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RAKBank primed to cash in on UAE growth

Lender prioritises expansion in digital banking sector

The UAE continues to demonstrate resilience, supported by its diverse and robust economy, a senior banking official said.

While global growth may slow and geopolitical uncertainties persist, the UAE is well-positioned to navigate these challenges, said Raheel Ahmed, Group CEO, RAKBank. “A potential slowdown in the global economy could put downward pressure on oil prices, impacting the oil sector. However, with lower interest rates on the horizon, the non-oil economy — making up nearly 70 per cent of the UAE’s GDP — stands to benefit. The UAE’s strategic diversification into sectors like tourism, real estate, logistics, hospitality, and manufacturing will help it manage this period effectively,” Ahmed told Khaleej Times in an interview.

In September 2024, RAKBank marked a milestone by executing its first Central Bank Digital Currency transfer via mBridge. “As we move forward, we will continue to collaborate with regulators and partners in the ecosystem to support the adoption of digital currencies, including the Dirham-based payment token,” Ahmed said.

Ahead of the bank’s full annual report for 2024, Ahmed remains bullish about the bank’s prospects. “We’ve surpassed many of our KPIs, achieving milestones well beyond our original targets. As we continue to diversify our balance sheet, reduce risk exposure, and introduce innovative products and services, the Bank remains strongly capitalized and continues to deliver impressive shareholder returns. One of our biggest achievements has been enhancing accessibility for our customers. In the first 9 months of 2024 alone, our customers logged into our digital platforms 37 million times, marking a 13 per cent YoY increase. In Personal Banking, a staggering 98 per cent of financial transactions were completed digitally. Additionally, since introducing our digital onboarding journeys, 83 per cent of Personal Banking accounts are now opened digitally, and 49 per cent of new bank cards are initiated through this platform,” Ahmed said.

The group stratifies the levels of credit risk it undertakes by placing limits on the amount of risk accepted not just in relation to the borrowers, but also the geographical and industry segments.

Around one-third of RAKBank;s loans and advances come from the Retail and Consumer banking sector. “In line with the strategic diversification, we continue to expand our portfolio in wholesale banking domain catering to large scale enterprises and financial institutions. In addition to the same, approximately one-third of the portfolio comes from the transport, storage, communication, trading and services sectors, while the balance includes financial institutions, manufacturing, hospitality, and other sectors/segments. Looking ahead, we are keen to grow our offering in healthcare, technology, and renewable energy, where we believe we can make a substantial impact,” Ahmed said.

Last year, RAKBank successfully completed two bond issues. The first was a conventional EMTN bond, followed by a Tier 2 issuance.

“In line with our strategic plan, in July 2024, we issued a $600 million RegS senior unsecured five-year social bond under RAKBank’s $2 billion Euro Medium Term Note Programme. This marked our return to the public debt capital markets for the first time since 2019, and notably, it was the first-ever public social bond issued by a financial institution from the Mena region. The bond was oversubscribed by over three times, with a peak order book exceeding $1.8 billion. Following this, we successfully completed an inaugural Tier 2 $250 million issuance, which was also very well received, oversubscribed by four times,” Ahmed said.

RAKBank is actively integrating artificial intelligence into its operations. “AI allows us to anticipate and predict customer needs, enabling us to personalise products and services with precision. It improves decision-making and automates manual tasks, which not only speeds up processes but also frees our bankers to focus more on meaningful customer interactions,” Ahmed said.

The bank is actively working on new products this year. Its mortgage product, Home-in-One, disbursed Dh2.06 billion in fresh loans as of YTD September 2024. “Additionally, our Microfinance product, launched in January 2024, has been a major success, with over 100,000 customers benefiting from it so far,” Ahmed said.

RAKBank recently launched Aani, the instant payments platform introduced by the Central Bank of the UAE. Additionally, Skiply 2.0 has evolved far beyond its initial role as a school payments app. “Now, it’s a comprehensive family payment platform that makes life much easier for parents across the UAE, offering a seamless way to manage everything from school fees to extracurricular activities,” Ahmed said.

In Business Banking, the bank plans new products in the e-commerce, payment, and merchant services space for SME clients over the next 6–9 months, tapping into emerging trends and shifting customer demands.

While RAKBank continues to expand its digital offerings, a select number of traditional branches will continue in key locations. “Ultimately, we strive to balance the convenience of digital banking with the personalized assistance that customers value throughout their banking journey,” Ahmed said.