Dubai Islamic Bank Q1 2024 pre-tax net profit hits Dh1.85 billion, a robust growth of 22% YoY

Total income reached to Dh5.607 billion compared to Dh4.431 billion, a solid expansion of 26.5 per cent YoY

by

Somshankar Bandyopadhyay

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The Dubai Islamic Bank headquarters. Net operating revenues showed a robust increase of 8.8 per cent YoY. — Supplied photo
The Dubai Islamic Bank headquarters. Net operating revenues showed a robust increase of 8.8 per cent YoY. — Supplied photo

Published: Tue 23 Apr 2024, 7:40 PM

Dubai Islamic Bank announced on Monday that its first quarter profit rose 22 per cent year-on-year (YoY) to reach Dh1.85 billion.

Total income reached to Dh5.607 billion compared to Dh4.431 billion, a solid expansion of 26.5 per cent YoY, data showed.


Net operating revenues showed a robust increase of 8.8 per cent YoY to reach Dh2.998 billion. Net operating profit came at Dh2.149 billion, a 6.7 per cent YoY increase compared to Dh2,013 million in Q1 2023.

DIB’s balance sheet expanded by a solid four per cent year-to-date (YTD) to Dh327 billion. Strong growth in customer deposits increasing to Dh236 billion, up siz per cent YTD with current and savings accounts (Casa) comprising 38 per cent of DIB’s deposit base.


Impairment charges were lower at Dh299 million against Dh496 million in Q1 2023, significantly down by 40 per cent YoY.

Non-performing loans declined to 4.97 per cent compared to 5.40 per cent in year-end 2023, lower by 43 basis points (bps) YTD. Cash Coverage rose to 93 per cent, up 300 bps YTD.

Cost to income ratio marginally up by 120 bps YTD and 140 bps YoY to 28.3 per cent as the bank continue to build its resources in key areas and functions in line with its growth strategy.

Liquidity remains healthy with liquidity coverage ratio (LCR) at 167.6 per cent.

Mohammed Ibrahim Al Shaibani, Director-General of The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank, said: “Despite tighter market conditions on elevated rate environment and geopolitical turbulence, the UAE remains steadfast in its economic growth with rising business confidence, increasing tourism inflows and expanding PMI index levels. The domestic financial market saw strong activities from new listings as well as institutions delivering healthy returns to their shareholders and investors. The banking system remains well capitalized supported by higher earnings with stable funding and liquidity. DIB has remained a strong and solid player in the market. Irrespective of the introduction of corporate tax into our earnings and regional tensions, the bank has managed to deliver a net profit (pre-tax) of Dh1.85 billion, achieving robust growth of 22 per cent YoY.”

Dr. Adnan Chilwan, group chief executive officer, DIB, said: “The global markets remain volatile with elevated inflation levels and regional instability that have led to further business challenges. Undeterred by global events, the UAE remains strong supported by robust business fundamentals and economic policies that have paved the way for continuous growth of both the public and private sectors over the past few years. The UAE banking sector remains financially sound supporting credit growth in key sectors such as construction, manufacturing as well as retail and wholesale trade sectors.”

DIB’s growth was supported by gross new financing across the key business to the tune of Dh21 billion during the quarter. “We continue to reinforce our fixed income book with sukuk portfolio now reaching Dh76 billion, a significant increase of 11 per cent YTD,” the bank said in a statement.

ESG aspirations remain at the forefront of DIB’s strategies, with the successful issuance of its third sustainable sukuk ($1 billion) which brings its total sustainable issuance to $2.75 billion. In addition, the bank also acted as a joint lead managers and bookrunner in various sustainable sukuk transactions, arranging $1.85 billion for issuers within the region during the quarter.

DIB witnessed stable overall YoY growth in gross new financing and sukuk in Q1 2024 amounting to Dh21.2 billion, up nearly two per cent compared to Dh20.8 billion in Q1 2023. Gross new consumer financing origination came in nearly at Dh6.2 billion, (+ 19 per cent YoY), driven mainly by auto finance, personal finance and a pick-up in mortgage. On the other hand, gross new corporate bookings came in at Dh7.2 billion. Routine repayments for the period continued to flow in at a slower rate totaling Dh8.7 billion down from Dh13.6 billion in Q1 2023. Additionally, the momentum of early settlements continued to retract over the period by 27 per cent YoY to Dh3.2 billion compared to Dh4.3 billion last year. This has resulted in net positive financing incremental growth of Dh1.5 billion in DIB’s portfolio over the Q1 2024 period.

Customer deposits registered Dh236 billion up by 6.2 per cent YTD. CASA now stands at Dh89 billion up 9.1 per cent YTD and comprising 38 per cent of deposits. Migration to wakala deposits (investment deposits) was a persistent trend over the year due to the current global rate scenario. Liquidity coverage ratio (LCR) at 167.6 per cent, down from 188.7 per cent FY 2023, remains above regulatory requirement, depicting strong liquidity position.

DIB’s consumer banking portfolio reached Dh57 billion, up two per cent YTD. The portfolio’s total new underwriting of Dh6.2 billion during the year increased from Dh5.2 billion, up 19 per cent YoY. All consumer segments witnessed strong growth particularly auto finance. Despite routine repayments of Dh4.8 billion, the portfolio added Dh1.4 billion of net new underwriting in Q1 2024 versus AED1 billion in Q1 2023. Blended yield on consumer financing grew by 46 bps YoY to reach to 7 per cent. Separately, on the funding side, consumer deposits increased by 2 per cent YTD to Dh90 billion while consumer CASA remained steady YoY at almost Dh47 billion.

Corporate banking portfolio now stands at Dh144 billion, up nearly 1 per cent YTD. Revenues increased by seven per cent YoY to Dh796 million. Yield on corporate financing portfolio expanded by 66 bps YoY to 6.7 per cent compared to 6.1 per cent. On the funding side, corporate deposits increased by 9 per cent on a YTD basis while CASA advanced by 23 per cent also on YTD level as the bank continued to attracts strategic corporate clients.

Treasury continued to provide a strong engine for growth as the curator of the bank’s fixed income book. The sukuk investment portfolio now stands at Dh76 billion, up a significant 37 per cent YoY and 11 per cent YTD, constituting a noteworthy 23 per cent of the bank’s assets. Gross new sukuk investments during the year amounted to Dh7.8 billion, up 56 per cent YoY. The portfolio carries an attractive yield of 4.8 per cent up 27 bps YoY.


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