DUBAI: Dubai Islamic Bank (DIB), the largest Islamic Bank in the UAE by assets, said on Tuesday that it has mandated eight banks to arrange a series of fixed income investor meetings for a potential benchmark sized ($500 million upwards) tier 1 sukuk issue.
DIB has mandated HSBC and Standard Chartered as the joint structuring banks for the dollar denominated perpetual sukuk issue. In addition Al Hilal Bank, Emirates NBD, National Bank of Abu Dhabi, Noor Bank, Sharjah Islamic Bank and DIB’s own investment banking team will arrange the roadshows, the bank said in a statement.
The sukuk roadshows will start from January 8 across in Asia, the Middle East, and Europe and a sukuk transaction which enhances its Tier 1, or core, capital may follow subject to market conditions. The possible sukuk will have a perpetual tenor, the bank said.
At the end to the third quarter, DIB’s Chief Executive Adnan Chilwan had indicated that the bank would look at boosting its capital reserves to meet the fast pace of loan growth.
The bank reported Dh2 billion net profits for the first nine months of 2014, up 72 per cent compared to Dh1.2 billion in the same period last year.
The bank’s gross revenue increased by 17 per cent to Dh4.7 billion million in the first three quarters of this year compared to Dh4 billion in the same period last year.
For the third quarter of this year, DIB reported Dh723 million net profits, up 57 per cent compared to Dh461 million in the same quarter last year. In the third quarter loans grew 8 per cent quarter on quarter translating into an impressive growth of 27 at the close of the third quarter.
The bank continued to aggressively re-leverage its balance sheet and direct liquidity into higher-earning assets. Management had revised its 2014 loan growth guidance following strong number in the first half of the year from 10-15 per cent to 15-20 per cent which again was surpassed in the third quarter.
Although the future loan growth prospects call for capital expansion, at the close of the third quarter the bank was one of the most liquid among peers with loans to deposit ratio at 74 per cent which pointed to sizeable headroom for further credit expansion. At the end of the third quarter, DIB’s total capital adequacy ratio, including Tier 1 and Tier 2 capital was 15.2 per cent.
The bank last issued a $1 billion sukuk in September 2013 at 6.25 per cent coupon. If the road shows this week succeeds in sale of the issue it will be the first bond deal from the Gulf region in 2015.