The
National
Bank
of
Ras
Al
-Khaimah
(P.S.C)
MANAGEMENT
DISCUSSION
&
ANALYSIS
FINANCIAL
RESULTS
PRESS
RELEASE
AND
Classification: RAKBANK-Public
Q1 2023
26 April 2023Classification: RAKBANK-Public
1
RAK BANK
RAKBANK more than doubles its quarterly Net Profit at
AED 450M for Q1’23 on the back of strong income growth
Ras Al Khaimah, United Arab Emirates, 26 April 2023 – The National Bank of Ras Al
Khaimah (RAKBANK) today reported its financial results for the first quarter of 2023 (“Q1’23”)
Total Income Total Assets Deposits Return on Return on
Highlights
AED 1,073M AED 68.9B AED 46.4B Equity Assets
Q1 2023 +48% +14.8% +16.4% 19.4% 2.8%
YoY YoY YoY
RAKBANK delivered a Net Profit increase of 105% for Q1 2023 driven by a robust and
diversified growth on both sides of the balance sheet. This was underpinned by strong
sales momentum and lower cost of funds.
•
Total Income performance was supported by a strong net interest income of AED 788.8M,
up 46.0% YoY. Net interest margins increased to 4.9% against 3.8% (Q1’22) and continues
to be among the highest in the Industry. Q1’23 non-interest income of AED 284.4M, up
52.5% YoY. The growth in non-interest income was driven by higher forex and derivative
income.
•
Gross loans & advances at AED 38.7B, reflecting a 1.4% increase compared to 31
December 2022 on the back of a changing balance sheet mix in line with the strategic
direction of the bank.
•
Customer deposits stood at AED 46.4B, an increase of 3.3% compared to 31 December
2022. The Bank has a strong Current & Saving Account (CASA) franchise with the CASA
ratio of 70.5%.
•
Cost of Risk remained low due to the Bank’s diverse business mix and resilient UAE
economic environment, leading to a 30.9% reduction in impairments as against Q4’22.
Impaired Loan provision coverage ratio increased to 192.1% against 137.8% in Q1’22,
remaining one of the strongest in the industry.
The Bank achieved balanced growth across all Business Segments:
Personal Banking:
•
Gross loans & advances at AED 19.1B are up 1% YoY and +2% against FY’22 driven by the
sales momentum across products with balance sheet for Auto loans +6%, Mortgages +5%
and Personal loans +0.3%.
•
Customer deposits of AED 16.7B, are up 22% YoY and +6% during the quarter driven by
higher Term deposits +30% & CASA +0.3%.
•
Q1’23 income supported by net interest income of AED 229M, +19.0% YoY and non-
interest income of AED 123M, +1% YoY.
Business Banking:
•
Gross loans & advances of AED 9.3B, are up 12% YoY and +3% against FY’22 mainly
through higher volumes for Rak business loans +5%.
•
Customer deposits of AED 19.7B, are up 14% YoY and +7% during the quarter driven by
higher CASA deposits +7% & Term deposits +2.7%.
•
Q1’23 income supported by net interest income of AED 337M, +57.0% YoY and non-
interest income of AED 77M +6% YoY.Classification: RAKBANK-Public
Wholesale Banking & Others:
•
Gross assets (including lending to banks) of AED 19.8B, are up 13% YoY and +1% against
FY’22 mainly driven by higher FI bank lending +2%.
•
Customer deposits of AED 9.9B, are up 13% YoY and +7% during the quarter.
•
Q1’23 income supported by net interest income of AED 224M, +68.0% YoY and non-
interest income of AED 84M against a loss of 8Mn in Q1’22.
RAKBANK delivered strong shareholder returns with ROE of 19.4% and ROA of 2.8%,
and remained highly liquid and well capitalized.
•
The Bank’s Capital Adequacy Ratio (CAR) was at 16.8%.
•
The regulatory eligible liquid asset ratio at 14.8%, compared to 12.8% as at 31
December 2022, and the advances to stable resources ratio stood comfortably at
81.8% compared to 79.7% at the end of 2022.
•
Cost-income ratio improved to 36.2% driven by strong cost discipline, automation and
digitization.
•
The Bank’s non-performing loans ratio improved to 3.0% against 3.6% in Q1’22.Classification: RAKBANK-Public
Raheel Ahmed, CEO of RAKBANK said, “Delivering on our
multi-year strategy, we accelerated our growth and achieved a
record net profit of AED 450M and a record total income of
AED 1,073M 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%
YoY. Our high CASA ratio in our deposit base of 70.5% despite
the high interest rate environment is a testament of the strong Raheel Ahmed, CEO
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 capitalized and liquid with a Capital Adequacy Ratio of 16.8% and an Eligible
Liquid Asset Ratio of 14.8%. As a result of our progress, we achieved an ROE of 19.4% and
ROA of 2.8%.
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 start-ups. Similarly, we disbursed AED 571M in business loans, out of which AED
394M were disbursed for new business loan customers.
As we grow, we are investing heavily in technology while maintaining cost discipline to digitize
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 characterized by its hyper-personalization 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 digitizing our customer journeys.
Continuing from Q4 2022, we are focusing on expanding strategic hires to lead our growth,
and we remain committed to and supporting the career aspirations and ambitions of our
colleagues. Special attention is drawn to developing our Emirati talents as we align
ourselves to the UAE leadership’s mission of growing and nurturing local talent.
As one of the nation’s leading financial institutions, RAKBANK recognizes our responsibility
to support the ‘UAE Net Zero by 2050’ initiative. The team is actively engaged with RAK
Government on COP28 submissions, working on financial inclusion and reducing emissions.
We continue to support financial inclusion and accelerate digital remittances through our
wages protection system partner and the United Nations Capital Development Fund.
Lastly, 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.”
Digital Transactions Card Spends Payment through Digitally Active
our rails (In/Out) Customers
+12% YoY +24% YoY +9% YoY +15% YoYClassification: RAKBANK-Public
Financial Highlights for Q1 2023
Income Statement Highlights Quarter Results Variance
Q1’23 Q1’23
(AED Mn) Q1’23 Q4’22 Q1’22
vs Q1’22 vs Q4’22
Net Interest Income and net income
788.8 733.1 540.4 46.0% 7.6%
from Islamic financing
Non-Interest Income 284.4 261.6 186.5 52.5% 8.7%
Total Income 1,073.2 994.8 726.9 47.6% 7.9%
Operating Expenditures (389.0) (371.4) (372.4) (4.5%) (4.7%)
Operating Profit Before Provisions
684.2 623.3 354.6 93.0% 9.8%
for Impairment
Provisions for Impairment (233.9) (338.7) (134.5) (73.9%) 30.9%
Net Profit 450.3 284.6 220.1 104.6% 58.2%
Balance Sheet Highlights Results as at Variance
Mar’23 Dec’22 Mar’22 Q1’23 Q1’23
(AED Bn)
vs Q1’22 vs Q4’22
Total Assets 68.9 66.4 60.0 14.8% 3.8%
Gross Loans & Advances 38.7 38.1 37.2 4.1% 1.4%
Deposits 46.4 44.9 39.8 16.4% 3.3%
Key Ratios Quarter Ratios Variance
Q1’23 Q1’23
Percentage Mar’23 Dec’22 Mar’22
vs Q1’22 vs Q4’22
Return on Equity* 19.4% 12.5% 10.5% 8.9% 6.9%
Return on Assets* 2.8% 1.7% 1.5% 1.3% 1.1%
Net Interest Margin* 4.9% 4.5% 3.8% 1.1% 0.4%
Cost to Income 36.2% 37.3% 51.2% 15.0% 1.1%
Impaired Loan Ratio 3.0% 3.0% 3.6% 0.6% 0.0%
Impaired Loan Coverage Ratio 192.1% 181.7% 137.8% 54.3% 10.4%
Total Capital Adequacy Ratio
16.8% 16.4% 16.5% 0.3% 0.4%
Basel III**
* Annualized
**After application of Prudential FilterClassification: RAKBANK-Public
Profitability Growth supported by Income momentum and improvement in
Provisions
•
Net Profit increased by 104.6% to 450.3M (vs Q1’22 104.6% and Q4’22 58.2%).
•
Net Interest Income and Income from Islamic products net of distribution to depositors
increased by 46.0% to AED 788.8M (vs Q4’22 7.6%).
•
Interest income from conventional loans and investments increased by 79.7%, while
interest costs on conventional deposits and borrowings increased by 300.5%. Net
income from Sharia-compliant Islamic financing increased by 7.8%.
•
Non-Interest Income increased by 52.5% to AED 284.8M (vs Q1’22 52.5% and Q4’22
8.7%), primarily due to forex and derivative income booked in Q1 2023.
•
Total Income increased by 47.6% (vs Q4’22 7.9%), benefiting from the balance sheet
growth momentum.
•
Operating Expenditure was AED 389.0M (vs Q1’22 AED 372.4M), reflecting a 4.5%
increase compared to the same period in 2022, and a 4.7% increase compared to Q4
2022, due to the Bank's growth investments.
•
Operating Expenses increased mainly due to higher staff costs, card expenses, and
other operating expenses. However, these were partly offset by lower IT expenses,
occupancy costs, depreciation, and communication expenses.
•
Cost-to-Income ratio for the bank decreased to 36.2% (vs Q1’22 51.2% and Q4’22
37.3%).
•
Provision for credit loss increased by 73.9% to AED 233.9M for Q1 2023 compared to
Q1 2022, due to prudent precautionary measures in anticipation of expected
developments. However, compared to Q4 2022, the provision for credit loss decreased
by 30.9% for Q1 2023.
•
Net Credit Losses to average loans and advances closed at 2.5% (vs Q4’22 3.4%).
Balance Sheet crosses AED 68.9B with a strong uptick across all customer
segments
•
Balance sheet crosses AED 68.9B as the Total Assets increased by AED 2.5B compared
to 31 December 2022 reflecting a growth of 3.8%, with an increase in Cash/Central
Bank balances by AED 929.2M, Investments by AED 805.8M, Gross Loans and
Advances by AED 551.9M and Lending to Banks by AED 480.3M as compared to 31
December 2022.
•
Business Banking portfolio increased by AED 264M, Retail Banking by AED 286.2M and
Wholesale Banking segment (including bank lending) increased by AED 211M
compared to 31 December 2022.
•
Business Banking recorded 2.9% growth compared to 31 December 2022 with
Business Loans growing by 5.3% and an increase of 1.5% on the Trade and Working
Capital Loans portfolio.
•
Retail Banking reflected a growth of AED 286.2 M supported by a strong sales momentum
across products with Mortgages growing by 4.8% and Auto Loans by 6.4%.
•
Non-performing Loans and Advances to Gross Loans and Advances ratio remained
same at 3.0% as at 31 March 2023 compared to 31 December 2022.
Robust Growth in Customer Deposits as we continue to be the main bank for most
of our customers
•
Q1’23 Customer deposits increased by 3.3% compared to 31 December 2022, mainly
due to an increase of AED 1,089.5M in CASA deposits and AED 404.7M in time deposits,
endorsing the trust our customers place in RAKBANK’s solutions and services.
RAKBANK has built a strong CASA franchise with a CASA ratio of 70.5 % as at 31
March 2023.Classification: RAKBANK-Public
Strong Capital and Liquidity position
•
The Bank’s Capital and Liquidity ratios remained strong.
•
With a Total Capital Ratio as per Basel III, after the application of prudential filter, at
16.8% compared to 16.4% at the end of 2022.
•
The regulatory eligible liquid asset ratio at the end of 31 March 2023 at 14.8%,
compared to 12.8% as at 31 December 2022, and the advances to stable resources
ratio stood comfortably at 81.8% compared to 79.7% at the end of 2022.
Healthy Cash Flows from operating activities
•
Cash and cash equivalent as at 31 March 2023 were AED 4.7B compared to AED
4.3B as at 31 December 2022.
•
Net cash generated from operating activities was AED 1.2B, AED 819.8M was used in
investing activities and AED 4.7M used in financing activities.
Impact of Projected Capital Expenditure and developments
•
The Group incurred AED 37.3M in capital expenditure in Q1 2023.
•
RAKBANK will carry on advancing its investment towards customer-centric
technology transformation.
Ratings
RAKBANK gets continuously rated by leading rating agencies with their latest ratings shown
in the table below. This rating reflects the institutional strength of the Bank that is backed
up by trust and transparency in financial reporting.
Rating Agency Last Update Deposits Outlook
Moody’s November 2022 Baa1 / P-2 Stable
Fitch April 2023 BBB+ / F2 Stable
Capital Intelligence August 2022 A- / A2 PositiveClassification: RAKBANK-Public
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 seriices, the Bank increased its lending in the traditional SEE,
Commercial, and Corporate segment in recent years. The Bank also offers Islamic Banking solutions, iia
RAKislamic, throughout its 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 iisit www.rakbank.ae or contact the Call Centre on +9714 213
0000. Alternatiiely, you can connect with RAKBANK iia twitter.com/rakbankliie and facebook.com/rakbank.
For enquiries, please contact:
Geraldine Dagher
Geraldine@rakbank.ae
Eichelle Saddi
michelle.saddi@rakbank.ae
DISCLAIEER
The information in this document has been prepared by The National Bank of Ras Al Khaimah (P.S.C) a public joint stock
company, United Arab Emirates (“RAKBANK”) and is general background information about RAKBANK’s actiiities and is not
intended to be current as on the date of the document. This information is giien in summary form and does not purport to be
complete.
The information is intended to be read by iniestors haiing knowledge in iniestment matters. Information in this document,
including forecast or financial information, should not be considered as an adiice or a recommendation to iniestors or potential
iniestors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into
account your particular iniestment objectiies, financial situation or needs. Before acting on any information you should
consider the appropriateness of the information haiing regard to these matters, any releiant offer document and in particular,
you should seek independent financial and legal adiice. All securities and financial product or instrument transactions iniolie
risks, which include (among others) the risk of adierse or unanticipated market, financial or political deielopments and, in
international transactions, currency risk.
This document may contain published financial information, or information obtained from sources belieied to be reliable,
forward looking statements based on numbers or estimates or assumption that are subject to change including statements
regarding our intent, belief or current expectations with respect to RAKBANK’s businesses and operations, market conditions,
results of operation and financial condition, specific proiisions and risk management practices. Readers are cautioned not to
place undue reliance on these forward-looking statements. RAKBANK does not undertake any obligation to publicly release the
result of any reiisions to these forward-looking statements to reflect eients or circumstances after the date hereof to reflect the
occurrence of unanticipated eients. While due care has been used in the preparation of forecast information, actual results may
iary in a materially positiie or negatiie manner. Forecasts and hypothetical examples are subject to uncertainty and
contingencies outside RAKBANK’s control. Past performance is not a reliable indication of future performance.
RAKBANK disclaims any responsibility for the accuracy, fairness, completeness and correctness of information contained in this
document including forward looking statements and to update or reiise any information or forward-looking statement to reflect
any change in RAKBANK’s financial condition, status or affairs or any change in the eients, conditions or circumstances on which
a statement is based. Neither RAKBANK nor its related bodies, corporate, directors, employees, agents, nor any other person,
accepts any liability, including, without limitation, any liability arising from fault or negligence, for any direct, indirect or
consequential loss arising from the use/reference of this document or its contents or otherwise arising in connection with it for
the quality, accuracy, timeliness, continued aiailability or completeness of any data or calculations contained and/or referred to
in this document.

Sentiment: positive