RAKBANK's Net Profit jumps by over 93% in the First Quarter of 2022

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RAKBANKâ€™s Net Profit jumps by over 93% in the First Quarter of 2022

<div>26/04/2022 <ul><li>Q1 2022 net Profit up by AED 106.1 million (93.1%) compared to Q1 2021</li><li>Total Assets increased by AED 2.3 billion year-to-date</li><li>Gross Loans and Advances amounted to AED 35.8 billion as of 31st March 2022, an increase of 4.7% year-to-date </li><li>Customer Deposits increased by AED 811 million year-to-date</li></ul>United Arab Emirates, 26 April, 2022: The National Bank of Ras Al-Khaimah (RAKBANK) has announced a consolidated Net Profit of AED 220.1 million for Q1 2022, an increase of 93.1% compared to the first quarter of 2021. Total Income of AED 726.9 million, decreased by 8.3% compared to the fourth quarter of 2021. As at 31 March 2022, Total Assets stood at AED 58.6 billion, increasing by 10.1% year-on-year and 4.1% year-to-date. RAKBANK CEO, Raheel Ahmed, commented: Our diversification strategy is working well. Q1 2022 net profit at AED 220.1 million is 93.1% higher compared to Q1 2021. We have delivered this very significant increase in net profit by improving our return on equity by 460 basis points to 10.5%, improving our returns on assets to 1.6%, whilst maintaining one of the highest impaired loan coverage ratio in the industry at 138%. We saw a reduction in our non-interest income driven by lower trading forex & derivatives & Investment Incomes. However, we expect that this will not be repeated in subsequent quarters. We have a strong balance sheet momentum across all lines of businesses as is evident from the 9.3% year-on-year growth in gross loans and advances. We have seen over a 20% year-on-year increase in digital engagement with customers & have seen double digit growth in both customer spends & customer payments versus Q1 2021. Continuing our journey of innovation, we launched Digital Lending for SMEs & further enhanced our SMEsouk portal - <a href="http://www.smesouk.com">www.smesouk.com</a> - the one stop digital platform for businesses in the UAE. Q1 2022 highlights <ul><li>Net Profit increased by AED 106.1 million compared to Q1 2021 </li><li>Net Interest Income increased by AED 8.7 million compared to Q1 2021</li><li>Total Assets increased by 10.1% compared to Q1 2021</li><li>Annualised Return on Assets stood at 1.6% and Return on Average Equity at 10.5%</li></ul>Performance reviewTotal Assets increased year-to-date by AED 2.3 billion which translates into a growth of 4.1%, due to an increase in Gross Loans and Advances which increased by AED 1.6 billion, Lending to Banks which increased by AED 751 million, offset by a reduction in Cash and Central Bank balances by AED 128 million. Total Assets increased by AED 5.4 billion to AED 58.6 billion compared to 31 March 2021 mainly due to an increase of AED 3.1 billion in Gross Loans and Advances, AED 1.3 billion Due from Banks and AED 850 million in Investments.Provision for Credit Loss decreased by AED 222.5 million compared to Q1 2021 and by AED 63.2 million compared to Q4 2021. Non-Performing Loans and Advances to Gross Loans and Advances ratio was 3.7% as at 31 March 2022, Net Credit Losses to average Loans and Advances ratio closed at 1.6% compared to 4.5% as at the end of the first quarter of 2021.On a year-on-year basis, Total Operating Income declined by AED 74.0 million to AED 726.9 million. The Net Interest Income and Net Income from Shariah-Compliant Islamic Financing increased by 1.6% year-on-year largely due to the increase in assets. However, the Non-Interest Income decreased by AED 82.7 million to AED 186.5 million, mainly due to a year-on-year decrease in FOREX and Derivative Income of AED 40.8 million, AED 29.3 million in Investment Income and AED 13.6 million in Other Operating Income. This was partly offset by an increase of AED 2.1 million in Net Insurance Underwriting Profit. The reduction was largely due to one off trading losses in the proprietary book due to a sudden increase in interest rates in Quarter 1 impacting the bond book and certain derivative positions. This was further exacerbated by devaluation in foreign exchange rates in certain currencies due to macroeconomic and geopolitical reasons.The Bank's total Capital Ratio as per Basel III, after the application of the prudential filter was 16.5% compared to 17.0% at the end of the previous year. The regulatory eligible Liquid Asset Ratio at the end of the quarter was 11.9%, compared to 11.6% as at 31 December 2021, and Advances to Stable Resources ratio stood comfortably at 87.0% compared to 82.9% at the end of 2021. Q2 2022 outlookThe impact of rising interest environment, Russia & Ukraine conflict & increase in inflation will have to be managed carefully. There is also intense competition for talent globally. However the UAE economy continues to grow strongly & there has been a significant improvement in both business & consumer sentiment. At RAKBANK we will continue to rapidly accelerate our focus on delivering personalized & convenient financials solutions for our clients whilst providing brilliant customer experience at all touch points. said Raheel Ahmed. We strongly believe that whilst continuing to build secure digital solutions is critical, so is ensuring that our colleagues are always there to support our customers, when needed. We are investing in both to deliver 'Simply Better' banking. Financial HighlightsIncrease in Net Profit by over 93% Income Statement Highlights<div aria-labelledby="heading9"><div><div><table><tbody><tr><th rowspan="1"> </th><th colspan="3" rowspan="1">Quarter Results</th><th colspan="2" rowspan="1">Variance</th></tr><tr><th>(AED Mn)</th><th>Q1'22</th><th>Q4'21</th><th>Q1'21</th><th>FY '21</th><th>FY `20</th></tr><tr><td colspan="1" rowspan="1">Net Interest Income and net income from Islamic financing</td><td>540.4</td><td>547.2</td><td>531.7</td><td>(1.2%)</td><td>1.6%</td></tr><tr><td colspan="1">Non-Interest Income</td><td>186.5</td><td>245.3</td><td>269.2</td><td>(24.0%)</td><td>(30.7%)</td></tr><tr><td colspan="1">Total Income</td><td>726.9</td><td>792.4</td><td>800.9</td><td>(8.3%)</td><td>(9.2%)</td></tr><tr><td colspan="1">Operating Expenditures</td><td>(372.4)</td><td>(371.1)</td><td>(330.0)</td><td>(0.3%)</td><td>(12.9%)</td></tr><tr><td colspan="1">Operating Profit Before Provisions for Impairment</td><td>354.6</td><td>421.3</td><td>470.9</td><td>(15.8%)</td><td>(24.7%)</td></tr><tr><td colspan="1">Provisions for Impairment</td><td>(134.5)</td><td>(197.7)</td><td>(354.0)</td><td>32.0%</td><td>62.3%</td></tr><tr><td colspan="1">Net Profit</td><td>220.1</td><td>223.6</td><td>113.9</td><td>(1.6%)</td><td>93.1%</td></tr></tbody></table></div></div></div>Double Digit Increase in Total Assets<div aria-labelledby="heading9"><div><div><table><tbody><tr><th rowspan="1"> </th><th colspan="3" rowspan="1">Results as at</th><th colspan="2" rowspan="1">Variance</th></tr><tr><th>(AED Bn)</th><th>Mar'22</th><th>Dec'21</th><th>Mar'21</th><th>Mar'22 vs Dec'21</th><th>Mar'22 vs Mar'21</th></tr><tr><td colspan="1" rowspan="1">Total Assets</td><td>58.6</td><td>56.3</td><td>53.2</td><td>4.1%</td><td>10.1%</td></tr><tr><td colspan="1">Gross Loans & Advances</td><td>35.8</td><td>34.2</td><td>32.7</td><td>4.7%</td><td>9.3%</td></tr><tr><td colspan="1">Deposits</td><td>38.5</td><td>37.6</td><td>36.5</td><td>2.2%</td><td>5.4%</td></tr></tbody></table></div></div></div>Marked improvement in Return on Equity & Return on Assets<div aria-labelledby="heading9"><div><div><table><tbody><tr><th> </th><th colspan="3" rowspan="1">Results</th><th colspan="2" rowspan="1">Variance</th></tr><tr><th>Percentage</th><th>Mar'21</th><th>Dec'21</th><th>Mar'21</th><th>Mar'22 vs Dec'21</th><th>Mar'22 vs Mar'21</th></tr><tr><td colspan="1" rowspan="1">Return on Equity</td><td>10.5%</td><td>9.5%</td><td>5.9%</td><td>1.0%</td><td>4.6%</td></tr><tr><td colspan="1">Return on Assets</td><td>1.6%</td><td>1.4%</td><td>0.9%</td><td>0.2%</td><td>0.7%</td></tr><tr><td colspan="1">Net Interest Margin</td><td>3.9%</td><td>4.1%</td><td>4.2%</td><td>(0.2%)</td><td>(0.3%)</td></tr><tr><td colspan="1">Cost to Income</td><td>51.22%</td><td>43.2%</td><td>41.2%</td><td>(8.0%)</td><td>(10.0%)</td></tr><tr><td colspan="1">Impaired Loan Ratio</td><td>3.7%</td><td>4.1%</td><td>5.4%</td><td>0.4%</td><td>1.7%</td></tr><tr><td colspan="1">Impaired Loan Coverage Ratio</td><td>137.8%</td><td>133.7%</td><td>125.7%</td><td>4.1%</td><td>12.1%</td></tr><tr><td colspan="1">Basel III Total Capital Adequacy Ratio </td><td>16.5%</td><td>17.0%</td><td>18.1%</td><td>(0.5%)</td><td>(1.6%)</td></tr></tbody></table></div></div></div>*Annualized **After application of Prudential Filter Lending in Wholesale Banking increased by AED 1.3 billion, Retail Banking segment increased by AED 104 million and Business Banking lending increased by AED 238 million compared to 31 December 2021. Customer deposits increased by AED 811 million to AED 38.5 billion compared to 31 December 2021 mainly due to increase of AED 322 million in time deposits and AED 489 million in CASA accounts.RAKBANK gets continuously rated by leading rating agencies with their latest ratings shown clearly in the table below. Fitch Ratings recently rated RAKBANK at 'BBB+', with a stable outlook. This rating reflects the institutional strength of the Bank that is backed up by trust and transparency in financial reporting. <div aria-labelledby="heading9"><div><div><table><tbody><tr><th>Rating Agency</th><th>Last Update</th><th>Deposits</th><th>Outlook</th></tr><tr><td colspan="1" rowspan="1">Moody's</td><td>October 2021</td><td>Baa1 / P-2</td><td>Stable</td></tr><tr><td colspan="1">Fitch</td><td>April 2022</td><td>BBB+ / F2</td><td>Stable</td></tr><tr><td colspan="1">Capital Intelligence</td><td>August 2021</td><td>A- / A2</td><td>Stable</td></tr></tbody></table></div></div></div>RAKBANK's Environmental, Social and Governance (ESG) framework is currently rated as BBB by Morgan Stanley Capital International (MSCI). Furthermore, RAKBANK believes that long-term financial growth requires a thorough integration of sustainability with its core business strategy. We intend to consistently improve Environmental, Social and Governance (ESG) practices throughout RAKBANK's operations. The Bank's Environmental, Social and Governance (ESG) framework is currently rated as BBB by Morgan Stanley Capital International (MSCI). For more details on the Bank's ESG Framework and Approach the Bank urges the public to read the <a href="/wps/wcm/connect/3097d8bb-4937-4be1-a88d-c762d1f1f870/RAKBANK+2021+Annual+Integrated+Report+English.pdf?MOD=AJPERES&CVID=o0thzXi">RAKBANK 2021 Annual Integrated Report</a>. </div>