Dubai: Dubai Islamic Bank (DIB) on Tuesday reported Dh3.12 billion net profit for the 9-month period ended September 30, 2020, down 22 per cent year on year.
The bank’s total income reached nearly Dh9.9 billion for the nine months of 2020 whilst net operating revenue grew to Dh6.9 billion supported by core business growth as well as robust fees and commissions and FX income of Dh1.32 billion, an increase of 19 per cent year on year.
The bank said despite the challenges in the global economy, it continues to demonstrate franchise strength and remain profitable during the on-going global crisis.
DIB expects the completion of the Noor integration to bring further positive contributions towards the bank’s overall profitability.
“The on-going consolidation of the banking sector in the GCC region is expected to continue with constrained growth opportunities and lower oil prices,” said Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank
“DIB’s strategic acquisition of Noor remains on target for completion by year end. The anticipated synergies have already started to materialize which will pave the way for robust growth and greater returns for our shareholders in the years to come.”
Operating expenses reached Dh2.13 billion in the first nine months of 2020 against Dh1.77 billion during the same period last year.
The rise in costs primarily stems from consolidation impact of Noor Bank as well as integration expenses in 1Q 2020. Cost to income ratio stood at 29.4 per cent as of Q3 2020, and is expected to steadily improve as synergies materialize, the bank said.
Financing and sukuk
The net financing & sukuk investments grew to Dh234.5 billion during the nine months of 2020 from Dh184.2 billion at the end of 2019, a robust rise of 27 per cent. Nearly Dh42 billion were deployed in gross new financing growth driven by the realignment of strategy focusing on lower risk sectors, particularly sovereigns, and includes gross new consumer financing amounting to Dh9.5 billion to date.
“Focusing on low risk segments, the bank remains at the top in the market from earning assets growth perspective with nine months increase of 27 per cent supported by gross new financing of around Dh42 billion. Despite the growth, liquidity remained strong at 92 per cent,” said Dr. Adnan Chilwan, Dubai Islamic Bank’s Group Chief Executive Officer.
Funding and liquidity
Customer deposits grew to Dh214.6 billion from Dh164.4 billion at year-end 2019 reflecting significant rise of 31 per cent year to date. CASA [current and savings accounts] rose strongly by 52 per cent year to date to Dh82.9 billion, growing from Dh54.6 billion in year-end 2019. This currently represents about 39 per cent of customer deposits. Net financing to deposit ratio stood at 92 per cent, signifying ample liquidity despite material growth in financing book.
Non-performing financing (NPF) ratio and impaired financing ratio stood at 4.8 per cent and 4.6 per cent respectively. Cash coverage and overall coverage ratio, including collateral at discounted value stood at 81 per cent and 114 per cent respectively.
Capital adequacy and CET 1 ratios improved to 17.3 per cent (+80 bps YTD) and 12.9 per cent (+90 bps YTD) respectively.