Tuesday 11, April 2017 by Jessica Combes

Dubai Islamic Bank Q1 2017 net profit reaches AED 1.042 billion

 

Dubai Islamic Bank (DFM: DIB) has announced its first quarter results for the period ended 31 March 2017.

 

Group Net Profit increased to AED 1,042 million, up four per cent compared with AED 1,001 million for the same period in 2016, while total income increased to AED 2,378 million, up 13 per cent compared with AED 2,102 million for the same period in 2016. Net Operating Revenue increased to AED 1,804 million, up seven per cent compared with AED 1,690 million for the same period in 2016, and impairment losses stood at AED 169 million compared with AED 118 million for the same period in 2016.

The cost-to-income ratio declined to 32.8 per cent compared with 33.7 per cent for the same period in 2016, and the net funded income margin stood at 3.16 per cent compared with 3.26 per cent for the same period in 2016.

 

Net financing assets rose to AED 121.4 billion up by six per cent, compared to AED 114.9 billion at the end of 2016, and Sukuk investments increased to AED 24.2 billion, a growth of four per cent, compared to AED 23.4 billion at the end of 2016. Total Assets stood at AED 186.9 billion, an increase of seven per cent, compared to AED 174.9 billion at the end of 2016.

 

The NPA ratio continues its downward trajectory improving to 3.7 per cent, compared to 3.9 per cent at the end of 2016, while provision coverage ratio improved to 118 per cent, compared to 117 per cent at the end of 2016. Overall coverage including collateral at discounted value now stands at 160 per cent, compared to 158 per cent at the end of 2016.

 

Customer deposits stood at AED 137.2 billion compared to AED 122.3 at the end of 2016, up by 12 per cent. CASA constituted 37 per cent of total deposit base, while the financing-to-deposit ratio stood at 88 per cent.

 

The capital adequacy ratio remained strong standing at 16.5 per cent, as against 12 per cent minimum required, and Tier One CAR stood at 16.1 per cent, against minimum requirement of eight per cent.

 

Shareholders’ return remains robust–in line with guidance for the year

  • Earnings per share stood at AED 0.16 in Q1 2017.
  • Return on assets steady at 2.34 per cent in Q1 2017.
  • Return on equity stood at 18 per cent in Q1 2017.

Profitability remained strong despite challenging economic environment. Total income for the period ended 31 March 2017 increased to AED 2,378 million from AED 2,102 million for the same period in 2016, an increase of 13 per cent driven primarily by sustained growth in core businesses, while income from Islamic financing and investing transactions increased by 17 per cent to AED 1,805 million from AED 1,542 million for the same period in 2016.

 

Net revenue for the period ended 31 March 2017 amounted to AED 1,804 million, an increase of seven per cent compared with AED 1,690 million in the same period of 2016. The increase is attributed to strong growth in the financing book of the bank with a significant portion coming from wholesale business.

 

Operating expenses were marginally up by four per cent to AED 592 million for the period ended 31 March 2017 compared to AED 567 million in the same period in 2016. However, cost to income ratio improved to 32.8 per cent compared to 33.7 per cent for the same period in 2016 indicating continuous widening jaws and improved efficiencies.

 

Net profit for the period ended 31 March 2017 rose to AED 1,042 million from AED 1,001 million in the same period in 2016, an increase by four per cent depicting robust profitability growth.

 

Net financing assets grew to AED 121.4 billion for the period ended 31 March 2017 from AED 114.9 billion as of end of 2016, an increase of six per cent as the bank continued its penetration in various targeted sectors particularly on the wholesale side of the business. Corporate banking financing assets grew at around 8.5 per cent to AED 77 billion whilst consumer business grew by three per cent to AED 40 billion. Commercial real estate concentration remains low at around 18 per cent and in line with guidance.

 

Non-performing assets have shown a consistent decline with NPA ratio improving to 3.7 per cent for the period ended 31 March 2017, compared with 3.9 per cent at the end of 2016. Impaired financing ratio stood at 3.5 per cent for the period ended 31 March 2017 from 3.6 per cent at the end of 2016. The improving NPAs and impaired ratios are driven by recoveries in legacy portfolio as well as quality new financing over the last few years with negligible fresh NPA formation. With continued buildup of provisions, cash coverage stood at 118 per cent for the period ended 31 March 2017 compared with 117 per cent at the end of 2016. Overall coverage ratio including collateral at discounted value stood at 160 per cent compared to 158 per cent at the end of 2016.

 

Sukuk investments increased by four per cent to AED 24.3 billion for the period ended 31 March 2017 from AED 23.4 billion at the end of 2016. The primarily dollar-denominated portfolio, mainly in UAE, consists of sovereigns and other top tier names many of which are rated.

 

Customer deposits for the period ended March 31, 2017 increased by 12 per cent to AED 137 billion from AED 122 billion as at end of 2016. CASA component stood at AED 50.5 billion as of 31 March 2017 compared with AED 47.4 billion as at end of 2016 showing consistent rise in low cost deposits. Financing to deposit ratio of 89 per cent as of 31 March 2017 indicates one of the strongest liquidity position in the sector.

 

Capital adequacy ratio remained robust at 16.5 per cent as of 31 March 2017, whilst T1 ratio stood at 16.1 per cent; both ratios are well above regulatory requirement.

 

Key highlights for Q1 of 2017:

  • In February, DIB successfully priced a $1 billion Sukuk issuance, the largest ever senior Sukuk issuance by a financial institution. The issuance under DIB's $5 billion Sukuk Programme carried a profit rate of 3.664 per cent reflecting the strong demand and confidence that global investors place in the UAE's largest Islamic bank.
  • The launch of Panin Dubai Shari'ah Bank in Indonesia marks DIB’s first foray in the Far East. The bank owns nearly 40 per cent stake in the Indonesian entity.

 

  

 

  

 

  

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