RAKBank made all-round gains on core services in 2022, whether lending to corporates or SMEs. And online channels too helped with the growth story. Image Credit: Supplied

The UAE’s RAKBank showcased a stellar performance last year, with a growth rate of 53.4 per cent - and the highest annual net profit growth since 2008. The bank offers conventional and Sharia-compliant services to retail, commercial and small businesses through a network of 27 branches and and through web and mobile banking channels.

With a market cap of Dh8.4 billion, RAKBank’s net income from Islamic financing increased 14.8 per cent year-on-year to Dh2.48 billion. There was a 26.1 per cent year-over-year rise in interest income from conventional loans and investments. Despite operating expenses being higher by Dh88.8 millionr, on a cost-to-revenue basis, the ratio actually decreased from 43.2 per cent in 2021 to 43.0% in 2021.

The total impairment provision dropped to Dh804 million against Dh1.07 billion in 2021, which is attributable to a well-rounded portfolio and UAE’s healthy macroeconomic conditions. The gross loans and advances increased 7.6 per cent, while net credit losses to average loans and advances dropped to 2.1 per cent from 3.1 per cent.

As a result, the Group’s net profit surged to Dh1.163 billion, representing growth of 53.4 per cent year-on-year.

Solid on balance-sheet

RAKBank raised its total assets 1.5 per cent to Dh66.5 billion, through an increase in gross loans and advances, investments and placements with other banks. The wholesale banking and financial institutions segment lending increased by Dh1.6 billion, and its business banking loan portfolio surged Dh1 billion compared to the previous year end.

Customer deposits rose by 15 per cent to Dh44.9 billion, driven by an increase of Dh3.7 billion in time deposits and a net increase of Dh2.2 billion in CASA accounts (a more cost-effective way to raise money than issuing term deposits).

As a result, the bank ended 2022 with a capital adequacy ratio of 16.4 per cent, leaving the bank with sufficient opportunity for growth this year.

Digital advances

Digitalization is now instrumental in ensuring success within the financial sector. RAKBank has made strides to enhance its out-of-branch offerings. Two noteworthy developments include the partnership with AMF’s Buna payment platform and collaboration with UAE’s export credit agency on the UAE Trade Finance Gateway.

The deal with Arab Monetary Fund on Buna will help strengthen the payment service platform in sending and receiving cross-border, multi-currency payments securely. The collaboration with UAE Trade Finance Gateway, seeks to identify exporters and re-exporters based in the country and assist in quickly gaining finance to expand their international reach.