Dubai: When Dubai Islamic Bank, the largest Islamic bank in the UAE by assets reported 111 per cent growth in net profit in the first quarter of this year; most analysts doubted a repeat of it in the following quarters. But with the results for the third quarter, the bank has surprised the sceptics with strong numbers for three consecutive quarters and a strong outlook for the fourth.

“We were not surprised by the initial doubts expressed by many. The easiest way to gain their confidence was to deliver it real numbers. Looking at our third quarter numbers some analysts have even commented that we have the potential to deliver more and we believe them,” said Dr Adnan Chilwan, Dubai Islamic Bank’s chief executive officer.

For the third quarter of this year, DIB reported a net profit of Dh723 million, up 57 per cent compared to Dh461 million in the same quarter last year. For the first nine months of 2014 the bank’s profits were up 72 per cent to Dh2 billon. The bank’s gross revenue increased by 17 per cent to Dh4.7 billion million in the first three quarters of this year compared to Dh4 billion in the same period last year. Dr Chilwan said the growth in the past three quarters are built on prevailing strong macroeconomic fundamentals, the intrinsic strength of the bank’s balance sheet and a robust strategy the bank has adopted following five years of transformation.

“Over the past few years the bank has gone through a lot of changes. We now have a very focused strategy,” Chilwan said. “Essentially we are not looking out; I mean to say we are not looking at what others are doing. We do not want to focus on any particular market segment or consumer segment. We want to be available for all and we are competing with ourselves.”

Analysts seem to agree.

“We view DIB as a play on the Dubai recovery story with liquid balance sheet, re-leveraging drive, growing loan market share, decent scope for asset quality improvement and ample room for return on equity optimisation,” Shuaa analysts Suha Urgan and Taher Safieddine wrote a recent research note.

Net financing portfolio of the bank increased by 27 per cent to Dh71.1 billion at the close of the third quarter of this year from Dh56.1 billion at year-end 2013. For the third quarter the bank reported 8 per cent financing growth.

DIB continues to aggressively re-leverage its balance sheet and direct liquidity into higher-earning assets. This growth has been broad-based with corporate financing up 34 per cent year to date and 6 per cent quarter-on-quarter with the consumer book up 16 per cent year to date and 6 per cent quarter-on-quarter.

In the third quarter, real estate financing showed its first quarter of sequential growth of 4 per cent.

Chilwan attributed the strong uptake in its consumer book (16 per cent) to three key components: personal, auto loans and home finance.

Meanwhile, the story on the corporate side is also unfolding in DIB’s favour despite intensifying competition. This growth has been mainly the result of new borrowings from corporates looking to fund projects and working capital requirements.

The bank wants to follow a comprehensive approach to balance-sheet growth and return on assets.

“We want the growth to come from all segments of business such as retail, SME, real estate, wholesale and investment banking,” Chilwan said. “Today consumer banking may be facing pricing pressures, but the volumes are growing. On other hand rate in corporate book may be slow but the pricing is better. So there can be ways in which we can balance out on overall return on assets.”

The bank remains one of the most liquid among peers with loan to deposit ratio at 74 per cent with ample headroom for credit expansion. With the improving market conditions Chilwan says lending growth and profitability are sustainable.