Moody’s Investors Service has affirmed National Bank of Ras Al Khaimah’s (RAKBANK) foreign and local currency deposit ratings at Baa1/P-2.
At the same time, Moody’s has affirmed RAKBank’s 0+ standalone Bank Financial Strength Rating (BFSR), mapping to baa3 baseline credit assessment (BeA) on the long term scale. All ratings carry a stable outlook. Moody’s also affirmed the (P)Baa1 rating assigned to the bank’s senior unsecured MTN programme (foreign currency).
Moody’s rating affirmation reflects RAKBank’s (i) strong retail and small medium enterprises (SME) lending franchise, which continue to generate stable core earnings (ii) low borrower concentration compared to UAE peers and (iii) consistently strong profitability, asset quality and capitalisation metrics.
RAKBank is a pure retail bank, with a singular focus on high margin retail and SME lending that has driven growth in assets and profitability since 2007. RAKBank’s net interest margin of 9% at end June 2012 is the highest in the UAE banking system.
We note that RAKBank’s concentration numbers compare favourably with most of the UAE peers due to its relatively large retail portfolio (80 per cent of loan book).