21/10/2024

RAKBANK achieves a record profit before tax of AED 1.9B for Sep’24 YTD, up 37% YoY. Delivered through execution of the Bank’s strategy, continued business momentum, and strong credit quality.

Ras Al Khaimah, United Arab Emirates, October 21, 2024 – The National Bank of Ras Al Khaimah (RAKBANK) today reported its financial results for the Sep’24 YTD.

Key Financial Highlights – Sep’24 YTD

RAKBANK delivers record net profit after tax of AED 1.7B, growth of 25% YoY, driven by growth in loan portfolio across all business segments, improved asset quality and tailwinds from higher net interest income.

Operating income for YTD Sep’24 is up 8.1% YoY, supported by a net interest margin of 4.6%, on the back of well diversified asset growth, stable and loyal CASA customer base, augmented by higher non-interest income.
Operating Expenses remained flat to last year at AED 1.2B for Sep’24 YTD. Cost to income ratio (CIR) at 33.6% compared to 36.2% for Sep’23 YTD as the result of improving operating efficiencies.
Gross loans & advances at AED 48.9B as at Sep’24, up 19.1% YoY, driven by growth across all segments, with Wholesale Banking loans and advances growing by 41% YoY, in line with diversification strategy.
Customer deposits at AED 57.3B 18.2% YoY, with a CASA ratio of 62.4%, remaining one of the highest in the industry
Portfolio credit quality remains robust with cost of risk at 1.6% YTD Sep’24 as against 2.5% during the same period last year, supported by a benign credit environment and a strategic shift in business mix towards secured, low risk assets.
Total provisions coverage on gross loans & advances is at 5.6% compared to 5.9% in Sep’23.
Shareholder returns remain strong with Return on Equity (ROE) of 20.6% and Return on Assets (ROA) of 2.9%.
The Bank remains liquid and well capitalized with capital adequacy ratio (CAR) at 19.6% for Q3’24 against 17.8% as at the close of FY’23.
Strong liquidity position is reflected by an Eligible Liquid Asset Ratio of 15.0% (vs. 13.0% at FY’23) and Advances to Stable Resources Ratio at 80.4% (vs. 82.1% at FY’23)
The impaired loan ratio as at Q3’24 improved to 2.2% against 2.6% as at FY’23.

Key Financial Highlights – Q3’24

Profit before tax for Q3’24 was at AED 659M, reflecting an increase of 45.7% YoY.
Operating Income for Q3’24 was at AED 1,204M, reflecting an increase of 7% YoY.
Gross loans & advances for the quarter are up 12.1% vs Q2’24 driven by growth across all the segments, with Wholesale banking portfolio closing at AED 16B.
Customer Deposits decreased by 2.1% vs Q2’24, as high-cost time deposits matured during the quarter.

CEO

Our strategic transformation is steadily advancing as we work towards becoming a ‘digital bank with a human touch.’ A relentless focus on enhancing customer experience has driven a significant expansion in our customer base, with a record of over 83,000 new customers added in the first nine months of 2024.

We have also supported over 1,600 customers with home loans as at Sep'24. BBG Commercial Books surpassed AED 2 billion AED as at Sep'24, while 99% of Rakbusiness loan applications were processed digitally through Quick Apply in the same period. Additionally, our Wholesale Banking division, now firmly established with robust product capabilities, continues to grow at a double-digit pace.

RAKBANK achieved record profitability in YTD September 2024, posting a profit before tax of AED 1.9B for Sep’24 YTD, representing a growth of 37% YoY. This success is underpinned by strong balance sheet growth on both sides of the balance sheet, well diversified business mix and prudent risk management, positioning us well for continued growth. The Bank remains well capitalized and continues to deliver strong shareholder returns.

At RAKBANK, innovation drives our commitment to delivering convenient, transparent, and personalized solutions, showcased by key initiatives. One such initiative is the launch of Protego.ae, our insurance aggregator platform. We have also launched Skiply 2.0. Our family super app has evolved to cover a wide range of family needs, including school fees, extracurricular activities, tuition payments, and more. With more than 300 institutions and over 270,000 students using it across the UAE, Skiply is now an essential tool for managing family life, offering convenience and ease for parents.

Earlier this year, we proudly launched our Microfinance product, aimed at meeting the financial needs of the underbanked & financially excluded segments. With c. 350,000 loans disbursed, we feel very humbled to be able to make a positive impact on the lives of these customers by replacing informal borrowing with a seamless & transparent banking product.

Moreover, RAKBANK is making strides in international digital payments. We are one of the first banks in the UAE to execute an international remittance using China’s digital Yuan (eCNY) in exchange for the Digital Dirham (CBDC). This transaction, made possible through the mBridge platform, showcases the potential of Central Bank Digital Currencies (CBDCs) in revolutionizing cross-border payments, delivering faster processing times, enhanced transparency, and reduced costs.

As a leader in the SME sector, we continue to champion the growth and success of small and medium-sized businesses. With the launch of Season 2 of our SME Souk podcast, we are delivering fresh insights and inspiring stories from top market experts. SME Souk has evolved into a dynamic platform where businesses can connect further emphasizing our dedication to fostering thought leadership and sharing valuable knowledge with the SME community.

I remain grateful to all our customers and clients for placing their trust in RAKBANK. I am equally thankful to all my colleagues for their relentless drive to serve customers' needs.

As we enter the final quarter of 2024, we remain focused on continuing to execute our strategic goals. The UAE economy also continues to demonstrate resilience, supported by stable oil prices, real estate growth, and a thriving trade and tourism sector. However, we remain vigilant of the global macroeconomic environment as we continue to navigate the year with agility and foresight.

Financial Highlights for Sep’24 YTD/Q3’24

Figures in brackets represent unfavorable movements
* Annualized
**After application of Prudential Filter

Profitability growth supported by Income momentum

37% increase in Profit before tax to AED 1.9B during YTD Sep’24 while Net Profit before tax for the quarter
at AED 659M, up 45.7% compared to Q3’23.
Operating Income for YTD Sep’24 is at AED 3.5B up AED 267M against prior year, Net Interest Income is up by AED 204M and non-interest income by AED 64M.
Net Interest Income and Income from Islamic products net of distribution to depositors is
AED 2.7B for YTD Sep’24.
Interest income from conventional loans and investments is up by 18.2% compared to YTD Sep’23, while interest costs on conventional deposits and borrowings is up by 37%.
Non-interest Income is up against prior year largely due to an increase of AED 41M in Investment income, AED 18M in foreign exchange & derivative income.
Operating expenses at AED 1.2B for YTD Sep’24, reflected an increase of 0.2% as compared to YTD Sep’23. Q3’24 operating expenses amounted to 404M, a reduction of 4.4% compared to Q3’23.
Cost to Income ratio for the Bank decreased to 33.6% in YTD Sep’24 compared to 36.2% at the end of same period last year and 36.4% for FY 2023.
Provisions for credit loss is at 506M for YTD Sep’24, lower by 32% compared to the same period last year.
Net credit losses to average loans and advances at 1.6% compared to 2.5% during the same period last year.

Total Balance Sheet at AED 83.9 billion, with a strong uptick across customer segments

Total Assets increased by AED 12B YoY reflecting a growth of 16.5%, with an increase in Gross Loans and Advances by AED 7.8B, Investments by AED 2.1B, Cash and Balance with CBUAE by AED 1.2B and due from other banks by AED 0.9B YoY.
Customer advances in wholesale banking increased by AED 3.7B, Business banking segment by AED 757M and Retail banking segment by AED 2.4B, compared to FY’2023. Strong balance sheet momentum continues across all segments.
Wholesale Banking segment reflects a strong YTD growth of 31.1%, mainly driven by corporate loans, as we strategically diversify our portfolio mix.
Growth in Retail banking is supported by strong sales momentum across products with mortgage loan portfolio expanding by 19.1% and Credit cards by 4.6% YTD.
Business banking segment recorded YTD growth of 7.7% backed by 10.4% growth in SME loans, and Rakbusiness loans growing by 3.5%.
Customer deposits increased by 18.2% YoY and 13.6% YTD, mainly driven by a YTD growth of AED 4.9B in time deposits, as well as 2.0B in CASA accounts, with CASA ratio at 62.4%, endorsing the trust our customers place in the RAKBANK franchise and our services.

Capital and Liquidity

Capital adequacy ratio for the Bank is at 19.6% at Sep’24 against 17.8% as at Dec’23.
Eligible Liquid Assets Ratio for the Bank is at 15.0% at Sep’24 against 13.0% as at Dec’23 while Advances to Stable Resources Ratio is 80.4% at Sep’24 against 82.1% as at Dec’23.

Cash Flows

Cash and cash equivalents as at Q3’24 are at AED 7.8B increasing by AED 0.6B against Q3’23.
Net cash generated from operating activities for the nine months ended 30^th Sep’24 is AED 0.2B, AED 2.0B was used in investing activities and AED 1.7B was received from financing activities.

Impact of Capital Expenditure and Developments

The capital expenditure for the nine months ended 30^th Sep’24 amounted to AED 155M compared to AED 111M in the same period last year, as the bank continues to grow the business and invest in technology and talent on a sustainable basis.

Ratings

RAKBANK is rated by leading rating agencies. The current ratings are summarized below. These ratings reflect the institutional strength of the Bank that is backed by trust and transparency in financial reporting and disclosures.

Raheel Ahmed
Group Chief Executive Officer

Q3 2024

Financial Results