Dubai: Dubai Islamic Bank (DIB) on Wednesday reported Dh3.1 billion net profit for the nine months on 2021.
While the bank reported a 19 per cent increase in net profit in the third quarter on a quarter on quarter basis, 9-month profits were down 2 per cent year on year.
The bank said effective cost management and lower impairments are supporting the profitability of the bank.
Pre-impairment profit during the first nine months of 2021 saw an increase of 7 per cent quarter on quarter and 10 per cent year on year reaching to Dh5.27 billion compared to Dh4.8 billion in the same period of last year. Impairment charges declined by 18 per cent year on year to Dh2.17 billion.
The bank’s total income during the first nine months of 2021 reached Dh8.94 billion showing a growth of 4 per cent quarter on quarter. Net operating revenue saw a growth of 5 per cent quarter on quarter and 3 per cent year on year reaching Dh7.14 billion.
“The UAE banking sector has remained resilient with healthy liquidity, strong capital buffers and improving profitability since the start of this year. DIB’s net operating revenues has reached Dh 7.1 billion, a robust growth of 5 per cent quarter on quarter and 3 per cent year on year on the back of improving economic conditions and the gradual return of business activities,” said Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank.
Costs
DIB’s operating expenses improved to Dh1.87 billion compared to Dh2.13 billion in the same period of last year, an improvement of over 12 per cent. The lower expenses have led to an improvement in cost to income ratio by nearly 320 bps year to date, which now stands at 26.2 per cent compared to 29.4 per cent for 2020.
“The steady improvement in our profitability is supported by our consistent efforts to continue to extract synergies from the acquisition, whilst pushing for further efficiencies via our digitalisation drive and further optimisation of our branch and ATM network,” said Dr. Adnan Chilwan, Dubai Islamic Bank Group Chief Executive Officer.
Balance sheet
Net financing & sukuk investments remained stable at Dh232.7 billion in the first nine months of 2021. Sukuk investments now stands at nearly Dh40 billion, up 13 per cent year to date. Gross new consumer financing amounted to more than Dh10 billion during the first nine months of 2021 driven by strong growth in home and personal finance while another nearly Dh20 billion came from corporate.
Customer deposits grew to Dh214.1 billion year to date, from Dh205.9 billion at year-end 2020. CASA [current and savings accounts] stands at Dh83.9 billion representing about 39 per cent of customer deposits. Liquidity coverage ratio (LCR) at 160 per cent remains well above regulatory requirement with finance to deposit ratio of 90 per cent.
“Our funding sources and liquidity continue to be a key strength of the bank with customer deposits now reaching Dh214 billion, a robust growth of 4 per cent year to date primarily supported by the wholesale business representing more than 50 per cent of the deposit base,” said Abdulla Ali Obaid Al Hamli Board Member and Managing Director.
Asset quality
Non-performing financing (NPF) ratio now stands at 6.7 per cent, adequately covered by cash coverage ratio at 72 per cent and overall coverage including collateral at 103 per cent. Cost of risk on gross financing assets continue to be on a downward trend and now stands at 101 bps compared from 137 bps in year-end 2020 an improvement of 36 bps to date.
Liquidity and capital
Liquidity remain strong with finance to deposit ratio of 90 per cent and LCR of 160 per cent. Capital ratios continue to improve with CAR ratio now at 17.5% and CET 1 ratio is stable at 12.8%, both well above the regulatory requirement.
