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DIB profit rises 10%; customer deposits up

By Muzaffar Rizvi DUBAI - Dubai Islamic Bank , or DIB , on Saturday said its first-half net profit rose 10 per cent to Dh552 million due to a sharp increase in customer deposits despite higher provisions.

The UAE's largest Islamic lender said its customer deposits stood at Dh77.6 billion as of June 30, reflecting a 22 per cent increase from December 31, while total assets rose 14 per cent to Dh102.9 billion during the same period.

"During a period of renewed growth, Dubai Islamic Bank has continued to perform impressively. The bank's commitment to prudently manage its core operations, through effective cost controls and risk management, has delivered a strong set of results in the second quarter of the year. From a position of strength, DIB remains committed to playing a central role in the continued economic growth and diversification of the UAE and wider region," Mohammed Ibrahim Al Shaibani, DIB 's chairman and director-general of The Ruler's Court of Dubai, said in an e-mailed statement to Khaleej Times.

The bank's second-quarter net profit also rose 10 per cent year-on-year to Dh331 million compared to Dh301 million in the same period last year. Comparing quarter-on-quarter, DIB 's net profit increased by 50 per cent in the second quarter of 2011 compared with Dh221 million in the first quarter of 2011.

The bank's total revenue in the first half of 2011 was Dh1.8 billion compared to Dh1.5 billion in the same period of 2010, an increase of 20 per cent. In the second quarter of 2011, the bank's total revenue grew by 13 per cent compared with the same period in 2010.

Provision rise

The bank continued to take a conservative and prudent approach by enhancing provisions for impairment from Dh320 million in the first half of 2010 to Dh500 million in the same period of 2011. During the second quarter of 2011, the bank raised provisions for impairment amounting to Dh210 million compared with Dh 146 million in the same period in 2010.

The Dubai-based bank maintained a robust financing-to-deposit ratio of 71.3 per cent as of June 30, 2011, providing a clear indication of the bank's strong liquidity position. The bank also reported a healthy Capital Adequacy Ratio of 17.5 per cent.

Looking ahead to the second half of 2011, the will continue to expand its network across the UAE with eight new branches scheduled to open later in the year. These openings follow the inauguration in June of DIB 's new Al Islami Private Banking branch in Dubai.

Second-quarter achievements

The second quarter of 2011 witnessed a number of significant achievements for the bank, including the completion of the landmark Salik road toll securitisation, in which DIB played a key role as part of its long-standing commitment to support the continued economic development of Dubai.

In May 2011, trading in the shares of Tamweel -- the UAE Islamic home finance provider -- resumed following DIB 's increased stake in the company. DIB , which owns 58.25 per cent of Tamweel, is the majority shareholder in the company and has provided significant liquidity and support.

The lender's shares closed unchanged on Thursday at Dh2 on the Dubai Financial Market.

© Khaleej Times 2011