Dubai Islamic nets AED2,004mn H1 profit

Dubai / Emirates Business

Dubai Islamic Bank (DIB), the first Islamic bank in the world and the largest Islamic bank in the UAE by total assets, on Wednesday announced its 1st half results for the period ended June 30, 2016.
Figures released on Wednesday show that Group net profit increased to AED 2,004 million, up 11% compared with AED 1,801 million for the same period in 2015, Total Income increased to AED 4,236 million, up 17% compared with AED 3,625 million for the same period in 2015, Net Operating Revenue increased to AED 3,356 million, up 6% compared with AED 3,166 million for the same period in 201, Impairment losses declined to AED 191 million compared with AED 276 million for the same period in 2015, and Cost to Income Ratio remained stable at 34.3% compared with 34.1% for the same period in 2015, in line with guidance for the year.
The results indicate a strong balance sheet driven by growth in core business activities with net financing assets at AED 108.9 billion up by 12%, compared to AED 97.2 billion at the end of 2015, Sukuk investments at AED 22.8 billion, an increase of 14%, compared to AED 20.1 billion at the end of 2015, and Total Assets at AED 172 billion, an increase of 15%, compared to AED 149.9 billion at the end of 2015.
The figures also reveal improving asset quality, with NPLs on a consistent decline with NPL ratio improving to 4.5%, compared to 5.0% at the end of 2015, provision coverage ratio improved to 100%, compared to 95% at the end of 2015, and overall coverage, including collateral at discounted value, now stands at 150%, compared to 147% at the end of 2015.
There has been a steady growth in customer deposits which are at AED 125 billion compared to AED 110 billion at the end of 2015, up by more than 13%. The CASA book has been enhanced to 41.3% of total deposit base compared to 40.6% at the end of 2015, despite the challenging liquidity environment.
The bank is maintaining strong capitalisation ratios, with capital adequacy ratio at 18.0% as of June 2016, as against 12% minimum required. Tier 1 CAR stood at 17.8% against minimum requirement of 8%. Financing to deposit ratio is at 87% highlighting significant liquidity.
Earnings per share stood at AED 0.40 in 1H 2016, return on assets is at 2.48% in 1H 2016, and return on equity stood at 18.1% in 1H 2016, in line with guidance given for the year.
Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank, said, “These continue to be challenging times with substantial economic impacts stemming from global events. The Brexit decision further added an air of uncertainty to the global economic scenario. DIB continues to impress with its performance as one the most attractive and profitable franchises in the country. The board and the management remain focused on effectively executing the growth strategy that not only achieves results in the short term but also builds capabilities and platform to sustain the same in the years to come.”
Dubai Islamic Bank Managing Director, Abdulla Al Hamli, said, “The bank has once again delivered robust results during the first half of 2016 aligned with the UAE economy’s resilience to the commodity prices volatility. The bank’s recent capital increase via a rights issue was heavily oversubscribed, denoting the strong shareholder interest in the franchise.
Dubai Islamic Bank Group Chief Executive Officer, Dr. Adnan Chilwan, said, “DIB’s performance over the last two years, despite the current economic conditions, has been remarkable to say the least.
Our growth guidance was well above the market and we have managed to beat those consistently. In a challenging and highly competitive liquidity landscape, we have shown the ability to generate not just a double digit deposit growth, but also growth in the low cost funding for the bank. Whilst NIMs continue to be under pressure across the industry, DIB remains at healthy levels and at the higher end of the market, another remarkable feat and a testament to the bank’s ability to generate low cost funding whilst maintaining competitive pricing on its financing book. The recent rights issuance has led to enhanced capitalisation with overall CAR standing at 18%, and has created room for further advancement and penetration in existing clientele and industry sectors as we push forth our growth strategy for 2016.
Given the solid performance so far and the robust balance sheet positioning, I believe that that we have the ingredients in place to navigate the economic challenges posed by the market and continue our performance leadership in line with the expectation of all our stakeholders.”
Total income for the period ended June 30th, 2016, increased to AED 4,236 million from AED 3,625 million for the same period in 2015, an increase of 17% driven primarily by growth in core businesses. Income from Islamic financing and investing transactions increased by 20% to AED 3,126 million from AED 2,614 million for the same period in 2015. Fees and commissions have increased by 25% to AED 790 million compared to AED 630 million for the same period in 2015.
Net revenue for the period ended June 30th, 2016, amounted to AED 3,356 million, an increase of 6% compared with AED 3,166 million in the same period of 2015. The increase is attributed to build up of core financing assets as well as growth in commissions and fees.
Operating expenses slightly increased by 7.0% to AED 1,152 million for the period ended June 30th, 2016, from AED 1,080 million in the same period in 2015. The marginal increase is primarily due to growth in operational expenses in line with increased business volume. Cost to income ratio remained stable at 34.3% compared to 34.1% for the same period in 2015, in line with guidance for the year.
Impairment losses declined to AED 191 million compared with AED 276 million for the same period in 2015, an improvement of 31%, a clear sign of improving asset quality. With a 50 bps drop in NPL within the first half, the bank remains on target for the guidance given for the ratio for 2016.
Net profit for the period ended June 30th, 2016, increased to AED 2,004 million from AED 1,801 million in the same period in 2015, an increase by 11%, stemming from higher revenues and declining impairment losses.
Net financing assets grew to AED 108.9 billion for the period ended June 30th, 2016 from AED 97.2 billion as of end of 2015, an increase of 12%. This increase was supported by Corporate Banking financing growth which rose to AED 76 bn (including commercial real estate) and Consumer Banking which grew to AED 38 bn.
Non-performing assets have shown a consistent decline, with NPL ratio improving to 4.5% for the period ended June 30th, 2016, compared with 5.0% at the end of 2015. Impaired financing ratio also improved to 3.8% for the period ended June 30th, 2016, from 4.1% at the end of 2015.
The improving NPLs and impaired ratio is primarily driven by recoveries in legacy portfolio as well as continuous growth in the quality asset book. With continued provisions, cash coverage improved to 100% compared with 95% at end of 2015. Overall coverage ratio stood at 150% at the end of June 2016 compared to 148% at the end of December, 2015.
Sukuk investments increased by 14% for the period ended June 30th, 2016, to AED 22.8 billion from AED 20.1 billion at end of 2015.

20 UAE banks rank in top
1,000 banks worldwide

Dubai / WAM

The General-Secretariat of the Union of Arab Banks (UAB) announced the inclusion of 85 Arab banks among the top 1,000 banks in the world, including 20 from the UAE.
The General Secretariat report, which is based on data published by “The Banker” magazine regarding the largest 1,000 banks in the world, named the Emirati banks as: National Bank of Abu Dhabi, First Gulf Bank, Abu Dhabi Commercial Bank, Emirates NBD, Dubai Islamic Bank, Mashreq Bank, Union National Bank, Abu Dhabi Islamic Bank, Commercial Bank of Dubai, RAK Bank, Al Hilal Bank, Sharjah Islamic Bank, National Bank of Fujairah, Bank of Sharjah, National Bank of Umm al Qaiwain, Al Masraf Arab Bank for Investment & Foreign Trade, Noor Bank, United Arab Bank, Invest Bank and Commercial Bank International.
The United Arab Emirates ranked first for the number of banks listed, Saudi Arabia came second (12 banks), both Lebanon and Qatar ranked third (10 banks), Bahrain ranked 4th (9 banks) and Kuwait ranked 5th (8 banks), while Saudi banks topped the list according to the total volume of assets, amounting to about US$578 billion.