Wednesday 25, January 2017 by Jessica Combes

Dubai Islamic Bank Group net profit up by six per cent

Dubai Islamic Bank (DFM: DIB), a leading Islamic bank announced its results for the year ended December 31, 2016.

Sustained performance amidst a year of market volatilities saw the bank’s group net profit increased to AED 4,050 million, up six per cent compared with AED 3,839 million in 2015, while total income increased to AED 8,636 million, up 14 per cent compared with AED 7,546 million in 2015.

Net Operating Revenue increased to AED 6,761 million, went up four per cent compared with AED 6,489 million in 2015 and impairment losses declined to AED 392 million compared with AED 410 million in the previous year.

Cost to income ratio remained stable at 34 per cent compared with 34.3 per cent in net interest margins stood at 3.23 per cent compared with 3.63 per cent. Net fees and commission increased by 10 per cent to AED 1,425 million from AED 1,295 million. 

Asset growth remains robust with net financing assets rising to AED 115 billion, up 18 per cent, from AED 97.2 billion in 2015, whereas Sukuk investments saw growth of 17 per cent, increasing to AED 23.4 billion, up from AED 20.1 billion in 2015. Total Assets stood at AED 175 billion, an increase of 17 per cent, compared to AED 149.9 billion in 2015. 

Resilient asset quality saw the non-performing loan (NPL) ratio consistently improving to 3.9 per cent, compared to 5 per cent in 2015. Provision coverage ratio improved to 117 per cent, compared to 95 per cent in the year prior. Overall coverage including collateral at discounted value now stands at 158 per cent, compared to 147 per cent in 2015. 

Customer deposits stood at AED 122.4 billion compared to AED 110.0 billion in 2015, up by 11 per cent, and CASA constituted 39 per cent of total deposit base compared to 41 per cent in 2015.

Capital adequacy ratio remained strong standing at 18.1 per cent from 15.7 per cent in 2015; Tier 1 CAR stood at 17.8 per cent, up from 15.5 per cent in 2015. A stable liquidity position was depicted by the financing to deposit ratio standing at 94 per cent. 

Shareholders’ return remains robust as earnings per share stood at AED 0.67 in 2016 from AED 0.74 in 2015, a marginal impact despite dilution due to rights issuance. Return on assets was steady at 2.43 per cent in 2016 against 2015’s 2.71 per cent. Return on equity stood at 17.2 per cent in 2016 compared to 19 per cent in 2015. The DIB Board of Directors recommended the distribution of a cash dividend of 45 per cent, subject to AGM approval. 

In December 2016, credit rating agency Moody’s re-affirmed DIB’s strong issuer rating to be at ‘Baa1’ reflecting the bank’s established retail franchise within the UAE with solid profitability and capitalisation metrics. The outlook has now been upgraded from ‘Stable’ into ‘Positive’ driven by the improvements in asset quality and loan loss coverage levels. The positive outlook also considers the ongoing improvements in the bank’s risk management and control environment. In November, DIB launched cobranded cards with flydubai. This exclusive partnership allows customers to earn OPEN rewards from flydubai on their card usage and redeem the points for flydubai services. 

Moving towards the year 2017, the bank has once again outlined a medium term growth strategy amidst the shifting macro-economic landscape. With oil prices starting to stabilise and emerging markets now looking into sustained economic and business growth, DIB is set to pursue a business expansion agenda primarily through protecting and growing its core businesses. Focus will remain on maximising business opportunities within the Consumer Banking, continuous enhancement of wallet share in Corporate Banking, managing and rationalising its international presence and identifying synergies within the organisation to unlock value.



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