DIB to raise its stake in Indonesian lender to 40%

Dubai: Dubai Islamic Bank PJSC (DIB) on Saturday said it has received formal approval from the Financial Services Authority, Indonesia (OJK) to hike its stake in PT Bank Panin Syariah Tbk (Bank Panin Syariah) to 40 per cent.

DIB had acquired around 25 per cent shares of Bank Panin Syariah, a listed commercial bank in Indonesia, in May last year. In the first phase of acquisition, DIB bought shares of Bank Panin Syariah from the market.

In the second phase of its acquisition strategy, DIB recently received a formal regulatory approval to obtain ‘Controlling Shareholder Status’ from the Financial Services Authority. DIB is now in a position to initiate and complete phase 2 of its share purchase plan, which seeks to increase its shareholding to 40 per cent.

DIB intends to cooperate with Bank Panin in order to promote the growth of Sharia banking in Indonesia. To achieve this, DIB will provide its well-established expertise in Islamic banking operations to Bank Panin Syariah, which will be bolstered by Bank Panin’s knowledge of the local market.

“Islamic banking in Indonesia has huge potential, which still remains largely unexploited”, said Dr. Adnan Chilwan, Group CEO, DIB.

“Given Bank Panin Syariah’s knowledge of local market and DIB’s undisputed expertise in this fast-growing segment, we see a massive opportunity for growth and expansion transforming what today is seen as a niche business into a more widely accepted form of banking within the country”.

Bank Panin Syariah is currently controlled by PT Bank Panin and operates through a network of 12 branches. The bank is listed on the Indonesia stock exchange.

As part of its growth strategy DIB has been fast expanding its book size within the UAE and through overseas operations.

In the first half of this year, DIB reported a 35 per cent increase in first half net profit to Dh1.8 billion compared to Dh1.33 billion in the same period last year.

In the first six months of the year, the bank’s total assets increased 18 per cent to Dh146.7 billion compared to Dh123.9 billion at the year-end 2014. Net financing assets at Dh87 billion, were up 18 per cent compared to Dh74 billion at end of 2014. DIB’s customer deposits in the first half of the year were up 18 per cent to Dh109.2 billion compared to Dh92.3 billion at end of 2014.

Outside the UAE, DIB already has operations in countries such as Pakistan, Sudan, Jordan and Bosnia. In Pakistan, Dubai Islamic Bank Pakistan was established in 2006 and DIB fully owns it. Indonesia offers high growth potential for Islamic banking. The country has a significantly large Muslim population combined with a growing middle class.