Rakbank posts AED534.7mn net profit in first nine-months

Emirates Business

The National Bank of Ras Al-Khaimah (Rakbank) announced a consolidated net profit of AED534.7 million for the nine-month period ended September 30, compared to the net profit of AED438.6 million for the same period last year. The total assets during the period equated to AED54.5 billion, increasing by 4.1% year-on-year and by 3.3% year-to-date.
There are several factors that led to the spike in the net profit throughout the year, which include a reduction in the provisions for credit loss along with an increase in non-interest income to AED258.9 million on the back of a growth in the net fee and commission income by AED14.0million as well as an increase in other operating income by AED17.5 million.
Rakbank CEO, Peter England, commented: “We have seen a continual improvement in asset quality at Rakbank especially in the last two quarters, which has led to a significant improvement in profitability. We have already surpassed our full year 2020 profit numbers in the first three quarters of this year. The improvement in asset quality has come about due to the change of mix in our loan book, which we have been gradually implementing over the last few years, and also the significant improvement in the macro-economic environment due to the exemplary handling of the Covid-19 pandemic by the leadership of the UAE. We see these very positive trends continuing into the fourth quarter which will bode well for a strong start to 2022.”
Total income decreased by 11.5% to AED2,438.1 million, compared to the same period last year, mainly due to a decrease in net interest income and net income from Islamic financing by AED342.5 million on account of the lower mix of high yielding assets. This was partially offset by higher non-interest income of AED24.1 million.
Net interest income and net income from Shariah-compliant Islamic financing weakened by 17.4% year-on-year to AED 1,621.3 million and the non-interest income increased by 3.0% to AED 816.8 million, as a result of the year-on-year increase of AED34.0 million in net fees and commission income, AED14.0 million in investment income and AED19.2 million in other operating income. This was partially offset by lower forex and derivative Income by AED 32.0 million and lower gross insurance underwriting profit by AED11.1 million.

Asset
Total assets increased by AED1.7 billion or 3.3% year to date and by AED2.2 billion year-on-year mainly due to the increase in investment securities by AED2.1 billion and in gross customer loans & advances
increased by AED884.4 million.

Asset quality
Provisions for credit loss decreased by AED407.2 million year-on-year. The non-performing loans and advances to gross loans and advances ratio closed at 4.5% compared to 5.2% as at December 31, 2020. Additionally, the annualised net credit losses to average loans and advances ratio closed at 3.6% compared to 4.9% year-to-date through September 2020.

Capitalisation, liquidity
The bank’s capital adequacy ratio as per Basel III was 17.8% compared to 18.6% as at the end of the previous year. The common equity tier 1 ratio of the bank stood at 16.7%. The regulatory eligible liquid asset ratio was 10.4% as at the end of September 2021.
The advances to stable resources ratio stood comfortably at 83.9%.
“Rakbank continues to focus very heavily on its digital transformation and we are increasingly focused on delivering simpler and more convenient banking solutions. We are seeing great traction on our ‘Skiply’ app, which is now being used by over 100,000 families in the UAE access 180 educational institutions who don’t even need to be a Rakbank customer to benefit from the proposition.” said Peter England. “We have also seen great success in our partnership with YAP that has developed a unique app based banking solution that allows new customers to open and operate Rakbank accounts and benefit from a range of products and services provided by YAP and Rakbank. This focus on digitalisation, innovation and partnerships will continue to grow and develop strongly in 2022 and beyond.”