

“We have also seen great success in our partnership with YAP that has developed a unique app based banking solution that allows new customers to open and operate RAKBank accounts and benefit from a range of products and services provided by YAP and RAKBank. This focus on digitalisation, innovation and partnerships will continue to grow and develop strongly in 2022 and beyond,” he added.

— muzaffarrizvi@khaleejtimes.com