The National Bank of Ras Al-Khaimah (RAKBANK) today announced a consolidated net profit of AED 811 million, an increase of AED 148 million (22%) over the previous year. Total Assets stood at AED 48.5 billion, an increase of 14.2% compared to 31 December 2016. Gross Loans and Advances closed at AED 33.2 billion, up by 11.6% over the previous year. Total Operating Income decreased by 0.8% due to the rebalancing of the loan portfolio, while Operating Expenses increased by AED 77.8 million, up by 5.7% over the previous year.

The provision for impairment on loans and advances decreased by AED 254.8 million compared to previous year, which is due to the lower payment defaults in all business segments compared to year 2016 and higher recoveries in Auto Loans.  Total impairment provision for the year was AED 1,552.9 million compared to AED 1,807.7 million in 2016. The Non-Performing Loan ratio declined to 4.0% as at 31st December 2017 compared to 4.2% as at the previous year end. 

Commenting on the results, RAKBANK Chief Executive Officer, Peter England, said: “The increase of AED 148 million in the Net Profit is mainly due to a decrease of AED 255 million in the provision for impairment in loans. 2017 was a year where we continued with our diversification strategy gradually reducing risk in the Balance sheet which was reflected in improving provisions.. We continued to attract quality business relationships as evidenced by the growth in our Customer Deposits and Loans and Advances by 9.4% and 11.6% respectively. We have made great strides in consolidating the efforts of the previous year, with new or revamped business units all achieving positive results. These achievements have, in part, been driven by our emphasis on innovation, which we regard as an essential vehicle for meeting future goals. In 2017, the Bank established a dedicated Innovation function, which has already played an important role in developing and strengthening our relationship with the UAE’s FinTech community. As with our customers, we have aligned our own journey with theirs via strategic partnerships that have been formed throughout the year like our collaboration with Invoice Bazaar and an MoU with Etisalat for managed point-of-sale services, both of which will help us improve our services to customers across segments as well as diversify our portfolio.”

Total Operating Income declined by AED 29.5 million to AED 3.8 billion which was mainly due to a decrease of AED 101.9 million in Net Interest Income and income from Islamic finance net of distribution to depositors compared to the previous year. This decrease was largely a result of the continuing focus on diversifying into lower risk areas. Non-interest income grew by AED 72.4 million to AED 1.1 billion. This was mainly due to increases of AED 62.0 million in fee and commission, AED 19.4 million in Insurance underwriting profit and AED 24.1 million in foreign exchange and derivative income. This was offset by a decrease of AED 38.4 million in investment income compared to 2016. Operating costs were up by AED 77.8 million, an increase of 5.7% on 2016. This was mainly due to an increase of AED 42.9 million in staff costs and AED 36.7 million in legal and collection costs offset by a reduction in outsourcing costs of AED 14.8 million. The Group’s cost to revenue ratio increased to 38.0% compared to 35.6% for the previous year.

Total Assets rose by 14.2% to AED 48.5 billion compared to the end of 2016. This was due to an increase in Gross Loans and Advances of AED 3.5 billion, lending to banks which grew by AED 1.2 billion and an increase in investments of AED 758 million. Wholesale Banking lending grew by 42.8%, up by AED 1.9 billion from the previous year. Personal Banking’s loan portfolio was up by AED 1.1 billion and Business Banking’s loan portfolio was up by AED 435 million compared to 31 December 2016. Customer deposits grew by 9.4% to AED 32.2 billion compared to 2016. This growth came mainly from an increase of AED 3.1 billion in time deposits and AED 297.0 million in current accounts. offset by a decrease in savings accounts and call deposits.

Commenting on the Group’s performance, RAKBANK’s Chairman H.E. Mohamed Omran Alshamsi noted: “Having restructured our core business divisions in 2016, this year our strategy focused on consolidating efforts to deliver a service and product portfolio that would deliver ‘Simply Better’ banking for all stakeholders. The strategy is focused on building the performance of the new and improved business units, by continuing to innovate through the introduction of a more diverse range of activities. In 2017, a particularly strong emphasis was placed on the growth of our Treasury and Wholesale Banking divisions, whilst SME customers have remained a high priority for our Business Banking unit. These customers continue to be of immense importance to the economic growth in the UAE, and of special importance to RAKBANK, as one of the country’s leading SME lender. Looking to 2018 and beyond, we will build on the successes that were achieved in 2017 to maintain growth across our principal business divisions, whist at the same time adapting and expanding our product range to exceed the expectations of our customers.”

After taking into consideration the profit for 2017 and before any dividend, the Bank’s Tier 1 ratio as per Basel II was 21.8% at year-end. This compares with 24.0% at the end of 2016. The Bank’s Basel III Common Equity Tier 1 ratio as at end of 2017 stands at 20.7%, which factors the profit for 2017 and the proposed dividend. This level of capital provides the Bank with ample room for growth in 2018. The regulatory eligible liquid asset ratio at the end of the year was 15.0%, compared to 16.9% the previous year. The advances to stable resources ratio stood comfortably at 87.8% compared to 85.5% at the end of 2016.

At the board meeting held on 29 January 2018, the Directors recommended a cash dividend of 30% which will result in 38% of net profit being retained within the Bank’s shareholders equity thereby increasing capital and reserves to strengthen the Bank’s overall position and provide support for future growth.