Dubai Bank considers expansion of capital base

Dubai: Dubai Bank, the Islamic banking company belonging to Dubai Banking Group, jointly owned 70 per cent by Dubai Holding and 30 per cent by Emaar, has plans to expand its capital base and seek regional expansion through acquisitions, Ahmed M. El Shall, chief financial officer of Dubai Bank, told Gulf News.

Earlier this year, the bank tripled its capital to Dh1.5 billion. But with its fast growing asset size and business expansion, Shall expects the bank will have to expand its capital base in the near future.

"We haven't yet decided whether we will expand our funding sources through debt or equity. In all likelihood, we will go for a combination of both, but an equity issue will depend on if Dubai Holding and Emaar wants to dilute their holding," El Shall said.

Dubai Bank, established in 2002, was converted into an Islamic Bank in January this year. Currently, the bank has an asset size in excess of Dh10 billion of which the corporate and retail portfolios consist of Dh5.6 billion and Dh1.4 billion, respectively.

Options

To boost the liability side of the balance sheet, the bank is seriously considering Medium Term Notes (MTNs). "Although there has been an increase in funding costs, overall debt still works out cheaper than equity. In addition, the credit turmoil in the US has improved the overall risk perception of MTNs from the Middle East banks," he said.

Considering the growing competition in the domestic market, Dubai Bank plans to expand its presence in the Middle East, North Africa and Pakistan.