Stock - DIB \ Dubai Islamic Bank
Dubai Islamic Bank's 2022 numbers were built on core revenue gains and 'prudent' cost management. Image Credit: Bloomberg

Dubai: The Dubai Islamic Bank pulled out a 26 per cent increase in net profit to Dh5.55 billion, against Dh4.4 billion a year ago. The increase was brought on rising ‘core revenues’ and ‘prudent’ cost management. The bank has proposed a 30 per cent dividend (or 30 fils a share).

The DIB numbers could be a precursor to a strong set of upcoming results from UAE’s leading banks, against a backdrop of higher interest rate, solid corporate and retail lending, and drastically lowered impairment charges.

“DIB attained its strongest year in its history with robust growth in profitability as total income reached Dh14 billion, a 20 per cent year-on-year growth and balance-sheet now at Dh288 billion witnessing a 5-year CAGR of 7 per cent,” said Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of DIB.

The bank has called for a general assembly on March 15 to get the go-ahead on the dividend proposal.

The UAE continued to attain economic growth and expansion amidst a turbulent year withstanding the impact of geo political conflicts and higher global inflation depicting its robust financial and monetary policies, strong
domestic recovery and fiscal surpluses. These robust economic policies have strengthened the banking sector...

- Mohammed Ibrahim Al Shaibani, Chairman of DIB

Going 'tactical'

"Given the rate environment and surplus liquidity, we made a deliberate tactical move focused on quality and structural sourcing rather than growth only," said Dr. Adnan Chilwan, Group CEO. "This led us to support large corporate and public sector entities in adjusting and aligning their balance-sheet in the new medium-term environment; a winning combination for customers, bank and economy.

"We continue to maintain firm control on expenses leading us to deliver to the best cost to income ratio in the market at 26.1 per cent while maintaining head room to elevate the bank’s system upgrades."

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DIB's 2022 pre-impairment profit

Cracking down on Non Performing Financing

During the year, DIB's NPF declined a 'healthy' 6 per cent to Dh12.98 billion from Dh13.78 billion. "The main improvement came from DIB’s core NPF portfolio, which improved by 4 per cent while (Abu Dhabi based hospital operator) NMC and NOOR POCI (which constitute 17 per cent of NPFs) both declined a combined 14%, due to ongoing recoveries," DIB said.

According to the CEO Dr. Chilwan, "Liquidity remains solid primarily through deepened relationship with the government, public and large corporates. This current liquidity profile provides us with the impetus for growth in 2023."

Key 2022 numbers

* Customer deposits were at Dh199 billion at year-end, a drop of 3.5 per cent year-on-year, with CASA at Dh87 billion, which is 44 per cent of deposits. "On a q-o-q basis, DIB has managed to increase its deposits during FY2022 by 7 per cent vs 9M-2022, driven by a 12 per cent increase in CASA deposits mainly through DIB’s corporate funding base." The liquidity coverage ratio (LCR) is at 150 per cent.

* Credit quality improved with the non-performing financing (NPF) ratio dropping 30 basis points y-o-y to 6.5 per cent.

* Net profit margin increased to 3.0 per cent (up 40 basis points) with return on assets and ROTE (return on tangible equity) at 2 per cent and 17 per cent.

* Underwriting quality 'remains robust resulting in sustained lower impairment charges amounting to Dh2.1 billion vs Dh2.44 billion, an improvement of 14 per cent y-o-y'.

"The year saw some landmark achievements on our sustainability journey with the successful launch of our sustainable finance framework, followed by an inaugural issuance of our $750 million sustainable sukuk," the CEO added. "The above two firsts for DIB and the region showcase the beginning of an incredible journey to transform the bank into a leading sustainable financial institution aligned to our ambition of owning the ESG space."