RAKBank, formerly known as the National Bank of Ras Al Khaimah, has recently revealed its plans to diversify its revenue streams and increase its digitalisation over the next four years. Raheel Ahmed, RAKBank’s CEO, announced that the bank will invest up to $163.5 million until 2026 as part of its strategy to develop new business lines and become a “more holistic partner” for its clients by expanding its services beyond deposit and lending facilities.
Ahmed explained that the bank’s strategy aims to create more diversity without adding more risk to its balance sheet. He said that RAKBank is focusing on growing cash management, trade, foreign exchange, hedging, and treasury products for businesses. In personal banking, RAKBank will concentrate on wealth management, transaction and payments businesses. The planned diversification will add a “new pillar” to RAKBank’s business, but will not be a “material contributor” this year.
RAKBank will also consider launching debt and equity advisory services for its clients, however, this plan will be part of the later stages of its expansion drive. The bank previously focused on extending financing to small and medium enterprises (SMEs), but has since made changes to their business mix to spread risk while preserving returns. Ahmed said that lending is now at 40% to personal banking and 40% to wholesale banking, while the remaining 20% goes to SMEs.
In the face of the COVID-19 pandemic, RAKBank has recently recovered well, posting a 53% increase in its full-year net profit to $316.6 million (AED 1.16 billion), its highest growth rate in over a decade. Non-performing loan ratios have decreased to 3% in 2022, compared to 4% the previous year. Impaired loan provision coverage ratios have also increased to 181.7% in 2022, up from 133.7% in 2021.
The bank will be relying on the UAE’s continued macroeconomic fundamentals and higher interest rates, combined with expectations of a solid positive momentum to support its anticipated growth for this year. While the economy’s growth is expected to be slower compared to last year, RAKBank believes that there is still enough growth opportunity in the domestic market to focus on.
RAKBank remains closed to the UAE market and is committed to building the right infrastructure in terms of technology, data, and analytics to further diversify into trade financing, invoice discounting, and supply chain financing. Ahmed stated that the bank does not plan to expand beyond the UAE’s borders until the foundations are solid enough.
عبدالرحمان زمین پیما
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آرمان جعفری
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