Dubai: Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE reported a net profit of Dh1.86 billion for the first half of 2021, down 12 per cent year on year.
For the second quarter of the year, the bank reported a net profit of Dh1.01 billion, up 18 per cent quarter on quarter.
The steady increase in total income over the past few quarters reflects the gradual re-opening of the economy and business activities supported by well-managed vaccination rollout across the emirate whilst adhering to precautionary safety measures.
“DIB’s core revenue generation has been on a steady positive trend since the peak of the pandemic with reported figure of Dh 5.8 billion during the first half of 2021. This was a 5 per cent increase over the previous quarter clearly depicting the bank’s resilience to and the robust strategy adapted in a challenging and changing environment,” said Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank.
Net operating revenue remained largely stable year on year to reach Dh4.62 billion.
Operating expenses declined to Dh1.24 billion compared to Dh1.47 billion in the same period of last year, an improvement of over 15 per cent.
The reduction in operating expenses is attributed to the continued integration synergies achieved as well as a disciplined approach to cost management. The lower expenses have led to an improvement in cost to income ratio by nearly 250 bps year to date, which now stands at 26.9 per cent vs 29.4 per cent for 2020.
Pre-impairment profit during the first half increased by 4 per cent year on year and 10 per cent quarter on quarter reaching to Dh3.38 billion compared to Dh3.25 billion in the same period of last year. Net profit margin continues to be stable at 2.5 per cent despite the low-rate environment.
“Driven by stronger top line growth (due to volumes) and declining impairments trend, DIB remains on the planned steady recovery path the bank has outlined in its strategy,” said Dr. Adnan Chilwan Dubai Islamic Bank Group Chief Executive Officer.
Net financing & sukuk investments remained stable at Dh232.8 billion in the first half of 2021, despite early settlements from large corporates during the first half amounting to more than Dh8 billion. Sukuk investments now stands at Dh38.5 billion depicting a year to date growth of 9 per cent.
Customer deposits increased to Dh218.3 billion in the first half of 2021, from Dh205.9 billion at year-end 2020 reflecting a robust rise of 6 per cent. CASA [current and savings account] now stands at Dh90.2 billion representing about 41 per cent of customer deposits.
Non-performing financing (NPF) ratio stood at 6.3 per cent, with impaired financing at Dh13.1 billion vs Dh12.1 billion in end of 2020. The coverage ratio stands at 74 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 103 bps compared from 137 bps in year-end 2020.
Impairment charges declined by 29 per cent year on year to Dh1.49 billion, reflecting the bank’s continued prudent approach to underwriting risk given the current market conditions.
Liquidity and capital
Liquidity coverage ratio (LCR) at 152 per cent remains well above regulatory requirement which along with the finance to deposit ratio of 89 per cent denotes an extremely healthy liquidity position.
Capital ratios continue to be stable with capital adequacy ratio o at 17 per cent and common equity tier 1 ratio stable at 12.3 per cent during the first half of 2021, both well above the regulatory requirement.