Rakbank's rating affirmed by Capital Intelligence

The ratings are underpinned by the high likelihood of support from UAE authorities in case of need. The financial strength rating is maintained at BBB+ reflecting the bank's good management and sound overall financials. All ratings carry a 'Stable' outlook.

Rakbank has differentiated itself from other banks by focusing on retail banking activities.

Consequently, the bank has minimal corporate exposures and no direct loans to real estate developers.

The current uncertainties regarding the financial health of the country's major business houses and the troubles faced by the building and contracting sectors therefore have little bearing on Rakbank's financials.

Rakbank however does have a large mortgage loan book (built over the last several years) consisting primarily of loans to high-income expatriates to purchase freehold properties constructed by good quality developers in the UAE. While the portfolio is performing well at present owing to the bank's tough credit acceptance criteria, non-performing loans (NPLs) have risen in recent months due to the challenging operating environment and could rise further over the next few quarters. However Rakbank's good operating profitability and favourable capital profile should enable it to provide aggressively should the need arise.

Earnings were high in 2008 owing to strong net interest income and high fees and commissions. H1 2009 results were strong. Rakbank is very well capitalised.

Liquidity ratios tightened last year although there was a slight easing of key ratios at end June 2009.

Rakbank's customer deposit growth rate was higher than the system average in the first half of this year, owing to aggressive deposit-gathering activities.

The bank was incorporated in 1976. It is majority-owned by the government of Ras Al Khaimah, one of the smaller emirates located in the northern part of the UAE.

Rakbank currently operates 25 branches and 62 ATMs across the country and is primarily a retail banking institution. With total assets of $3.8bn at end 2008, the bank ranks among the smaller domestic commercial banks in the country.