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RAKBANK proposes dividend for 2016
RAKBANK proposes a dividend of 30 fils per share for the financial year ended 31 December 2016. The proposed dividend will be presented for approval by the shareholders in the Annual General Meeting (AGM) to be held on 5 April 2017 at the Bank’s headquarters in the emirate of Ras Al Khaimah.
RAKBANK Group Reports AED 663 million Net Profit for the Year ended December 31, 2016
The National Bank of Ras Al-Khaimah (RAKBANK) announced the financial results for the year ended on 31 December 2016. RAKBANK’s consolidated net profit is at AED 663.0 million, a decrease of AED 742.3 million over the previous year. Total Assets stood at AED 42.5 billion, an increase of 4.7% compared to 31 December 2015. On a more positive note the Group’s* operating Profit before impairment losses grew by AED 10.0 million over 2015 mainly as a result of the bank’s cost optimisation strategy which commenced in early 2016.
“2016 has been a very challenging year for RAKBANK as we have seen a significant increase of provisions especially in our legacy SME loan portfolio,” said Peter England, RAKBANK Chief Executive Officer. “From 2008 until early 2015 the Bank’s core focus had been on SME lending and therefore it is understandable that RAKBANK has been significantly affected by the challenges in the SME sector brought about by a range of global and regional factors. We are however seeing some signs of improvement with provisions having peaked in the third quarter of 2016 and showing signs of improvement in the fourth quarter”, explained England.
Total Operating Income declined by AED 99.9 million to AED 3.8 billion mainly due to a decrease of AED 223.2 million in Net Interest Income predominantly due to the decline in the high margin SME Business loan book. Non-interest income grew by AED 123.3 million to AED 1.0 billion. This was mainly due to an increase of AED 132.5 million in income from investments, AED 17.7 million in insurance underwriting profit and AED 12.3 million in foreign exchange and derivative income. This was offset by a decrease of AED 27.2 million in commission income and AED 11.9 million in other income compared to 2015.
Operating costs were down by AED 109.9 million, a decrease of 7.4% from 2015. This was mainly due to a decrease of AED 68.3 million in staff costs, AED 21.7 million in outsourced staff costs and AED 11.1 million in depreciation costs. The Group’s cost to revenue ratio reduced to 35.6% compared to 37.5% for the previous year.
The provision for impairment in loans and advances increased by AED 752.3 million compared to previous year and this was due to larger payment defaults in the unsecured loan products, Business Banking and Commercial Banking segments. Total impairment provisions for the year was AED 1.8 billion compared to AED 1.1 billion in 2015.
“Overall, 2016 was a challenging year, however we made significant strides in advancing our three year Strategic plan. The Bank’s diversification strategy that commenced in early 2015 has been showing exceptional results with solid growth coming in our Corporate and Financial Institutions segments, as well as a very solid performance by our Treasury unit. We have recognised the need to move away from the Bank’s traditional legacy approach, achieving greater diversity in our balance sheet and income base to minimise the risk of focusing on specific sectors. The Bank successfully merged its internet and mobile banking platforms to deliver a seamless digital experience, called RAKBANK Beyond, and we will continue to introduce innovative products and services as well as strengthen our branch and ATM network across the country. We have completely revamped our Personal banking segments and have made significant progress in our revitalised Card business and further enhanced the market for home lending with RAKBANK’s widely acclaimed ‘Home in One’ product that was successfully launched in August of this year,” said England.
Total Assets rose by 4.7% to AED 42.5 billion compared to the end of 2015. This was due to an increase in Gross Loans and Advances of AED 1.2 billion, lending to banks which grew by AED 722.4 million and an increase in investments of AED 695.6 million. Customer deposits grew by 5.7% to AED 29.4 billion compared to 2015. This growth came mainly from an increase of AED 1.1 billion in demand deposits and AED 455.4 million in time deposits.
The Bank’s capital adequacy ratio as per Basel II before taking into consideration profit for the year 2016 stood at 21.8% by the year-end. This compares with 22.3% at the end of 2015, against a requirement of 12% set by the UAE Central Bank. This level of capital provides the Bank with ample room for growth in 2017. The regulatory eligible liquid asset ratio at the end of the year was 16.9%, compared to 19.1% the previous year. The advances to stable resources ratio stood comfortably at 85.5% compared to 83.3% at the end of 2015.
Commenting on the results, RAKBANK’s Chairman H.E. Mohamed Omran Alshamsi noted: “While 2016 presented many obstacles, we made significant progress in the implementation of our three-year strategy, particularly with regards to diversifying our business. We are placing greater emphasis on optimizing synergies within the Group to increase efficiency while supporting the diversification of our revenue streams. The Bank’s progress in 2016 positions us well for sustained profitable growth. By doing so, we aim to better serve our customers by offering them a seamless experience across the Bank’s diverse products and services through industry-leading service excellence, innovation, and simplicity. We will also continue to strengthen our capacity to meet any future challenges. This has placed us in a strong position to grow in both the medium and long term. The Bank’s new business mix – which includes lower margin and lower risk products – is likely to contribute to a steadier more sustainable growth.”
RAKBANK Celebrates the Launch of 3 New Branches in the UAE
RAKBANK recently launched 3 new branches that are conveniently located in central business hubs - Al Hamra in Ras Al Khaimah, Jabal Ali Free Zone (JAFZA) and Dubai Investment Park (DIP) in Dubai. This totals RAKBANK’s presence to 38 branches and over 280 ATMs across the UAE. The strategic location of all 3 branches makes the Bank easily accessible to customers and offers a range of products and services on Personal Banking, Business Banking, and Wholesale Banking.
Along with a comprehensive Conventional and Sharia-compliant Islamic Banking services, the new branches also offers access to products and services such as the mortgage facility Home in One, a suite of Business Banking products, RAKelite centres, and RAKMoneyTransfer remittance services. The Bank’s top management including the COO, Geoff Stecyk, Director of Branch Distribution, Emad Hittini, and Director of RAK Business, Saleh Ali Saleh, inaugurated the branches.
Geoff Stecyk, COO of RAKBANK, said that, “RAKBANK’s strategy is to constantly offer a combination of both convenient Branch locations and enhanced Digital Banking solutions for a seamless banking experience, this ensures that the Bank caters to customers across all main locations and channels. The opening of the 3 branches is in line with the Bank’s plan to expand its branch network and to explore and develop major Corporate and Individual relationships in the UAE.”
For detailed location information when visiting the branches, customers are invited to use the ATM/branch locator.
RAKBANK Honored at Mastercard’s Customer Event
Dubai, UAE, 07 December, 2016: Mastercard, a leading technology company in the global payments industry, recently celebrated its 30th anniversary of operations in the UAE with colleagues, financial institutions, and business partners alike. In acknowledgement of the company’s long-standing business partnerships with leading financial institutions in the UAE, Mastercard presented RAKBANK with a commemorative milestone award for ‘First Launches in the Country’ at the exclusive event hosted at Layali Beach, Al Qasr Hotel, Madinat Jumeirah, Dubai.
On behalf of the Bank, RAKBANK’s Chief Executive Officer, Peter England, accepted the award from Ann Cairns, President of International Markets, Mastercard, in recognition of being the first bank to offer a Cobranded Jewellery credit card in the region and the launch of the Mastercard Titanium credit card.
(From left to right: Raghu Malhotra, President, Middle East and Africa, Mastercard, Nalin Costa, Director of Sales RAKBANK, Banali Malhotra, Director of Marketing RAKBANK, Peter England, CEO of RAKBANK, Ann Cairns, President of International Markets, Mastercard, Mufaddal Khumri, Director of Cards RAKBANK, Khalid Elgibali, Division President for Middle East and North Africa, Mastercard, and Eyad Al-Kourdi, Senior Vice President and General Manager, UAE, Mastercard)
“These awards are a testament to the Bank’s continuous efforts to remain innovative and competent,” said Peter England, RAKBANK’s Chief Executive Officer. “Both the Titanium and the Cobranded Kalyan Jewellers credit cards underline our commitment to providing faster, simpler and more convenient payment solutions to customers.”
Eyad Al-Kourdi, Senior Vice President and General Manager, UAE, Mastercard, said: “Completing 30 years in the UAE is a major achievement for Mastercard – one that underlines our commitment towards meeting the growing demands of the market and also our partners’
RAKBANK Arranges $15 Million Long Term Financing Solution to Seylan Bank in Sri Lanka
United Arab Emirates – 30 November 2016: RAKBANK is pleased to announce the arrangement of a five-year US $15 million long term loan facility to Seylan Bank, a financial institution based in Sri Lanka. Seylan Bank has secured the loan for general expansion of its portfolio growth in Foreign Currency Banking Unit (FCBU). The long term funding would also assist in further improving the Asset Liability Management (ALM) gap in Seylan’s FCBU Book.
This is Seylan’s first long term financial agreement with financial institutions based in the Middle East, which reflects strong investor confidence in the Bank’s operations and future growth potential. The loan facility was recently signed at the Capital Club in Dubai International Financial Center (DIFC). Attending the ceremony were Kapila Ariyaratne, Seylan Bank Chief Executive Officer, and Peter England, RAKBANK Chief Executive Officer, along with other senior representatives from RAKBANK and Seylan Bank.
Peter England, RAKBANK CEO, said: “We are delighted to have partnered with Seylan Bank to support their general expansion plan of the Foreign Currency Banking Unit. This long term financing allows us to diversify our asset book into various geographies while introducing Seylan Bank to the region.”
Commenting on the signing, Kapila Ariyaratne, Seylan Bank Chief Executive Officer said: “We are extremely pleased to sign up on this partnership as the Bank’s first long term financial agreement with the Middle East market, which reflects strong investor confidence in Seylan Bank’s operations and future growth potential.”
RAKBANK Celebrates the 45th UAE National Day
RAKBANK celebrated the 45th UAE National Day by organizing a special ceremony in its Ras Al Khaimah headquarters and across the 35 branches. Senior management and staff, from different nationalities and backgrounds, all gathered to commemorate the 45th National Day, as well as celebrate the UAE’s culture and heritage.
The ceremony began with the UAE national anthem, followed with a march performed by the Ras Al Khaimah police to commemorate the nation’s spirit of the union, and ended with the Emirati youth standing alongside one another for the traditional Emirati dance, Harbiya
RAKBANK Group Reports AED 554.2 million Net Profit for the Nine Months of 2016
The National Bank of Ras Al-Khaimah (RAKBANK) today announced a consolidated net profit of AED 554.2 million for the nine months ended 30 September 2016. The Group’s operating profit increased by 6.1% to AED 1.9 billion as a result of reduction in operating cost by 11.7% offset by a marginal drop in total operating income.
Total operating income is AED 2.9 billion and is down by 0.8% due to a reduction in the net interest income and net income from Islamic financing by 6.1% that is partially offset by the increase in non-interest income by 17.4%. Non-interest income grew by AED 115.5 million, and this is mainly due to a growth of AED 113.9 million in investment income and AED 8.6 million in income from the insurance segment.
Operating expenses declined by AED 134.2 million during the first nine months of the year compared to the previous year due to various cost saving initiatives taken by the Group. The Group improved its Cost-to-Income ratio to 34.8% compared with 39.1% during the nine months of 2015, as it maintained its focus on cost optimization. The consolidated operating profit before provision for impairment increased by AED 110.2 million to AED 1.9 billion, while the total provisions for impairment for the nine months increased to AED 1.3 billion. As a result, the Bank recorded a net profit of AED 554.2 million for the nine months ended September 30, 2016.
“2016 has been a very challenging year for RAKBANK as we have seen a significant increase of provisions in our legacy SME Business loans portfolio,” said Peter England, RAKBANK Chief Executive Officer. “From 2008 until early 2015 the bank’s core focus had been on SME lending and therefore is it understandable that, as the largest SME bank in the UAE, we would be adversely affected by the very challenging market for SME’s due to a number of factors including a global economic slowdown,” explained England.
“On the positive side, the banks diversification strategy commenced in early 2015 has been showing exceptional results with solid growth coming in our Corporate and Financial Institutions business, as well as a very solid performance by our Treasury unit. On the SME front, we remain firmly committed to this business having completely revamped our entire front end and back end where we continue to book solid business here, albeit under a completely different set of risk parameters than used last year. We have commenced completely revamping our Personal banking business and have seen significant progress in our revitalised Card business and completely changed the market for home lending with RAKBANK’s widely acclaimed ‘Home in One’ product which was successfully launched in August of this year,” added England.
Total assets grew by AED 275.3 million to AED 40.8 billion as compared to 31 December 2015, mainly as a result of growth in gross loans and advances which were up by AED 463.7 million to AED 29.0 billion. Customer deposits grew by AED 544.9 million during the nine months of 2016 to AED 28.4 billion as compared to AED 27.8 billion as at 31 December 2015.
The Bank’s capital adequacy ratio as per Basel II requirement that comprises entirely of Tier 1 capital is 23.9%, compared with 24.4% at the end of the previous year. This is against a current minimum total capital ratio of 12.0% prescribed by the Central Bank in the UAE. At the end of this quarter, the regulatory eligible liquid assets ratio is 18.7% and advances to stable resources ratio stood comfortably at 84.3%. Total shareholder’s equity is AED 7.5 billion including the current year profit.
Commenting on the results, RAKBANK’s Chairman H.E. Mohamed Omran Alshamsi noted “We expect to see on-going challenges during the course of 2016 from the Bank’s legacy SME Business loans portfolio, however we see positive mid to long term benefits from the Bank’s strategy that focuses on a larger balance sheet catering to all customer segments in the UAE. The bank is well placed for growth with a very strong capital position and ample liquidity from a well-diversified depositor base. We remain committed to the SME sector, however the journey we commenced last year to re-enter the Wholesale banking market and revitalise our Personal banking business is beginning to bear fruit and is crucial to building a long term sustainable banking franchise.”
RAKBANK and Network International Sign MOU to Further Support Merchants
RAKBANK announced the signing of a Memorandum of Understanding (MoU) with Network International (NI), the leading payment solutions provider in the Middle East and Africa (MEA), in order to reach an agreement to provide merchants seamless access to NI‘s POS and payment gateway products. With this partnership, UAE merchants will have speedier and more direct access to POS machines, payment gateways, and competitive financing options. In addition, the agreement facilitates that the two parties will cooperate and benefit from each other’s networks, customers, systems, techniques and expertise for the purpose of enhancing customers’ experience.
The MoU was recently signed at GITEX Technology Week in Dubai World Trade Centre. Peter England, RAKBANK Chief Executive Officer, and Bhairav Trivedi, Network International Group Chief Executive Officer, along with Dhiraj Kunwar, RAKBANK Director of Business Banking, and Samer Soliman, Managing Director – Group Acquiring of Network International, attended the signing ceremony.
(From left to right: Dhiraj Kunwar, RAKBANK Director of Business Banking, Peter England, RAKBANK CEO, Bhairav Trivedi, Group CEO of Network International, and Samer Soliman, Managing Director – Group Acquiring of Network International)
Peter England, CEO of RAKBANK, said: “As a prominent bank in the SME space, we are always looking to bring our valued customers added choice and convenience. Our partnership with Network International gives us the opportunity to support customers by offering them convenient business banking solutions and provide easy access to POS and e-payment gateways for their businesses.”
Bhairav Trivedi, Group CEO of Network International, said: “As the leading provider of innovative payment solutions in the region, Network International is delighted to sign a strategic agreement with RAKBANK that will support the UAE merchant’s business needs. SMEs remain the backbone of our economy and our offering of state-of-the-art POS and e-payment gateways combined with RAKBANK’s financing solutions, will provide enhanced support to this merchant base.”
RAKBANK Offers a Suite of Innovative Products to SMEs in the UAE
With an aim of addressing the financial needs of SMEs in the UAE, RAKBANK extends its lending to small and medium-sized enterprises (SME) through the launch of a suite of new Business Banking products. The ‘Point of Sale’ loan (POS), machinery loan, real-estate financing, and lastly a buy-out loan that will assist SME customers in managing their day-to-day liquidity as well as plan their business expansion.
Customers can now enjoy four new Business Banking products that will help them meet all their financial needs. For starters, the POS loan is mainly directed to retailers in the UAE. Providing retail businesses the extra support that is needed by offering a loan amount based on the total value of transactions that are made through the POS machine. Real-estate financing supports the capital expansion plans of SMEs by offering customers the opportunity to own commercial property. With the real-estate loan, customers can enjoy flexible pricing, repayment period and loan tenor.
The Bank also launched asset backed financing to help customers buy machinery, equipment, and other commercial assets to support their expansion plans. With attractive rates and financing solutions, customers can also take advantage of the available re-financing option. Lastly, companies in the UAE that are in search of a better financial solution to manage their liquidity without additional cost or collateral can now look to RAKBANK and avail a buy-out loan.
Additionally, with a renewed focus on strengthening relationships with valued customers, the Bank also provides an advisory service to its Business Banking customers to ensure that they feel supported at every stage in their business lifecycle. This service is available in person or virtually via the Bank’s many ‘touch points’.
RAKBANK Chief Executive Officer, Peter England, said: “We are one of the pioneers in supporting SMEs in the country and we therefore remain fully committed to the Business Banking segment. We will continue to help this segment grow by extending innovative and collaborative solutions, because we believe that the potential of SMEs will generate greater returns for the economy.”
RAKBANK Arranges $10 Million Medium Term Financing Solution to DFCC Bank in Sri Lanka
RAKBANK is pleased to announce the arrangement of a three-year US$10 million medium term loan facility to DFCC Bank PLC, a leading financial institution in Sri Lanka. DFCC Bank has secured the loan for general expansion of its Offshore Banking Unit (FCBU).
The loan facility was recently signed at Dubai International Financial Center (DIFC). Attending the ceremony were Lakshman Silva, DFCC Bank Deputy Chief Executive Officer, and Peter England, RAKBANK Chief Executive Officer, along with other senior representatives from RAKBANK and DFCC Bank.
(From left to right: Rahul Oberoi, RAKBANK Managing Director Wholesale Banking, Peter England, RAKBANK CEO, Lakshman Silva, DFCC Bank Deputy CEO, and Kapila Nanayakkara, DFCC Bank Senior Vice President Treasury & Resource Mobilization)
Peter England, RAKBANK CEO, said: “We are pleased to have partnered with DFCC Bank to support their general expansion plan of the Offshore Banking Unit. This medium term financing allows us to diversify our asset book into various geographies while introducing DFCC Bank to the region.”
Commenting on this significant achievement, Lakshman Silva, Deputy Chief Executive Officer of DFCC Bank said: “We have strong aspirations to grow our offshore banking business and we believe these funds will provide the right momentum to achieve our growth plans and support our expansion strategy. Our ability to raise medium term funding on this scale from a reputed overseas financial institution reflects investor confidence in DFCC Bank’s operations and future growth potential. This is our first foray into a Middle Eastern market for medium/long term financing.”
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