Inflation is hitting new highs in the UAE and is becoming one of the most talked about issues. How do you assess the policies adopted by the UAE central bank? What policies do you think should be adopted to lower the inflation?

Inflation is now becoming an international issue; it’s not just within the UAE. There are three issues that are causing inflation: oil prices, the UAE dirham’s link to the dollar and the booming economy in this part of the world and Asia. I think we have to live with it because we cannot do a lot about inflation today if we want to grow. We have to be flexible and change our way of life to accept a new way of living, especially with the current oil price levels.

Do you think this might change in the future?

It’s in the policy that the government has accepted that we will stick with the dollar-dirham peg.

How do you see the progress towards the planned monetary union in GCC?

I think this is a very good idea so that countries can control and monitor their economy and currency.

Experts say that the UAE banking sector posted nearly $6,8 billion in profits for 2007; an increase of 29%. Economic fundamentals are remaining strong. However, we might see external factors, such as the US economic crisis, affecting the UAE. What gives you confidence that the banking sector in the UAE is immune to these external factors?

I think there are two different segments of business between the US and here. We don’t want to say that we are immune to what happened in the US or other countries but I think the UAE banking sector is exposed very little to the US economy’s situation. So, we see 2008 very positively and are looking forward to 2009.

How come this economy is sheltered from the global crisis?

I think that the policy is different here, the economy is still growing and a lot of banks never got involved in the problems of the US’ lending crisis.

There are around 47 banks in the UAE, of which 21 are national and the remaining 26 foreign. The sector is by many accounts over banked. In your opinion, is this, in fact, the case? Are we to see consolidation?

I don’t see that we are over banked because the UAE economy is growing at a tremendous rate so all banks have enough business and they are all performing well.

But we’ve seen the merger of two big banks to form the largest bank in the UAE.

That’s a policy to create major banks in the region to compete internationally. It’s more of a governmental policy.

RAK Bank is committed to upholding the highest standards of business ethics to its clients. In what way is RAK bank developing the emirate of Ras Al Khaimah? What were the effects of RAK bank on the development of Ras Al Khaimah?

RAK bank has a policy in our Board of Directors; we set a team of managers who set standards for quality to work in the financial market and we follow the leaders of this country; their wisdom is our aim. So far, we’ve been achieving good results in RAK Bank and we hope that we will continue to achieve good results in future.

How about social development and emiratization?

We are a local bank in the emirate of Ras Al Khaimah, which is part of the Emirates so we focus on doing our utmost services in Ras Al Khaimah as we have the highest presence in this emirate.

The UAE is soon to adopt the Basel II accord. In your opinion what are the challenges and advantages of introducing the Basel II Accord?

I think this is a very positive development. At RAK Bank, we set these standards a long time ago, before the central bank. We comply with these rules. I think it is very positive to have a safe and secure banking system. We try to grow and assess our risk too.

The National Bank of Ras Al Khaimah (RAK Bank) reported a net profit of Dh142.31 million for the quarter ended March 31, a 65 per cent increase over the same period in 2007 and over 30 per cent growth from the previous quarter. What ability makes you perform better than last year?

I think all the people who come to visit the UAE see its booming economy. We set this standard of business some time ago. When we saw that the economy was booming, we took advantage of that and we were positive. The first quarter was very good and we expect the rest of the year to be equally good and we predict the same for 2009.

What have some of the newest developments over the past 6 months been?

In fact, we are working to expand our network; we are investing heavily in technology, we are nationalizing a lot of jobs in the bank. We are growing.

How does RAK Bank differentiate from the other banks?

I think all of them are succeeding; we haven’t had a failing bank in the UAE for a long time. However, RAK Bank is aiming at a certain segment; we are very active in retail, credit card, mortgage lending, auto loans, and corporate business to some extent.

Is your product offering the key to your success?

I think the key to any business is having the right team, the right management and the right situation.

What other products are you planning to launch in the future?

We are expanding our network; we are building two operation centers; one in Ras Al Khaimah and one in Dubai.

“The high level of inflation and shortage of talent are some of the major challenges the banking sector is facing” according to Ahmed El Shall, chief financial officer of Dubai Bank. What are the major challenges RAK Bank is facing?

I think the issues that all people doing business in this part of the world are facing are the cost of living is increasing, inflation, to have the right people and to reward them. In RAK Bank, we try to reward the quality team we have.

RAK bank is one of the smaller banks, how do you create much needed recognition and awareness?

We are very aggressive in publicity in the UAE and this has served us very well. We reward our customers with our service. We are satisfied so far.

You have also created a special scheme to award customers who validate their complaint by 100 dhs. How do you value your customers?

We try to get close to our customers and our services are just to satisfy our customers.

Your CEO, Mr. Graham Honeybill, mentioned “the bank expects to post profit growth of nearly 30-40% in the coming years and you plan to add 5 more branches to the existing 20”. How do you evaluate your priorities and expansion?

We want to grow and increase business but we like to control our risk as we grow. We feel we are satisfied, we have high standards, and we can maintain that growth with fewer problems.

Is the growth sustainable? What makes you think that the growth of 30-40% is attainable on year on year basis?

The country is growing tremendously and we have had a policy at the bank for the last few years. We’ve been growing at a good rate. So, we see that in the near future we will be able to maintain that.

So, it’s about the overall economic environment in the UAE?

Yes, that’s true.

How would you describe your long-term strategy?

We have already expanded in the Emirates; we are now looking at our neighbors in the GCC to have our business established in Qatar, Oman and Kuwait.

How do you imagine the bank in five years?

I hope it will be performing well and providing bigger profits to its shareholders.

How do you assess the relationship in Ras Al Khaimah between the public and private sector?

It’s very much going to the private sector. A lot of services are moving from public to private. The government is encouraging the private sector to take more responsibility for services.

How do you imagine Ras Al Khaimah in ten years?

It will be a different place because we are growing in many fields: tourism, industry, and other services.

This will become the new centre of the northern Emirates?

I hope so. It’s a dream and we can see that it is coming true.

Is that also the vision of His Highness?

As you implement the system – the laws and regulations – and the people see that you are doing the right thing, they are encouraged; they have faith and trust and this in itself causes business growth.

As you grow, are you looking into some strategic partnerships with some international partners?

For a long time, we have had this vision. We welcome partners but we are waiting for the right time and partner.

Do you envisage expanding into Europe?

At the moment, we are looking only in our area.

What is your dream for RAK Bank?

Everybody, as a child, looked to the grown-ups and hoped to achieve what they achieved. I hope that RAK Bank will sustain its growth and increase its presence in the Emirates and surrounding countries with controlled risk of the business. It’s very easy to lend but to get your money back is difficult.

This was one of the main challenges: people coming here and leaving their debts.

True, but we have a good computer system with which we analyze all of our lending automatically and we can change with the situation. We change our policies yearly, and sometimes even half-yearly. We try to be flexible otherwise we will fail. As you see, the country is changing a lot; we have move with it.

How about internet banking and services?

Very soon we will be offering that. Are there any announcements you would like to make? I would like to thank you for this interview and I hope the country and RAK Bank will succeed.