DIB net profit dips to Dh3.16b in 2020 on prudent provisioning

Dubai Islamic Bank (DIB), the UAE’s largest Shariah-complaint bank, reported on Tuesday a 38 per cent decline in group net profit to Dh3.16 billion, as its total income reflected a marginal dip to Dh13.42 billion in 2020 from 13.684 billion in 2019.

The profit plunge was “primarily driven by a deliberate and pointed prudent approach to provisioning ensuring that the bank is protected against any unforeseen scenarios and positioned for a strong rebound in the near future,” DIB said in a statement.

Operating revenue grew to Dh9.471 billion, up by 2.0 per cent, “depicting the strength of the bank’s core franchise which continues to grow despite the macro-economic landscape signifying the ability to generate higher profitability as the environment improves.”

The bank said a strategic shift towards low-risk sectors during the year supported growth in the balance sheet amidst a difficult economic environment.

Mohammed Ibrahim Al Shaibani, director-general of His Highness The Ruler’s Court of Dubai and Chairman of DIB, said in line with the government efforts to support the domestic economy during the pandemic, DIB has provided relief measures of nearly Dh9 billion to over 54,000 customers in retail and corporate under the UAECB’s TESS Program. “These measures were extended to benefit our client base and to ensure business continuity.”

Abdulla Ali Obaid Al Hamli, board member and managing director of DIB, said the repositioning of the bank’s institutional purpose and values to adapt to the changing landscape “will ensure that customers continue to receive unsurpassed service and experience across all channels and branch network and will pave the way for sustained growth for DIB in the years to come.”

Dr Adnan Chilwan, CEO of DIB, said the bank’s deliberate shift in strategy at the height of the pandemic and strong relationships enabled it to tap into lower-risk sectors, primarily on government related lending. “This allowed us to grow our balance sheet to Dh 289 billion (growing 25 per cent year-on-year). This also ensured quality returns in the succeeding quarters with minimal use of our capital whilst maintaining strong margins and healthy liquidity.”

In 2020, the bank’s total assets grew by 25 per cent to Dh289.6 billion as against Dh231.8 billion in 2019 despite headwinds clearly showcasing the ability of the bank to unearth business opportunities using its well-entrenched franchise.

Net financing and Sukuk investments rose to Dh232.0 billion from Dh184.2 billion in 2019, up by 26 per cent as “the bank focused on sectors with minimal risk and capital consumption – a deliberate and strategic shift to counter challenges posed by the pandemic environment.”

DIB customer deposits increased to Dh205.9 billion up by 25 per cent, “a testament to the bank's ability to generate and manage liquidity in the testing scenario during the year.”

Capital adequacy ratio improved to 8.5 per cent, a rise of 200 bps despite significant growth in financing assets. CET 1 also remained stable at 12 per cent well above the minimum regulatory requirements. CASA (current account and saving account) component increased to 42 per cent from 33 per cent when compared to 2019, supported by the Noor acquisition as well as the strategic focus on salary and transactional accounts, the bank said. — issacjohn@khaleejtimes.com