Capital Intelligence, the international emerging markets rating agency, has assigned a positive outlook to the ratings of the National Bank of Ras Al-Khaimah (Rakbank), in view of the bank’s continuing good performance.
After a recently completed ratings review, the United Arab Emirates (UAE)’s bank’s foreign currency ratings were affirmed at BBB- long-term and A3 short-term, while the financial strength rating was affirmed at BBB- and the support rating at 3.
The ratings reflect the bank’s good management, its sound asset quality, strong provision cover and high profitability. The constraining factors are the small size of the balance sheet ($800 million at end 2002), sector concentration in consumer credit and the bank’s incorporation in one of the smaller emirates.
Rakbank operates a network of 14 branches spread across the country. Its strategies emphasize both corporate and consumer banking activities, although the latter currently contributes two-thirds of the bank’s gross income.
The retail-banking infrastructure is largely in place and the activities of the personal banking division have grown substantially over the last two years. The Rakbank brand is growing in value and the bank is now a more visible participant in the domestic banking sector.
It is well managed with good controls and systems. Its credit policies are risk averse, resulting in a high concentration of loan assets in consumer banking where delinquencies are traditionally low.
The bank’s asset quality is sound. It remains solidly capitalized, although the capitalization ratio has declined over the years due to the growth in risk assets. Liquidity has improved with the substantial increase in customer deposits, and is at a satisfactory level.
The bank is reaping the benefits of its personal banking initiatives launched a few years ago and its profitability is high. Rakbank has a long history of profitable and well-managed operations. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
