The National Bank of Ras Al Khaimah (RAK Bank) on Monday announced that it posted record historical profits in 2023, driven by a strong growth on both sides of the balance sheet.
Profit after tax for the full year stood at Dh1.78 billion, up 53.4 per cent from Dh1.16 billion in 2022, the bank said in a statement.
Net interest income to Dh3.3 billion, up 34 per cent, supported by a robust fee income of Dh1.1 billion up 17.8 per cent.
Gross loans and advances, at Dh42.0 billion, rose 10.1 per cent year-on-year. As the bank continues to diversify its balance sheet, wholesale banking loans and advances grew at an impressive rate of 16.3 per cent.
Customer deposits increased 12.3 per cent year-on-year as the bank continues to build primary operating account relationships with its customers, delivering a CASA ratio of 66.9 per cent.
FY’23 operating income gained 29.7 per cent year-on-year, supported by a net interest margin of 4.9 per cent complemented by higher interest rates and solid performance in foreign exchange & investment income.
Strong use of digital channels by customers, targeted operating efficiencies and robust revenue momentum led to a drop in the cost to income ratio to 36.4 per cent against 42.3 per cent in 2022.
The bank delivered robust shareholder returns with return on equity (ROE) of 18.4 per cent and return on assets (ROA) of 2.6 per cent for FY’23, whilst remaining highly liquid and well capitalised.
Record profitability along with a broad based balance sheet growth drove healthier capital adequacy ratio (CAR) at 17.8 per cent vs. 16.4 per cent as at December 31, 2022.
RAK Bank maintained a strong liquidity position as reflected by an eligible liquid asset ratio of 13.0 per cent and advances to stable resources ratio of 82.1 per cent.
The impaired loan ratio improved to 2.6 per cent against 3.0 per cent for the previous year while the provision coverage ratio improved to 227.0 per cent against 181.7 per cent and remains one of the highest in the industry.
In the fourth quarter of last year, gross loans and advances for the quarter gained 2.2 per cent vs Q3’23, mainly on account of growth in the wholesale banking segment, up 6.9 per cent on the back of higher corporate loans. Customer deposits increased by 4 per cent during the quarter.
Profits before tax for the fourth quarter stood at Dh444.6 million, an increase of 56.5 per cent year-on-year and a slight reduction of 1.7 per cent against Q3’23.
Income was up 14.9 per cent vs Q4’22 largely driven by higher net interest income reflecting a growth of 19.5 per cent vs Q4’22.
“We are on one hand deepening our multi-year transformation to build out important foundations in terms of digital, technology and ways of working to become the leader in customer experience. On the other hand, we have achieved record financials in terms of revenue, profit, business assets and customer deposits. We see 2024 as a year full of opportunities, albeit challenging. While the broader global environment will create headwinds, we have confidence in the strength of the UAE economy. The country continues to see strong growth driven by key initiatives taken by the UAE leadership including ongoing economic diversification initiatives, progressive immigration policy, and reforms in business ownership, just to name a few,” said Mohammad Omran AlShamsi, chairman of RAK Bank.
“We continue to diversify our balance sheet, reduce our risk profile and add on new value-added products and services. The bank remains well capitalised, delivering strong shareholder returns and having one of the highest provision coverage ratios in the industry. Being the leading SME bank in the UAE, we will continue to support entrepreneurs and small businesse. We opened more than 10,000 accounts for start-ups and SMES whilst providing them AED 2.2B in financing to establish or scale their businesses. Equally, we grew commercial SME business by 68 per cent year-on-year,” said Raheel Ahmed, CEO of RAK Bank.