Profit before tax rose to Dh2.3 billion, up 27 per cent year on year, supported by the highest ever income of Dh4.7 billion, up seven per cent year on year with the total customer loans and advances surpassing Dh50 billion, up 19 per cent year on year.
Operating income for FY'24 was up seven per cent year on year, supported by a net interest margin of 4.5 per cent, on the back of well diversified asset growth, a stable customer base, augmented by higher non-interest income.
Operating expenses stood at Dh1.7 billion, increasing year on year by 3.6 per cent, with cost to income ratio (CIR) at 35.2 per cent compared to 36.4 per cent for FY'23, as the bank continues to scale the business and deliver operational efficiencies through investment in technology and strategic cost management initiatives.
Gross loans and advances at Dh50.3 billion as at December 2024, up 19.2 per cent year on year, driven by growth across all segments, with wholesale banking and business banking loans and advances growing by 35 per cent and 7.5 per cent year on year respectively, in line with the bank's diversification strategy.
Customer deposits grew 18.4 per cent year on year to Dh59.6billion, with a current and savings account (CASA) ratio of 62.7 per cent, remaining one of the highest in the industry.
Portfolio credit quality remained robust with net impairment charge to average loans and advances ratio at 1.7 per cent for current year compared to 2.5 per cent for the last year, supported by a strategic shift in business mix towards secured, low risk assets and benign credit environment. Non-performing loans and advances to gross loans and advances ratio improved to 2.1 per cent from 2.6 per cent in the previous year.
Shareholder returns remain strong with return on equity (ROE) of 18.4 per cent and return on assets (ROA) of 2.6 per cent. The bank remains well-capitalised with capital adequacy ratio (CAR) at 18.1 per cent for FY'24 against 17.6 per cent as at the close of FY'23.
Strong liquidity position is reflected by an eligible liquid asset ratio of 16.4 per cent (vs. 13.0 per cent at FY'23) and advances to stable resources ratio at 80.2 per cent (vs. 82.1 per cent at FY'23).
For the fourth quarter, profit after tax stood at Dh386 million and profit before tax at Dh424 million, a decline of 10.4 per cent and 4.6 per cent respectively. Operating income was at Dh1.16 billion, an increase of 3.7 per cent year on year. Gross loans and advances for the quarter rose 2.3 per cent vs Q3'24 driven by growth across all the segments. Customer deposits increased by 4.2 per cent vs Q3'24.
Mohamed Omran Alshamsi, Chairman of RAKBank
“With a strong and resilient balance sheet, RAKBank will continue to invest in talent and technology to deliver a market-leading offering, distinguished by exceptional customer experiences,” said Mohamed Omran Alshamsi, Chairman of RAKBank.
Raheel Ahmed, RAKBank Group CEO, said:“2024 has been significant for RAKBank, marked by record profitability and substantial growth across all business lines. The UAE economy continues to perform strongly, supported by thriving tourism and non-oil activity along with population growth across the Emirates. However, we remain vigilant to increasing global economic uncertainty and remain cautiously optimistic for the year ahead.”
Raheel Ahmed, RAKBank's Group CEO
The increase in profit before tax by Dh480.6 million was mainly due to increase in net interest income and net income from Islamic financing by Dh225.7 million, non-interest income by Dh82.6 million, decrease in net impairment charge by Dh229.5 million partly offset by increase in operating expenses by Dh57.2 million.
Gross interest income and income from Islamic financing increased by Dh664.9 million which was offset by increase in interest expense and distributions to depositors by Dh439.2 million that resulted in total increase in Net interest income and net income from Islamic financing of Dh225.7 million.
Non-interest income increased by Dh82.6 million to Dh1.15 billion. This was mainly due to an increase of Dh25.5 million in foreign exchange and derivative income due to increase in customer volumes and increase in investment income by Dh39.4 million.
Operating expenses increased by Dh57.2 million compared to the previous year. Increase in expenses was mainly due to staff and outsourcing costs, technology costs, marketing expenses partially offset by a decrease in credit card expenses. The Group's Cost to income ratio improved to 35.2 per cent compared to 36.4 per cent for the previous year.
Operating profit before net impairment charge and tax increased by Dh251.2 million from 2023. Net impairment charge for the year decreased by Dh229.5 million compared to the previous year. Decrease in net impairment charge is driven by a shift in the business mix towards secured low risk assets with better portfolio performance, coupled with benign credit environment.
The bank's total balance sheet stood at Dh88.3 billion, with a strong growth across customer segments.
Total assets increased by 19.4 per cent to Dh88.3 billion compared to 2023. This was mainly due to an increase in gross loans and advances by Dh8.1 billion, investments by Dh3.4 billion, cash and balance with the UAE Central Bank by Dh3.0 billion. Wholesale banking and financial institutions lending increased by Dh4.2 billion, retail banking lending by Dh3.2 billion and business banking lending by Dh0.7 billion respectively compared to prior year.
Wholesale banking segment reflects a strong growth of 35 per cent, mainly driven by lending to corporate and financial institutions, as we strategically diversify our portfolio mix. Growth in retail banking is supported by strong sales momentum across products with mortgage loan portfolio increasing by 28.6 per cent and credit cards by 7.1 per cent.