RAKBANK Reports Net Profit of AED 917.5 million for 2018

RAKBANK Reports Net Profit of AED 917.5 million for 2018

Group’s FY Net Profit increased by AED 107 million (13.2%)

RAKBANK’s Total Assets grew by 8.5% during 2018

Growth in Net Profit driven by improved net interest income, net income from Islamic financing and reduced provisioning

Dubai, United Arab Emirates – The National Bank of Ras Al-Khaimah (RAKBANK) has announced consolidated Net Profit of AED 917.5 million for FY 2018, increasing by AED 107 million over the previous year. As at 31 December 2018, the Bank’s Total Assets stood at AED 52.7 billion, growing by 8.5% compared to 2017. Gross Loans and Advances were AED 34.8 billion, up 4.8% on the previous year.

RAKBANK CEO, Peter England, commented: “This considerable increase in Net Profit was due mainly to an increase in net interest income and net income from Islamic financing – which grew by AED 45.5 million – and a decrease of AED 131.8 million in provision for impairment in loans. Total Operating Income increased by 0.4%, due to higher net interest income, while Operating Expenses increased by AED 41.9 million, up by 2.9% compared to last year. There are tangible results to show that the efforts we have made to de-risk certain parts of the business over the last few years have allowed us to reduce provisions and improve the quality of our loan book. In short, the ‘quality’ of our earnings has improved continually over the last 2 years and we expect this trend to continue.”

Total Operating Income increased by AED 17.1 million to AED 3.8 billion, mainly due to an increase of AED 45.5 million in net interest income and income from Islamic financing, net of distribution to depositors. Non-interest income declined by AED 28.3 million to AED 1.1 billion. This was due to a year-on-year decrease of AED 61.2 million in investment income. However, the decrease was offset by an increase of AED 12.7 million for fee and commission income and an increase of AED 24.0 million for foreign exchange and derivative income.

Operating costs increased by AED 41.9 million, an increase of 2.9% on 2017. This was mainly due to an increase of AED 7.0 million in staff costs and AED 15.7 million in IT related expenses. The Group’s cost to revenue ratio increased marginally, to 38.9% compared to 38.0% in 2017. This is expected to taper down in the coming years as income grows and cost optimisation and digitalisation initiatives improve efficiency.

The AED 131.8 million decrease in provision for impairment in loans and advances was due to lower payment defaults on auto loans, RAKfinance, SME lending, and in the Commercial segment. Total impairment provision for the year was AED 1.42 billion, compared to AED 1.55 billion in 2017. Meanwhile, RAKBANK remains well provisioned against loan losses, with a conservative loan loss coverage ratio of 133.1%, which does not include the value of tangible assets held as security.

“We’re pleased to have achieved significant improvements in business performance. With Net Profit growing by more than 13%, in addition to robust growth in fee income and a rebalancing of the risk asset portfolio for Business Banking, our 2018 journey also saw the development of our Commercial and Corporate offer within Wholesale Banking. This has enabled solid asset growth, with new areas of activity introduced to drive future revenues. To achieve RAKBANK’s long-term ambitions, we need to deliver more than just an increase in net profit, and this is represented by a range of strategic initiatives, among which diversification is a key driver. Likewise, innovation is front and centre of our strategy for all business units. This approach is already putting the Bank on the path to achieving sustained future growth,” continued England.

Total Assets grew by 8.5% to AED 52.7 billion, due to an increase of AED 1.6 billion in Gross Loans and Advances, lending to banks – which grew by AED 956 million – and an increase in investments of AED 1.6 billion. Wholesale Banking lending grew by 22.2%, up AED 1.4 billion from the previous year. Personal Banking’s loan portfolio was down by AED 346 million and Business Banking’s loan portfolio was up by AED 494 million compared to 2017. Customer deposits grew by 6.1% to AED 34.1 billion, with growth derived mainly from an increase of AED 2.7 billion in time deposits.

RAKBANK’s Chairman, H.E. Mohamed Omran Alshamsi, commented:”While 2018 presented hurdles, we maintained our diversification path, which is a core part of our 2020 Strategic Plan. RAKBANK is placing greater emphasis on connecting new technologies with advanced processes that will deliver state-of-the-art services. In doing so, we aim to better serve our customers by offering a seamless experience across products and services, through industry-leading service excellence, innovation and simplicity. In reinforcing our capacity to overcome future challenges, our strategic plan will strengthen the profile of RAKBANK beyond a locally-focused personal and SME lender to a full-service bank with relationships across client categories, including multinationals and institutions. This puts us in a very strong position for medium- and long-term growth.”

The Bank’s capital adequacy ratio as per Basel III was 17.2% at year-end. The major change in Capital position occurred as a result of opening adjustments made in the adoption of IFRS 9. The regulatory eligible liquid asset ratio at the end of the year was 14.5%, which is much higher than the stipulated regulatory minimum of 10%. The advances to stable resources ratio stood at a comfortable 94.5%, as against the regulatory cap of 100%.


RAKBANK, also known as The National Bank of Ras Al Khaimah (P.S.C), is one of the UAE’s most dynamic financial institutions. Founded in 1976, it underwent a major transformation in 2001 as it rebranded into RAKBANK and shifted its focus from purely corporate to retail and small business banking. In addition to offering a wide range of Personal Banking services, the Bank increased its lending in the traditional SME, Commercial, and Corporate segment in recent years. The Bank also offers Islamic Banking solutions, via RAKislamic, throughout its 36 branches and its Telephone and Digital Banking channels. RAKBANK is a public joint stock company headquartered in the emirate of Ras Al Khaimah and listed on the Abu Dhabi Securities Exchange (ADX). For more information, please visit http://www.rakbank.ae or contact the Call Centre on +9714 213 0000. Alternatively, you can connect with RAKBANK via twitter.com/rakbanklive and facebook.com/rakbank.


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