Ras Al-Khaimah based National Bank of Ras Al Khaimah (RAKBANK) has decreased its credit card limit to AED 5,000 for select customers as banks across the region struggle to cope with the challenges of COVID-19.
RAKBANK had earlier reported a 43.2 percent drop in net profit in Q1 2020 at AED 153.5 million compared to Q1. Bank’s customers previously held credit limits as high as AED 150,000 and as low as AED 36,000.
“Dear Customers, based on a periodic review of our policy, the credit limit on your Rakbank credit card has been revised to AED5,000,” Bank’s message sent to its customers said.
“The increase or decrease of customers’ Credit Card limits are part of an ongoing portfolio risk monitoring activity that the bank conducts periodically through which any decisions made are based on Rakbank’s internal risk assessment policies and customer utilization of limits.”
RAKBANK’s decline in earnings is mainly caused by a supplementary AED 130 million in IFRS 9 prerequisites it took to combat the economic impact of the virus, according to CEO Peter England. The provisions are the International Accounting Standards Board’s (IASB) response to a financial crisis.
Mr. England insisted the bank had “an exceptional January and February” and was on track for one of its “best quarters on record until the events around COVID-19 began to unfold”.
Nevertheless, Mr. England added that the bank is “very well-positioned to weather the current challenges with very high levels of capital, liquidity and precautionary provisions, leaving us in a very strong position to help our clients through these very challenging times.”
