The National Bank of Ras Al Khaimah (RAKBANK) has reported a record AED 1.1 billion net profit, a 21% year-on-year (YoY) increase, driven by diversified growth in balance sheet, continued sales momentum and strong credit quality.
RAKBANK’s net interest income, including income from Islamic products net of distribution to depositors, reached AED 1.8 billion. Growth was attributed to a 19.4% increase in interest income from conventional loans and investments compared to the first half of 2023.
However, interest costs on conventional deposits and borrowings surged by 41%. Net income from Sharia-compliant financing experienced a decline of 13.2%.
“Our strategic transformation remains on course, and we are making strong progress on becoming the ‘digital bank with a human touch’. The progress of our transformation is evidenced in our record-breaking financial performance in H1 2024,” said Raheel Ahmed, RAKBANK’s Group CEO
“We continue to diversify our balance sheet, reduce our risk profile, and add on new innovative products and services for our customers. The bank remains well capitalised and delivers strong shareholder returns.”
Non-interest income saw an impressive increase of AED 44.1 million, largely attributed to gains in investment income (AED 27.5 million), foreign exchange (AED 18.5 million), and other income (AED 39.3 million). This growth was partially offset by a rise in net insurance expenses by AED 14.5 million.
Overall, operating income increased by AED 188.6 million, primarily driven by an AED 144.6 million rise in net interest income and an AED 44.1 million increase in non-interest income.
Operating expenses for the first half of 2024 amounted to AED 788.8 million, reflecting a 2.8% increase compared to the first half of 2023 and a 2.0% increase compared to the second quarter of 2023. These expenses were higher by 3.1% compared to the previous quarter as the bank continued to invest in growth initiatives.
The rise in operating expenses was mainly due to an AED 36.8 million increase in staff costs, AED 29.1 million in information and technology expenses, AED 4.9 million in depreciation, and AED 3.3 million in marketing expenses. These were slightly offset by a reduction in card and other costs amounting to AED 55 million.
Despite the increase in expenses, RAKBANK’s cost-to-income ratio improved to 33.6% compared to 35.5% at the same time last year and 36.4% for the full year 2023.
Provisions for credit loss stood at AED 364.2 million for the first half of 2024, representing a 25.9% decrease compared to the first half of 2023, but a 32.6% increase compared to the first quarter of 2024. Net credit losses to average loans and advances closed at 1.7%, a significant improvement from 2.6% at the end of the first half of 2023.
