Dubai: Dubai Islamic Bank (DIB) Group reported Dh1.21 billion first quarter net profit, up 16 per cent compared to Dh1 billion in the same period last year.
Profitability of the bank improved further in the quarter with total income increasing to Dh2.69 billion compared to Dh2.37 billion for the same period in 2017. The bank reported sustained growth in core businesses, as income from Islamic financing and investing transactions increased by 16 per cent to Dh2.09 billion from Dh1.8 billion for the same period in 2017.
“DIB carries on its growth aspirations in the coming years following recent approvals from our shareholders to increase its capital and deploying it towards growing and expanding the business franchise,” said Mohammad Ebrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank.
Net revenue for the first quarter 2018 amounted to Dh1.97 billion, an increase of 9 per cent compared with Dh1.8 billion in the same period of 2017. Whilst the robust growth in core business continued to support revenues, strong rise in fees and commissions of 15.5 per cent gave an additional boost to rising profitability.
Operating expenses declined to Dh590 million in the first quarter 2018 compared to Dh592 million in the same period in 2017. As a result, cost to income ratio significantly improved to 29.9 per cent compared to 32.8 per cent for the same period in 2017.
“The significant growth in profitability over the years has enabled the bank to continue to distribute strong dividends to shareholders whilst optimising internal generation of capital. As Islamic banking activities continuing to pick up pace in the country, DIB remains a key player in the financial sector with a growing market share year on year,” said Dubai Islamic Bank Managing Director, Abdullah Al Hamli.
Net financing and sukuk investments grew to Dh162.7 billion from Dh157.3 billion as of end of 2017, an increase of nearly 3.5 per cent. Corporate banking financing assets grew at around 4 per cent to Dh93 billion whilst consumer business remained steady at Dh40 billion supported by new financing of close to Dh500 million. Commercial real estate concentration remained low at around 19 per cent and in line with guidance.
Strong note
The bank’s profitability increase came on the back of a strategy focus on building a quality financing portfolio while simultaneously managing costs.
“The year has once again started on a strong note with 16 per cent profitability growth clearly signifying that the plans put in place continue to yield strong returns. A key component of the success witnessed by the bank has been the shareholders’ support over the years, particularly in building capacity when needed to remain on our growth path,” said Dubai Islamic Bank Group Chief Executive Officer, Dr Adnan Chilwan.
Bank’s customer deposits for the first quarter 2018 increased by 3 per cent to Dh152 billion from Dh147 billion as at end of 2017. CASA component stood at Dh51.7 billion as of March 31, 2018 denoting a significant portion of low cost deposits. Financing to deposit ratio stood at 90 per cent as of March 31, 2018.
Non-performing financing ratio and impaired financing ratio remained steady at 3.4 per cent and 3.3 per cent respectively depicting the high quality of credits. Build-up of provisions increased cash coverage to 122 per cent at the close of the first quarter 2018 compared with 118 per cent at the end of 2017. Overall coverage ratio including collateral at discounted value stood at 158 per cent compared to 157 per cent at the end of 2017.
Capital adequacy ratios remained robust with overall CAR at 15 per cent as of March 31, 2018 and CET1 ratio at 9.5 per cent. The announced capital raising plan will be a key factor to ensure compliance under the new Basel III regime.
