The National Bank of Ras Al Khaimah (RAKBANK) reported its financial results for the first half of 2023 (“H1’23”)
Key Financial Highlights
Record net profit in H1 2023 driven by diversified growth in balance sheet, continued sales momentum and strong credit quality.
- Income up 42% YoY as sustained increase in operating accounts drive low cost deposits while a well diversified growth on the asset side
- Cost increases 7% YoY as we accelerate our strategic transformation for H1’23 whilst delivering operational efficiencies, cost to income ratio for H1’23 at 3% vs. 48.0% in H1’22.
- Gross Loans & advances increased to ~AED 40B, up 7% YoY, whilst all segments reflect growth, Wholesale banking advances up 13% YoY representing 27% of the asset mix against 25% in H1’22.
- Customer deposits increased to AED 49B, up 19% YoY with the share of CASA deposits at 68% being one of the best in the industry, reflecting a 10% growth YoY.
- Portfolio credit quality remains robust with cost of risk at 2.6% and with one of the industry leading impaired loan coverage ratio of ~232% for H1’23 against ~142% for H1’22.
RAKBANK delivered strong shareholder returns with ROE of 19.3% and ROA of 2.7%, whilst remaining highly liquid and well capitalized.
- Strong profitability and diversified growth on the balance sheet drives healthier Capital Adequacy Ratio (CAR) at 7% for H1’23 vs. 16.8% in H1’22.
- We remained highly liquid with Regulatory Eligible Liquid Asset Ratio at 15.1% for H1’23 and the Advances to Stable Resources Ratio stood comfortably at 79.9%.
- The bank delivered enhanced shareholder value with the Return on Assets improving to 7% against 1.8% for H1’22.
- The Impaired Loan ratio improved to 5% against 3.4% for H1’22.
Raheel Ahmed, Group Chief Executive Officer, RAKBANK said, “We continue to make strong progress in implementing our new strategy to build a ‘digital bank with a human touch’. At the same time we consistently pivot the culture and mindset of our company to being ‘customer first’ in everything we do.
Our active customer base grew 5% YoY. 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 AED 1 billion of business loans. Our wholesale banking business is now well established with strong product capabilities and is growing in double digits.
Our existing customers continue to increase their trust and engagement with us. Our deposits grew by 19% YoY with robust growth in operating accounts. Spends on our cards are up 20% YoY. Our digital banking was accessed over 21M times in H1 (up 15%) and digital transactions have grown over 10% YoY.
A deep-rooted commitment to contribute back to the society in which we operate is embedded in our DNA. We actively promote financial inclusion and green financing solutions. In line with UAE’s vision for Net Zero by 2050, we have partnered with Honeywell to reduce our electricity consumption by 20% in next 12 months.
Whilst the UAE economy continues to demonstrate positive momentum & 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 & 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. These initiatives will showcase our relentless commitment to innovation and our dedication to meeting the evolving needs of our customers.”
