Profits were up by 71% year-on-year, driven by diversified growth in the balance sheet, continued sales momentum and strong credit quality.
The National Bank of Ras Al Khaimah (RAKBANK) reported strong financial results for the first half of 2023 (H1’23). As the bank accelerates strategic transformation for H1’23, the cost increases were 7 per cent year-on-year, gross loans and advances increased to AED 40 Bn, customer deposits were up 19 per cent year-on-year to AED 49 Bn, while the share of CASA deposits stood at 68 per cent, reflecting a 10 per cent year-on-year growth.
Net profit for the quarter stood at AED 450.5mn, up 46.6 per cent compared to Q2 2022, thus reflecting the highest quarterly net profit since 2015.
RAKBANK delivered strong shareholder returns with ROE of 19.3 per cent and ROA of 2.7 per cent, whilst remaining highly liquid and well capitalized. The balance sheet shows healthier Capital Adequacy Ratio (CAR) at 17.7 per cent for H1 2023, in comparison to 16.8 per cent in H1 2022.
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 per cent YoY. In H1 2023, 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.”
RAKBANK’s wholesale banking business is now well established with strong product capabilities and is growing in double digits. Their existing customers continue to increase trust and engagement, while the deposits grew by 19 per cent YoY with robust growth in operating accounts.
“Our digital banking was accessed over 21M times in H1 (up 15 per cent) and digital transactions have grown over 10 per cent 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 per cent in the next 12 months,” Ahmed added.
“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,” Ahmed asserts. “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.”
Balance sheet crossed AED 71 billion with a strong uptick across customer segments – the total assets increased year-to-date by AED 5.5B reflecting a growth of 8.3 per cent, due to an increase in Gross Loans and Advances by AED 1.8B, Cash and Central Bank balance increased by AED 2.2B, lending to banks increased by AED 1.4B and investments increased by AED 260Mn.
Lending in retail banking increased by AED 888M, wholesale banking segment increased by AED 376M and business banking lending increased by AED 495M. Strong balance sheet momentum was visible across all the segments.
Wholesale banking segment reflected a strong YTD growth of 3.7 per cent on the back of 7 per cent growth in the corporate portfolio. Growth for retail banking supported by a strong sales momentum across products, with mortgage loans reflecting 11.4 per cent YTD growth, auto loans growing by 11.2 per cent, and credit cards by 4.1 per cent. The business banking segment recorded a 5.5 per cent growth YTD, backed by 10.3 per cent growth on business loans, while trade and working capital loans reflected 2.5 per cent growth YTD.
There has been a strong growth in customer deposits, an increase of 19.4 per cent as against the first half of 2022, and 9.1 per cent or AED 4.1B to AED 49.0B compared to 31 December, 2022. The capital expenditure more than doubled to AED 80.3M in H1 ’23, against 31.9M in H1’22, as the bank continues to invest in digitization initiatives, and strengthening its regulatory and customer protection framework compliance. The bank will continue to invest in innovative digital-first solutions to offer a highly personalized and digitized experience to its customers.
