Dubai Islamic Bank 1st Quarter 2020 Group Financial Results

Robust capital position maintained with CAR at 16.5%.

His Excellency Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Rulerrsquo;s Court of Dubai and Chairman of Dubai Islamic Bank.

His Excellency Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank.

  • Total asset now at AED 276 billion, up by 19% from year end 2019.
  • Financing and sukuk investments grew by 17% to nearly AED 216 billion.
  • Deposits jump by 22% to nearly AED 200 billion with FDR at 90% depicting healthy liquidity.
  • Net profit of over AED 1.1 billion has been achieved despite creating additional provision and buffers of nearly AED 1.5 billion.
  • Robust capital position maintained with CAR at 16.5%.
  • Noor Bank acquisition completed with financial consolidation.
  • Foreign ownership limit increase from 25% to 40% approved by AGM.

Dubai: Dubai Islamic Bank (DFM: DIB), the largest Islamic bank in the UAE, today announced its results for the period ending March 31, 2020. DIB continues to deliver profitable results amidst an extraordinary global economic environment. 

Q1 2020 results highlights: 

  • Total Income reached AED 3,559 million, compared to AED 3,407 million in Q1 2019.
  • Group Net Profit for the quarter stood at AED 1,111 million supported by robust total income.
  • The Q1 profitability has been achieved despite a deliberate, conservative and prudent approach adopted by the bank to create additional provisions and buffers of nearly AED 1.5 bln (offsetting the over a billion dirham gain on bargain purchase of Noor Bank) to manage the impact, if any, of the COVID-19 pandemic, as well as lower oil prices and interest rates.
  • Cost to income ratio stood at 29.8% without synergies expected from Noor Bank acquisition yet to materialize over the course of the year.
  • Net Profit Margin now at 3.00% from 3.15% in 2019 within the guidance.
  • ROA and ROE stood at 2.08% and 16% respectively for the quarter.
  • Net Financing & Sukuk investments rose to AED 216.2 billion, up by 17% YTD.
  • Total Assets stood at AED 276.4 billion, up by 19% YTD.
  • Customer deposits increased to AED 199.9 billion up by 22% YTD.
  • Financing to deposit ratio stood at 90%.
  • NPF ratio is at 4.3%, with cash coverage ratio at 100%.
  • Overall coverage, including collateral at discounted value, stands at 138%.
  • Capital adequacy ratio is at 16.5% whilst CET 1 ratio is at 12.1%

Management’s comments for the period ending 31 March 2020: 

His Excellency Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank, said: 

  • Over the past few months, countries across the globe have been experiencing unprecedented times, as they come together to combat the current global pandemic. Thanks to the strong leadership of the UAE, the country has taken an inspiring and decisive approach by promptly implementing various health and safety measures as well as economic reforms to ensure that our business and services continue to operate optimally in the current environment. 
  • The UAE banking sector has acted quickly to provide essential support towards the banks and the customers with various relief and stimulus measures amounting to more than USD 70 bln, executed in line with regulatory guidance. At DIB, we remain committed to such initiatives undertaken by our government and continue to cooperate and work hand in hand with the appropriate authorities to protect the community and the market. 

Dubai Islamic Bank Managing Director, Abdulla Al Hamli, said:

  • Safety and security of our employees and customers remains top priority for the bank. In this respect, we have implemented a variety of measures across the organization ranging from technology based work from home platforms for staff, to creating awareness on the health and safety, to ensuring appropriate and optimal management of branches and express centers from hygiene and cleanliness perspective, all in line with guidance from authorities.
  • At DIB, we believe that we are all “In It Together”. Our crisis management team and the staff working from office or homes remain committed to serve the customers with minimum disruption. The foundations we laid in our digital capabilities are now being optimized for the increased on-line activities and transactions taking place and with capacity enhancements, we assure all our customers that our services remain seamless across all channels during these times. 

Dubai Islamic Bank Group Chief Executive Officer, Dr. Adnan Chilwan, said: 

  • 2020 has started in a rather explosive manner. The Covid-19 pandemic is destined to create significant headwinds and force a rethinking and recalibration of our strategies. Growth, or at the very least, quantum of growth is sure to be impacted. Our focus will be more on protection and continuity of business and ensuring that the long term returns are there for all stakeholders. Difficult decisions may need to be made in the short term to ensure that we return to normalcy in the fastest possible manner. 
  • We have adopted a highly conservative approach to provisioning in this quarter building coverage and protection against any impacts on asset quality arising out of the current environment. Extraordinary gain and recurring profits allowed us to build further stage 1, 2 & 3 provisions adding to the management overlay totaling AED c.1.5 bln to protect the financial position of the bank from any expected impacts emanating from the pandemic, oil price volatility and low interest rate environment.   
  • Our strategy for 2020 will have a familiar ring for those who have seen the bank consolidate and then grow into financial powerhouse over the last decade. The leadership team at DIB is no stranger to such adverse market phenomena. It is the same team that led the bank successfully through the 2008 financial crisis and is ready to take the challenge and navigate the bank in the current economic environment as well. 
  • Whilst we will continue to take all necessary measures to protect the financial robustness of the DIB franchise, I am pleased to say that we have completed the acquisition of Noor Bank and the reported financials now depict a consolidated picture of the combined entity. At the same time, with the integration process currently underway, we expect the synergies to start materializing and contributing to DIB’s earnings within the latter part of this year thus alleviating the pressure on P&L due to the unfriendly environment today. 
  • The recent shareholders’ approval on the increase in FOL to 40% for DIB will have a fundamental positive impact for DIB primarily through the increased weightings in global and regional indices. This is a major milestone and a clear testament to the fact that the Board and management of DIB remain committed to the shareholders and focused on ensuring that returns continue to be optimized.

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