RAKBANK more than doubles net profit to Dhs450m in Q1 2023

RAKBANK delivered a net profit increase of 105 per cent for Q1 2023. The results were bolstered by robust and diversified growth on both sides of the balance sheet, underpinned by strong sales momentum and lower cost of funds.

The bank’s total income performance was supported by a strong net interest income of Dhs788.8m, up 46 per cent year-on-year (YoY).

Net interest margins increased to 4.9 per cent against 3.8 per cent (achieved in Q1 2022).

The quarter’s non-interest income of Dhs284.4m, was up 52.5 per cent YoY. The growth was driven by higher forex and derivative income.

Gross loans and advances were at Dhs38.7bn, reflecting a 1.4 per cent increase compared to December 31, 2022 on the back of a changing balance sheet mix in line with the strategic direction of the bank.

Customer deposits stood at Dhs46.4bn, an increase of 3.3 per cent compared to December 31, 2022.

RAKBANK also reported a strong current and saving account (CASA) franchise with a CASA ratio of 70.5 per cent.

The cost of risk remained low due to the bank’s diverse business mix and resilient UAE economic environment, leading to a 30.9 per cent reduction in impairments as against Q4 2022.

Impaired loan provision coverage ratio increased to 192.1 per cent against 137.8 per cent in Q1 2022 for the bank.

RAKBANK on a roll

Raheel Ahmed, CEO of RAKBANK said, “Delivering on our multi-year strategy, we accelerated our growth and achieved a record net profit of Dhs450m and a record total income of Dhs1,073m for the quarter. In addition to this impressive growth, I am very pleased with the progress we are making in laying the foundation for sustainable growth.

“In diversifying our income sources, we achieved robust growth on both sides of the balance sheet, across interest and fee incomes, and in all our segments. In terms of building deeper customer relationships, we achieved strong growth in digitally active customers with digital transactions growing by 12 per cent YoY. Our high CASA ratio in our deposit base of 70.5 per cent despite the high interest rate environment is a testament of the strong relationships we built with our customers and clients. We enhanced our operational leverage and improved our cost-income ratio through our strong cost discipline, and our cost of risk reduced via diversifying our business mix.

“The bank remains well capitalised and liquid with a capital adequacy ratio of 16.8 per cent and an eligible liquid asset ratio of 14.8 per cent. As a result of our progress, we achieved a return on equity of 19.4 per cent and return on assets of 2.8 per cent.”

Admed added: “Being one of the largest SME banks in the UAE, we continue to back entrepreneurs and start-ups by opening more than 4,000 business accounts in Q1 2023, of which 1,600 accounts were opened for startups. Similarly, we disbursed Dhs571m in business loans, out of which Dhs394m were disbursed for new business loan customers.

“As we grow, we are investing heavily in technology while maintaining cost discipline to digitise customer journeys, upgrade core data architecture, and revamp compliance and risk infrastructure. This investment will enable RAKBANK’s journey to provide a superior customer experience that is characterised by its hyper-personalisation and relevance. The recent launch of our first fully digital accounts opening capability with straight-through processing is a good example of how we are digitising our customer journeys.

“Our outlook for FY 2023 remains positive yet cautious, with the buoyant UAE economy and uncertain global macro set up as backdrops. While we closely monitor the headwinds of inflation, rising interest rates, geopolitical developments, we will continue building on the Bank’s strengths and remain committed to delivering on our strategy.”