• Non-interest income increased by 3.1% to AED 557.9 million compared to H1 2020
  • Gross Loans and Advances amounted to AED 33.2 billion, an improvement of 3.1% year-to-date
  • Non-Performing Loans ratio improved to 5.1% compared with March 2021 and December 2020

United Arab Emirates: The National Bank of Ras Al-Khaimah (“RAKBANK”) has announced a consolidated Net Profit of AED 306.0 million for the first half of 2021. The Net Profit for the second quarter of 2021 amounted to AED 192.1 million, resulting in a 25.4% increase compared to the second quarter of 2020. This positive trajectory was also reflected in the Bank’s Total Income for the second quarter of 2021, amounting to AED 831.8 million, which resulted in an increase of 3.9% compared to the first quarter of 2021. The Total Income for the first half of 2021 stood at AED 1.6 billion. As of 30 June 2021, Total Assets amounted to AED 54.3 billion up by 2.9% year-to-date and an increase of 2.0% compared to the first quarter of 2021.

RAKBANK CEO, Peter England, commented: "Q2 2021 has been a very strong quarter for us. We have seen Total Income commence growth again after a number of quarters of decline since the beginning of the pandemic. This is a crucial turning point for us as we see growth in our loan book and customer deposit and that is a very positive sign. Additionally, our provisions for this quarter are the lowest they have been for many years as we see the re-balancing of our portfolio, which we have undertaken over the years, bear very positive results. It also demonstrates the significant rebound in the UAE economy and a strong return of consumer confidence that we have witnessed during the first half of this year.”

Performance highlights:

  • Q2 2021 Net Profit of AED 192.1 million is up by5% compared to Q1 2021
  • H1 2021 Operating expenditures reduced by 4.7% year-on-year
  • Gross Loans & Advances increased by 3.1% year-to-date
  • Total Deposits at AED 37.0 billion, up by 5.6% year-on-year
  • Annualised Return on Assets and Return on Average Equity stood at 1.2% and 7.8% respectively

Performance review

Total Income for the first half of 2021 decreased by 14.2% to AED 1,632.7 million as compared to the same period of the previous year. This is mainly due to a decrease in Net Interest Income and Net Income from Islamic products by AED 287.9 million that was partially offset by an increase of AED 16.7 million in Non-Interest Income. Non-interest income increased by 3.1% to AED 557.9 million because of the year-on-year increase of AED 20.0 million in net fees and commission income and AED 28.0 million in Investment income, which was partially offset by decline of AED 23.1 million in forex and derivative income and AED 10.0 million in Gross insurance underwriting profit.

Total Income for Q2 2021 increased by 3.9% as compared to Q1 2021, mainly due to a boost in Net Interest Income and Net Income from Islamic products by AED 11.3 million as well as a rise of AED 19.6 million in Non-Interest Income. The increase in Net Interest Income and Net Income from Islamic products is due to the increase in loans and advances, due from banks and investments. Non-interest income grew mainly due to an increase of AED 8.1 million in net fees and commission income, AED 22.9 million in forex and derivative income, AED 10.0 million in Gross insurance underwriting profit offset by a reduction of AED 8.7 million in Investment Income and AED 12.6 million in Other Income.

Assets

Total Assets increased by AED 1.5 billion to AED 54.3 billion compared to 31 December 2020 with major growth in loans and advances by AED 1.0 billion, investments up by AED 949 million and bank placements is up by AED 2.3 billion offset by a reduction in excess funds parked with the Central Bank of the UAE.

Asset quality

Provisions for credit loss for the quarter decreased by AED 114.4 million compared to Q2 2020 and AED 237.8 million for H1 2021 compared to H1 2020 largely due to lower IFRS 9 provisions across most products and segments. Provisions for credit loss were lower by AED 60.4 million in Q2 2021 compared to Q1 2021. Non-performing Loans and Advances to Gross Loans and Advances ratio improved to 5.1% compared to 5.4% as at 31 March 2021 and 5.2% as at 31 December 2020. The Bank is well provisioned against loan losses with a loan loss coverage ratio of 127.7%, which does not take into consideration mortgaged properties and other realizable asset collateral available against the loans.

Capitalization and liquidity

The Bank’s total Capital Ratio as per Basel III, after the application of the prudential filter was 17.8% compared to 18.6% at the end of the previous year. The regulatory eligible liquid asset ratio at the end of the quarter was 9.6%, and advances to stable resources ratio stood comfortably at 83.7% compared to 80.6% at the end of 2020.

H2 2021 outlook

“Our strong Q2 result marks the beginning of a turnaround for RAKBANK after a very challenging 12 months when the pandemic commenced in March last year” said Peter England. “The entire team and the Board have worked tirelessly to safeguard the Bank’s franchise value and help our customers through challenging times and we are very encouraged with the signs we are seeing both for RAKBANK and the broader UAE economy going forward. We expect to see continual improvement in the coming quarters with sustained income growth, lower provisions and sound cost control. We also continue to win accolades for our customer service and will continue our focus on new digital innovation in all areas of our business” added England.

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The Total Loans and Advances increased by AED 1.0 billion amounting to AED 33.2 billion compared to 31 December 2020. Additionally, lending in the Personal Banking segment grew by AED 656.2 million over the previous year-end to AED 17.4 billion. Wholesale Banking segment’s lending was also up by AED 513.6 million compared to 31 December 2020.

Likewise, Customer deposits increased by AED 83.0 million to AED 37.0 billion compared to 31 December 2020. The increase was mainly due to the time deposits of AED 623.0 million, which was partially offset by the decrease of AED 540.0 million in CASA and Call deposits.

RAKBANK is currently rated by the following leading rating agencies, with their ratings provided below:

 

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About RAKBANK              

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 decreased its lending in the traditional SME, Commercial, and Corporate segment in recent years. The Bank also offers Islamic Banking solutions, via RAKislamic, throughout its 27 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 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. 

For media enquiries, please contact:
Geraldine Dagher
Geraldine@rakbank.ae 

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© Press Release 2021

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