RAKBANK Reports AED 306.0million in Net Profit for the First Half of 2021


United Arab Emirates, 27th July,2021: The National Bank of RasAl-Khaimah (“RAKBANK”)has announceda consolidated Net Profit of AED306.0 million for the first half of 2021.The Net Profit for the second quarter of 2021 amounted to AED 192.1 million, resulting in a 25.4% increasecompared to the second quarter of 2020. This positive trajectory was also reflected in the Bank’s Total Income for the second quarter of 2021, amounting to AED 831.8 million, which resulted in an increase of 3.9% compared to the first quarter of 2021. The Total Income for the first half of 2021 stood at AED 1.6 billion. As of 30 June2021, Total Assets amounted to AED 54.3 billion up by 2.9% year-to-date and an increase of 2.0% compared to the first quarter of 2021.

RAKBANK CEO, Peter England,commented: "Q2 2021 has been a very strong quarter for us. We have seen Total Income commence growth again after a number of quarters of decline since the beginning of the pandemic. This is a crucial turning point for us as we see growth in our loan book and customer deposit and that is a very positive sign. Additionally, our provisions for this quarter are the lowest they have been for many years as we see the re-balancing of our portfolio, which we have undertaken over the years, bear very positive results. It also demonstrates the significant rebound in the UAE economy and a strong return of consumer confidence that we have witnessed during the first half of this year.”

Performance highlights:

• Q2 2021 Net Profit of AED 192.1 million is up by 68.5% compared to Q1 2021 • H1 2021 Operating expenditures reduced by 4.7% year-on-year • Gross Loans & Advances increasedby 3.1% year-to-date • Total Deposits at AED 37.0 billion, up by 5.6% year-on-year • Annualised Return on Assets and Return on Average Equity stood at 1.2% and 7.8% respectively

Performance review

Total Incomefor the first half of2021 decreased by 14.2% to AED 1,632.7million as compared to the same period of the previous year.This is mainly due to a decrease in Net Interest Income and Net Income from Islamic productsby AED 287.9 million that waspartially offset byan increase ofAED 16.7 million in Non-Interest Income. Non-interest income increased by 3.1% to AED 557.9 million because ofthe year-on-year increase of AED 20.0 million in net fees and commission income and AED 28.0 million in Investment income, whichwas partially offset by decline of AED 23.1 million in forex and derivative incomeand AED 10.0 million in Gross insurance underwriting profit.

Total Income for Q2 2021 increased by 3.9% as compared to Q1 2021, mainly due to a boost in Net Interest Income and Net Income from Islamic productsby AED 11.3 million as well as a riseof AED 19.6 million in Non-Interest Income. The increase in Net Interest Income and Net Income from Islamic productsis due to the increase in loans and advances, due from banks and investments. Non-interest income grewmainly due to an increase of AED 8.1 million in net fees and commission income, AED 22.9 million in forex and derivative income, AED 10.0 million in Gross insurance underwriting profit offset by a reduction of AED 8.7 million in Investment Income and AED 12.6 million in Other Income.


Total Assets increased by AED 1.5 billion to AED 54.3 billion compared to 31 December 2020 with major growthin loans and advances by AED 1.0 billion, investments up by AED 949 million and bank placements is up by AED 2.3 billion offset by a reduction in excess funds parked with the Central Bank of the UAE.

Asset quality

Provisions for credit loss for the quarter decreased by AED 114.4 million compared to Q2 2020 and AED 237.8 million for H1 2021compared to H1 2020 largely due to lower IFRS 9 provisions across most products and segments. Provisions for credit loss were lower by AED 60.4 million in Q2 2021 compared to Q1 2021. Non-performing Loans and Advances to Gross Loans and Advances ratio improved to 5.1% compared to 5.4% as at 31March 2021 and 5.2% as at 31 December 2020. The Bank is well provisioned against loan losses with a loan loss coverage ratio of 127.7%, which does not take into considerationmortgaged properties and other realizable asset collateral available against the loans.

Capitalization and liquidity

The Bank’s total Capital Ratio as per Basel III, after the application of the prudential filter was 17.8% compared to 18.6% at the end of the previous year. The regulatory eligible liquid asset ratio at the end of the quarter was 9.6%, and advances to stable resources ratio stood comfortably at 83.7% compared to 80.6% at the end of 2020.


“Our strong Q2 result marks the beginning of a turnaround for RAKBANK after a very challenging 12 months when the pandemic commenced in March last year” said Peter England. “The entire team and the Board have worked tirelessly to safeguard the Bank’s franchise value and help our customers through challenging times and we are very encouraged with the signs we are seeing both for RAKBANK and the broader UAE economygoing forward. We expect to see continual improvement in the coming quarters with sustained income growth, lower provisions and sound cost control. We also continue to win accolades for our customer service and will continue our focus on new digital innovation in all areas of our business” added England.

Financial highlights

Income statement highlights (AED Mn) Q2’21 Q1’21 Q2’20 H1’21 H1’20 Net Interest Income and net income from Islamic financing 543.0 531.7 666.5 1,074.8 1,362.7 Non-Interest Income 288.8 269.2 236.2 557.9 541.3 Total Income 831.8 800.9 902.8 1,632.7 1,903.9 Operating Expenditures (343.1) (330.0) (338.7) (673.1) (705.9) Operating Profit Before Provisions for Impairment 488.7 470.9 564.1 959.6 1,198.0 Provisions for Impairment (296.6) (357.0) (411.0) (653.6) (891.4) Net Profit 192.1 113.9 153.1 306.0 306.6

Balance sheet highlights

(AED Bn) Jun’21 Mar’21 Dec’20 Jun’20 Total Assets 54.3 53.2 52.8 54.3 Gross Loans & Advances 33.2 32.7 32.2 34.6 Deposits 37.0 36.5 36.9 35.1

Key ratios highlights

Percentage Jun’21 Mar’21 Dec’20 Jun’20 Return on Equity 7.8%* 5.9%* 6.5% 7.9%* Return on Assets 1.2%* 0.9%* 0.9% 1.1%* Net Interest Margin 4.2%* 4.2%* 4.6% 4.8%* Cost to Income 41.2% 41.2% 39.2% 37.1% Impaired Loan Ratio 5.1% 5.4% 5.2% 4.5% Impaired Loan Coverage Ratio 127.7% 125.7% 129.4% 128.2% Total Capital Adequacy Ratio Basel III 17.8%** 18.1%** 18.6%** 18.3%**


**After application of Prudential Filter

The Total Loans and Advances increased by AED 1.0 billion amounting to AED 33.2 billion compared to 31 December 2020. Additionally, lending in the PersonalBanking segment grew by AED 656.2 million over the previous year-end to AED 17.4 billion. Wholesale Banking segment’s lending was also up by AED 513.6 million compared to 31 December 2020.

Likewise, Customer deposits increased by AED 83.0 million to AED 37.0 billion compared to 31 December 2020. The increase was mainly due to the time deposits of AED 623.0 million, which was partially offset by the decrease of AED 540.0 million in CASA and Call deposits.

RAKBANK is currently rated by the following leading rating agencies, with their ratings provided below:

Rating Agency Last update Deposits Outlook Moody’s July2021 Baa1 / P-2 Negative Fitch May 2021 BBB+ / F2 Stable Capital Intelligence August 2020 A-/A2 Stable