Dubai: Islamic banks operating in the UAE reported robust growth in assets and profits in the first half of this year as both funded and non-funded income streams improved in the second quarter.

Dubai Islamic Bank (DIB) the largest Islamic bank in the UAE by total assets reported a net profit of Dh1.33 billion compared with Dh739 million in the same period in 2013.

“With 81 per cent growth in first half profits and similar strong performances across other key metrics, we feel that we have done justice to the confidence and faith placed in DIB by the market,” said Dubai Islamic Bank Chief Executive Officer, Dr Adnan Chilwan.

In the second quarter of 2014, the bank’s net profits were up 60.9 per cent at 700.44 million compared to 436.97 million in the same quarter last year. Net funded income saw an increase of 20 per cent to Dh1.68 billion while fees and commission income grew by 34 per cent to Dh581 million in the first half of this year of 2014 compared to the same period last year.

DIB’s total assets were up 9 per cent to Dh123.2 billion at June 30, 2014 compared with Dh113.3 billion at year end 2013. Financing portfolio increased 18 per cent to Dh66.1 billion in the first half this year from Dh56.1 billion at December 31, 2013.

Emirates Islamic Bank (EIB), the Islamic bank belonging to the Emirates NBD group reported a net profit of Dh226.46 million for the first half of 2014, up 104 per cent compared to Dh111.02 million for the same period in 2013.

In the second quarter of this year the bank’s net profits were up 70.3 per cent at Dh132.49 million compared to Dh77.78 million in the second quarter of last year.

Abu Dhabi Islamic Bank (Adib) Group reported a first half net profit of Dh864.3 million, an increase of 21.5 per cent compared to Dh711.4 million in the first half of 2013. For the second quarter of the year, the group posted a 22.5 per cent increase in net profit to Dh454.8 million, with total assets growing 15.4 per cent to Dh105.7 billion compared to the second quarter of 2013.

According to Shuaa Capital’s analysis ADIB’s net profits were 13 per cent ahead of consensus largely driven by decent interest income generation (+11 per cent year on year) robust fee income (up 17 per cent complemented by a pick up in investment gains and lower provisions as asset quality metrics show further signs of improvement.

The bank’s net customer financing assets grew by 15.4 per cent compared to the second quarter of 2013 to reach a new high of Dh64.9 billion as a result.

Improving deposit growth

While DIB’s customer deposits were up by 20 per cent to Dh94.8 billion in the first half with financing to deposit ratio at 70 per cent. Adib’s customer deposits increased by 18.2 per cent year-on-year and stood at Dh79 billion at the end of the second quarter of 2014.

DIB’s non-performing loans (NPL) continued to decline resulting in reduction in impairment losses from Dh545 million in the fist the half of 2013 to Dh355 million at the close of the first half of this year. NPLs saw a consistent decline with NPL ratio improving to 9.3 per cent in the first six months of this year compared to 11.1 per cent at the end of 2013.

ADIB’s credit provisions and impairments for the first half of 2014 increased by 7.4 per cent to Dh392.3 million compared to Dh365.4 million for the first half of 2013. During the second quarter, non-performing accounts as a percentage of gross customer financing decreased to 7.1 per cent compared to 9.6 per cent as at June 30, 2013.