With two locally headquartered banks and a substantial number of institutions from elsewhere in the UAE and further afield, Ras Al Khaimah’s banking sector is very competitive. The National Bank of RAK (RAKBANK) and Commercial Bank International (CBI) have rolled out a handful of new products and services in recent years, focusing on small and medium-sized enterprises (SMEs) and retail banking. Additionally, RAKBANK is expected to launch Islamic banking and financial products before the end of 2012. These areas are increasingly seen as major growth drivers in RAK.

At the same time, both RAKBANK and CBI have worked to build up their reputations on a national level as well. RAKBANK, in particular, has become a major player in the UAE as a whole over the past few years, even as many other institutions saw declining revenues as a result of the after-effects of the international financial crisis of 2008-09. A handful of banks from other emirates are also active in RAK, including Emirates NBD (ENBD), which is the largest bank in the UAE, and the National Bank of Abu Dhabi (NBAD), the second-largest bank in the country. Finally, a number of foreign banks also carry out business in RAK, including the UK-based HSBC Bank Middle East, India’s Bank of Baroda and Jordan’s Arab Bank, among others.

LOCAL PLAYER: RAKBANK, which is the oldest and largest bank in the emirate, posted net profits of Dh1.2bn ($326.64m) in 2011, up 20% on 2010, according to financial results released at the end of January 2012. RAKBANK was set up by the government in 1976 and remains under government control today. As of late February 2012, RAK owned 52.75% of RAKBANK, and 100% of the firm was listed on the Abu Dhabi stock exchange, with the remainder held by private investors. The jump in profits over the course of the year was the result of higher revenues from net interest income, which rose to Dh1.98bn ($538.96m) in 2011, up 23.4% over 2010. Similarly, total advances jumped by around 12% to Dh18.4bn ($5.01bn) in 2011, while total assets went up by 14.6% to reach some Dh24.5bn ($6.67bn).

RAKBANK, like many other UAE-based financial institutions, saw an uptick in deposits over the course of 2011, as it is a domestic retail bank and can source its deposits domestically. Customer deposits rose from Dh16.4bn ($4.46bn) at the end of 2010 to Dh18.3bn ($4.98bn) at the end of 2011, up 11.73%.

In response to new loan- and credit-related regulations put in place by the central bank in February 2011, RAKBANK worked to strengthen its core retail business over the course of the year. The institution has gained a reputation for rolling out innovative products and services aimed at SMEs, which have been a major driver of growth in RAK over the past decade.

WORKING THE RETAIL SEGMENT: Additionally, the bank has introduced a number of new retail products. It launched RAKBANK Direct, which allows customers to apply for products, including insurance policies, in an online-only process. RAKBANK also released Bling and Loaded, two value-added prepaid cards which offer an alternative to cash.

In addition, the firm worked to expand its retail-banking network in 2011. As of the end of the year, the institution operated 31 branches in the UAE, with three more expected to be up and running by the end of 2012. Additionally, RAKBANK customers had access to a national network of 159 ATMs at the end of 2011, and a further 54 are planned to be installed before the end of 2012. In an effort to tap into the UAE’s growing Chinese population, as of May 2011, the bank operated 41 Mandarin-enabled ATMs. Finally, in April 2011, RAKBANK launched mobile banking services for all mobile phone users in the UAE.

INVESTING IN SKILLS: In addition to expanding the branch and ATM network and rolling out mobile services, RAKBANK has invested heavily in employee training in recent years. These efforts have paid off. In late 2011, the institution was named the second “best overall bank” in the UAE by Ethos Consultancy, a Dubai-based international consulting firm that focuses on customer service. This is a slight drop on the previous five years (2006-10), when RAKBANK took the top spot in the survey. In April 2011, the company was named the “best credit card issuer” in the Middle East and North Africa at the 2011 Middle East Product Awards, sponsored by The Banker magazine.

BUILDING A BASE: CBI, which was set up by a handful of private and corporate investors in May 1991, also has a major presence in RAK. The institution operates three branches in the emirate, including one in Nakheel, one in Manar Mall and one in Al Hamra Mall. As of early 2012, 23.8% of CBI was owned by the state-controlled Qatar National Bank (QNB), one of the largest banks in Qatar and the region at large. Other major shareholders include the RAK Company for White Cement and Construction Materials, Abu Dhabi Commercial Bank, and the RAK Poultry and Feeding Company.

Since the international economic downturn swept through the Middle East in 2008-09, CBI has worked to shore up its accounts, adopting a conservative stance in most areas. The institution has focused on expanding its product and service offerings in a number of niches and protecting itself against the ongoing economic turbulence in the US and Europe.

At the end of the third quarter of 2011 the bank posted net profits of Dh62.8m ($17.09m), down 41.73% from Dh107.89m ($29.37m) the previous year. The drop in profits was primarily the result of a handful of new regulations put in place in early 2011 by the UAE’s central bank, which capped the fees financial institutions are allowed to collect from clients.

Despite the less-than-ideal 2011 financial results, the bank’s management is optimistic about the future. “We will continue to invest in new products, technology and human resources,” said Kris Babicci, the CEO of the bank, in November 2011. “Our strategy is to focus on business growth while taking prudent steps to improve the asset quality. The strength and diversity of our income has been maintained and we are in a good position to build upon this growth.”

Like RAKBANK, CBI has focused on boosting the quality of its customer service in recent years. The bank operates a six-month training programme for UAE nationals interested in a career in finance, which includes English-language instruction, a computer literacy unit, and a variety of other vocational and finance-related topics, in addition to hands-on training in the company’s branches and service centres.

MARKET LEADER: ENBD, the largest bank in the UAE in terms of assets, operates two branches in RAK, in addition to a substantial number of ATMs. In 2011, the bank posted net profits of Dh2.5bn ($680.50m), up 6% on the previous year, despite the fact that profits fell by 62% in the fourth quarter of 2011 due to extra provisioning to account for bad loans. The government-owned Investment Corporation of Dubai holds around 56% of ENBD, and just over 39% is listed on the Abu Dhabi stock exchange, with the remainder being held by private investors.

ENDB has acquired a number of other financial institutions in a variety of markets in recent years. In 2011, the bank bought Dubai Bank, a local Islamic institution that was founded in September 2002. In early March 2012, Dubai Bank’s ATM network was folded into ENDB’s existing system, which is also linked up with Emirates Islamic Bank, another ENDB holding. Customers of all three banks now have access to a linked network of over 800 ATMs spread throughout the UAE.

CLOSE COMPETITOR: NBAD is the second-largest bank in the UAE in terms of assets. It operates two branches in RAK, one at Al Nakheel and one on the corniche, RAK’s coastal road, in addition to 18 ATMs throughout the emirate. The Abu Dhabi Investment Council owns 70% of NBAD, and around 30% is listed on the Abu Dhabi stock exchange. In 2011, the bank posted annual profits of Dh3.708bn ($1.01bn), up less than 1% from the previous year, due to the fact “the region has been affected by the Arab Spring, low interest rates and the euro crisis,” according to Michael Tomalin, NBAD’s CEO. Despite the challenging financial environment, the bank posted assets of Dh255.7bn ($69.60bn) at the end of 2011, up 20.9% from 2010.