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02 October 2023

Retail banking focus places RAKbank in the top league

By Karen Hart


In what was thought as an audacious move, RAKbank metamorphosed itself and offered its first credit card in 2001, which was also the first “free for life” credit card in the region. A few years later, and today the small kid on the block is one of the top two credit card providers in the UAE. And it will not rest until it gets the top laurel – should the plan go well – by the year-end.

Behind the fame of this local bank are two former Standard Chartered executives who pledged not to commit the same mistakes.

Emirates Business sat with Graham Honeybill, RAKbank general manager, and David Martin, RAKBank business advisor, to know what transpired during the bank’s revamp and what else is in the pipeline.

Can you talk about your performance and profits in 2007?

Martin: The last three quarters were 50 per cent higher than the previous year’s. If the trend is consistently higher by 50 per cent quarter over quarter, and no major adverse event has happened in the last quarter, you can extrapolate from that statement what the year’s profit is going to be.

Is 2007 the best year for RAKbank?

Martin: Yes, it is the best year.

What are the factors that brought forward this boom?

The external market is growing, as you know; the GDP factor in this country is going up about 10-plus a year, backed by strong oil prices. Strong investment in the country has undoubtedly helped in preparing a ground for retail banks to grow. Internally, we completely revamped the way we conduct our business.

A total revamp? What do you mean by this?

Martin: We did not have a retail product seven years ago other than current accounts, savings account, six deposits and six loans. Now we have six retail products. It was only seven years ago when we decided to concentrate on retail banking and small-business banking. We changed the focus of the bank away from corporate (our customer was mainly the Defence Department of Ras Al Khaimah) and we’ve changed completely to retail banking.

Honeybill: Back in the late 1990s, we had some slight crises – such as the declining US dollar interest rates. We looked at corporate lending and said we couldn’t make money on it. So we made the move to retail banking. We then approached David to join us and then put up the structure.
How much of your bank’s portfolio runs retail businesses now?

Martin: Virtually the entire bank is made up of retail and small business portfolio – around 93 per cent. Corporate, in terms of assets, is about seven per cent. Credit cards make up no more than 25 per cent. Our largest outstanding portfolio is personal loans. Second largest is mortgages with Dh2.5 billion portfolio and no bad debt.

Why have you shifted focus to retail banking?

Honeybill: When you look at the size of our balance sheet, we do not have the capacity for million or billion dollar or dirham loans. In corporate banking, you require a huge amount of capital, and it is not that rewarding in terms of the margins that you get. So we just decided to focus on a lower level and that is why we look at commercial lending with a major focus towards SMEs.

Has the decision paid off?

Brilliant move, actually. Seven years ago, we had 5,000 customers in retail, Dh50,000 in deposits, Dh500 million in loans, seven branches and 70 staff.

Today, we have 250,000 customers, 23 branches, 53 ATMs, Dh8bn worth of loans, Dh5bn deposits, more than 800 employees and about 700 sales staff. The profitability of growing the retail business has grown 11 times or 1,100 per cent in the last seven years.

RAKbank is now seen as the number two retail bank in terms of size and profitability in the country. And it is seen as the best bank in terms of customer service quality, according to Ethos and our internal/external services as well as third party consultants.

What are your expansion plans?

Martin: We are growing organically. As you can see from the first three quarters of this year we have organically grown by 50 per cent. We had not done too badly in the last six to seven years, so I think we’ll continue this growth. We are expecting our growth not to fall below 35 per cent.

Are you looking at mergers or acquisitions?

Honeybill: At this point in time we are not looking.

The credit crunch in the West has taken a lot of investors aback. How are you faring against bad debts?

Martin: In retail banking, which is virtually all the bank’s portfolio, we have a portfolio of Dh8bn. We also have bad loans, all banks have. Percentage-wise it varies from product to product, averaging across the entire range of around one per cent.

Honeybill: We have a very conservative credit policy and that is reflected in the level of our bad debts. If you take our major competitors, their bad-debt level is running at 50 per cent higher.

Two years ago, we used to give credit cards only to those whose companies are accredited with us but not anymore as it was too constricting. Now we have another set of criteria for non-bank customers.

RAKbank has an aggressive marketing and advertising strategy. Is it part of the metamorphosis?

Yes. In 1999, our advertising budget was Dh50,000, most of which was not spent. But then the only product we had was savings, which you won’t be really excited about. Last year, it was well in excess of Dh20m.

Honeybill: When we started to market ourselves as RAKbank in 2001, we had to make a statement.

How is the weakening dollar affecting a local bank such as RAKbank?

Honeybill: It is affecting our customers more than it is affecting us. The price increases, especially in rents, are forcing a lot of people to go back home. So whatever facilities or debt they had from the banks they just leave them. These things impact us. But those on the higher brackets are weathering the storm.

Martin: We can say it has an effect on our customer base, whose salary is below Dh5,000 a month. And we feel that this has been seen by other retail banks, as well. There has been an increase in bad debt in that segment of customers.

Due to the higher cost of living, a number of people are returning to their home countries to escape debts. Have you been resorting to imprisonment as regards bad debts?

Honeybill: If people have a problem and they approach us, we have a track record of helping them. But on the other hand if people cheat us, then we’ll go to the ends of the earth to get our money back.


RAKbank has catapulted itself into the premier league of UAE retail banking by reinventing its brand franchise and delivery network.

The management team, led by Graham Honeybill, general manager of RAKbank for over 10 years, presented a strategic plan to reposition and expand the bank’s retail banking franchise to its Board of Directors in January 2000.

Retail banking profits and the loan asset book had risen by a phenomenal 1,100 per cent since 2000.

Honeybill’s counsel David Martin, a fellow ex-Standard Chartered senior executive and full-time business consultant to RAKbank, is no stranger to strategy formulation and implementation initiatives in international retail banking.

He spent three decades at Standard Chartered Bank in managing businesses in locales as varied as Spain, Denmark, Brunei, Bahrain, UAE and Qatar.