Diversified income streams boosts RAKBank growth
REBALANCED LOAN PORTFOLIOS SUPPORT PROFIT, RISK MITIGATION
National Bank of Ras Al Khaimah (RAKBank) reported net profit of Dh839.4 million for the ninemonths period, up 24.9 per cent year-on-year. For the third quarter of 2019 the bank’s profits were up 18.5 per cent year on year to Dh284.5 million.
The latest set of numbers is not the result of any one-off gain, rather it has been the result of a gradual change that the bank began about 5 years ago in the loan portfolios that focused on diversification of income streams that supported both profitability and risk mitigation, Peter England, CEO of the bank, told Gulf News.
“The strategy we set out a few years ago was to increase the net interest income to total income ratio along with a tangible increase in the noninterest income. The change in the composition of our balance sheet also helped to bring in more diversified income streams,” said England.
Non-interest income
Net interest income and net income from Islamic finance for the first nine months of 2019 was Dh2.1 billion, up by 1.2 per cent year-on-year. The bank got a big boost from non-interest income by Dh138 million year-on-year to Dh907 million, mainly due to an increase of Dh74 million in Forex & derivative income and Dh54 million in fee & commission income.
The standout performer of the year continues to be fee income, with all business units recording solid growth in this area relative to their performance in 2018, leading to an impressive 17.9 per cent increase in this line.
“There has been exceptional growth in some of the feebased income streams, especially the forex (FX) and some of the derivative deals. Overall, our underlying fee income is very strong with very good results coming from cards business. We also have had some very positive results in fee incomes in business banking. In fact, we had reduced fees in some areas but have seen volumes compensating for lower charges,” said England.
A few years ago, the bank’s forex incomes were negligible. Now the bank has a range of products covering mass market FX product through its instant money transfer all the way up to forex solutions for large corporates including hedging.