Dubai:  Dubai Islamic Bank yesterday reported full year 2009 net profits of Dh1.2 billion, down 30.6 per cent from the year before.

While the numbers were below analyst expectations, investors reacted positively, taking the share price to Dh2.44, gaining over 5 per cent.

In the fourth quarter, the bank made a profit of Dh80 million as a result of provisioning for bad loans at Dh818 million, up 56 per cent from Dh520 million in 2008.

The bank said the decline was primarily due to the conservative and prudent approach adopted by the bank in continuing with the policy of enhancing provisions for impairment.

High provision levels

The Islamic lender's revenue saw slight change, with Dh5.1 billion in 2009 from Dh5.2 billion in 2008. At year-end, customer deposits stood at Dh64.2 billion, compared to Dh62.6 billion at the end of 2008.

"Banks have been able to show that even with the high provision levels that they have taken for the year, the risks and the worries that people had in mind, they were still able to have some returns," said Mohammed Yasin, chief executive of Shuaa Securities, brokerage division on Shuaa Capital, the UAE's largest investment bank.

He said that the results were better than expected as investors were suffering from negative sentiment after Dubai World's announcement of a debt standstill in November.

The bank proposed a cash dividend of 20 per cent for 2009, but is subject to ratification.

"Even today if you want to buy this share and take the profits, that would provide you a very good dividend yield, attracting for more investors," said Yasin. DIB also announced that its total assets were Dh84.3 billion, slightly lower than Dh84.6 billion at the end of the same period in 2008.

Conservative policy

The bank's total financing assets reached Dh49.9 billion as of December 31, a slight decline from Dh52.7 billion in 2008, "due to the bank's conservative policy of managing the financing portfolio in these times," DIB said in a statement.

"As the global economy emerges from a phase of severe disruption and unprecedented volatility into a period of recovery, Dubai Islamic Bank is now uniquely positioned to further contribute to the continued economic growth and diversification of the UAE and wider region," said Mohammad Ebrahim Al Shaibani, Director-General of the Dubai Ruler's Court and Chairman of Dubai Islamic Bank.