RAKBank profit after tax rises 26.1% to Dh1.374 billion for first half
For the second quarter, profit after tax stood at Dh669 million, reflecting an increase of 22 per cent year on year.
The bank recorded an operating profit of Dh1.68 billion, up 7.7 per cent year on year on the back of strong growth in balance sheet and continued non-interest income momentum.
Operating expenses rose 12.9 per cent vs last year driven by continued investments in technology, data, people and customer experience. Cost to income ratio (CIR) at 34.6 per cent vs. 33.6 per cent for the first half of 2024.
Total assets grew by 18.1 per cent year on year to Dh95 billion, with gross loans and advances increased to Dh51.3 billion, an increase of 17.4 per cent year on year. Growth in loans driven by all segments, with wholesale banking loans growing by 33.0 per cent year on year, aligning with the bank's diversification strategy.
The current and savings accounts (Casa) deposit base grew to Dh40.4 billion, up 12.2 per cent year on year, with Casa1 ratio of 66 per cent, one of the highest in the industry
Portfolio credit quality remains robust with net impairment charge to average loans and advances ratio at 0.7 per cent against 1.7 per cent during the same period last year, resulting from a strategic shift in business mix towards secured, low risk assets as well as favorable economic and credit environment.
The impaired loan ratio for the first half of 2025 improved to 1.9 per cent against 2.4 per cent for the first half of 2024 while 'provisions to gross loans' ratio was 5.2 per cent compared to 6.2 per cent as of the first half of 2024, providing adequate coverage.
Shareholder returns improved with return on equity (ROE) of 22.1 per cent against 20.4 per cent in the first half of 2024 and return on assets (ROA) of 3.1 per cent against 2.9 per cent in the first half of 2024.
The bank remains well capitalised with capital adequacy ratio (CAR) of 18.8 per cent as at the first half of 2025 against 18.0 per cent as at the first half of 2024.
Strong liquidity position was reflected by an eligible liquid asset ratio of 15.1 per cent vs. 15.5 per cent at the first half of 2024 and lending to stable resources ratio at 80.7 per cent vs. 79.4 per cent at the first half of 2024.
Operating income for the first half of 2025 amounted to Dh2.6 billion, a 9.5 per cent increase vs the first half of 2024. Operating Income for the second quarter was Dh1.3 billion, an increase of 7.4 per cent year on year.
Net interest income rose 0.8 per cent compared to the first half of 2024 due to growth in total assets by 18 per cent year on year, despite interest income being impacted by 100 bps rate cut in the second half of last year.
Despite external pressures on the net interest margin, on a risk adjusted basis, RAKBank's net interest margin improved by 37 bps to 3.3 per cent in the first half of 2025 compared to 2.9 per cent in the first half of 2024, as the bank shifts toward secured, low-risk assets.
Non-interest income increased by 35.6 per cent from last year to Dh795 million, driven by the bank's efforts to diversify its fee income, forex income and episodic gains in investment income.
Net impairment charges fell 52.5 per cent compared to the same period last year to Dh173 million, as the bank's portfolio quality improved with impaired loan ratio dropping to 1.9 per cent from 2.4 per cent as at the first half of 2024.
Net impairment charge to average loans and advances ratio was at 0.7 per cent for the first half of 2025 compared to 1.7 per cent during the same period last year.
Raheel Ahmed, Group Chief Executive Officer, RAKBank, said: 'We have, once again, achieved strong balance sheet growth and fee income. This growth reflects the strength of our diversified business model and continued balance sheet momentum. Portfolio credit quality remains robust with cost of risk improving to 0.7 per cent in H1 2025 from 1.7 per cent in H1 2024. On the back of the UAE's strong economic fundamentals, we remain confident in delivering a solid performance in the second half of 2025, supported by our strategic execution and sustained business momentum. However, we remain cautious about the geopolitical and global economic uncertainties, including the loosening of monetary policy across key economies and its impact on margins.'
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