The National Bank of Ras Al Khaimah (RAKBANK) has seen its first-half (H1) net profit soar 70.8% to record AED900.8 million ($245.25 million) driven by a healthy balance sheet, continued sales momentum and strong credit quality.

 

Net profit for the second quarter was AED450.5 million up 46.6% compared to Q2 2022, posting the highest quarterly net profit since 2015.

 

Profitability growth of the bank is supported by income momentum. Net interest income and income from Islamic products was AED1.6 billion.

 

Interest income

Interest income from conventional loans and investments was up by 80.9% compared to H1 2022, and interest costs on conventional deposits and borrowings was up by 278.0%. Net income from Sharia-compliant Islamic financing was up by 9.2%.

 

Non-interest income was up by AED133.6 million to AED572.1 million mainly due to an increase of AED96.1 million in Forex and Derivative income, Investment income increased by AED31.7 million and Net insurance underwriting profit increased by AED12.0 million. This was partly offset by AED3.8 million decrease in Net Fee and Commission and AED2.3 million decrease in other operating income.

 

The total operating income was up by AED647.4 million compared to H1 2022, mainly due to increase in interest income by AED513.8 million and increase in non-interest income by AED133.6 million.

 

Operating Expenditure at AED794.6 million for H1 2023 reflected an increase of 7.4% as compared to H1 2022 and 10.3% as compared to Q2 2022 as the bank continued to invest for growth. Compared to the previous quarter, the Operating Expenditure is higher by 4.3%.

 

Operating expenses

Compared to H1 2022, operating expenses for first half of this year were higher by 7.4%. This was mainly due to an increase of AED30.4 million in Staff costs, AED21.4 million increase in other operating expenses, AED10.9 million in Card expenses and AED2.7 million in Technology expenses. This was partly offset by AED7.9 million in Occupancy costs and AED3.2 million in Communication costs.

 

Cost-to-Income ratio for the bank decreased to 36.3% compared to 48.0% at the end of same period last year and 43.0% for FY 2022.

 

Provision for credit loss at AED494.0 million as at H1 2023, increased by 80.0% compared to H1 2022 and 85.8% compared to Q2 2022.

 

Net Credit Losses to average loans and advances closed at 2.6% compared to 1.5% as at end of first half of 2022.

 

The bank’s balance sheet crossed AED71 billion with a strong uptick across customer segments.

The bank’s total Capital Ratio as per Basel III, after the application of prudential filter was 17.7% compared to 16.4% at the end of the previous year.

 

New strategy

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 AED1 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 21 million times in H1 (up 15%) and digital transactions have grown over 10% YoY.

 

“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."-- TradeArabia News Service