Dubai: The Dubai Islamic Bank Group on Wednesday reported a net profit of Dh2 billion for the first half of 2016, up 11 per cent from Dh1.8 billion in the same period in 2015. Strong first half results were driven by higher revenues and declining impairment losses.
For the second quarter of the year, DIB reported a net profit of Dh1 billion, up 5.2 per cent compared to Dh950.3 million reported in the same quarter last year.
The bank’s total income for the first half of 2016 increased to Dh4.23 billion from Dh3.62 billion for the same period in 2015, an increase of 17 per cent driven primarily by growth in core businesses.
“These continue to be challenging times with substantial economic impacts stemming from global events. The Brexit decision further added an air of uncertainty to the global economic scenario. DIB continues to impress with its performance as one the most attractive and profitable franchise in the country,” said Mohammad Ebrahim Al Shaibani, Director-General of His Highness the Ruler’s Court of Dubai and Chairman of DIB.
Income from Islamic financing and investing transactions increased by 20 per cent to Dh3.12 billion from Dh2.61 billion for the same period in 2015. Fees and commissions have increased by 25 per cent to Dh790 million compared to Dh630 million for the same period in 2015.
Net revenue for the first half of the year amounted to Dh3.35 billion, an increase of 6 per cent compared with Dh3.16 billion in the same period of 2015. The increase is attributed to build up of core financing assets as well as growth in commissions and fees.
“The bank has once again, delivered robust results during the first half of 2016 aligned with the UAE economy’s resilience to the commodity prices volatility,” said Abdullah Al Hamli, Managing Director of DIB.
Healthy liquidity
Net financing assets grew 12 per cent to Dh108.9 billion at the close of the first half of the from Dh97.2 billion as at year-end 2015. Customer deposits during the first half increased by 13 per cent to Dh125 billion from Dh110 billion at year-end 2015. Financing to deposit ratio of 87 per cent as of June 2016 compared to 88 per cent at the end of 2015, showed healthy liquidity.
“In a challenging and highly competitive liquidity landscape, we have shown the ability to generate not just a double digit deposit growth, but also growth in the low cost funding for the bank,” said Dr Adnan Chilwan, CEO of DIB.
The bank showed consistent improvement in asset quality with decline in non-performing assets with NPL ratio improving to 4.5 per cent at the close of the first half of this year compared with 5 per cent at the end of 2015. Impaired financing ratio also improved to 3.8 per cent for the period ended June 30, 2016 from 4.1 per cent at the end of 2015.
The improving NPLs and impaired ratio is primarily driven by recoveries in legacy portfolio as well as continuous growth in the quality asset book. Overall coverage ratio stood at 150 per cent at the end of June 2016 compared to 148 per cent at the end of December 2015. Impairment losses declined to Dh191 million in the first half of this year compared with Dh276 million for the same period in 2015, a clear sign of improving asset quality
Operational expenses
During the first six months of the year the bank witnessed cost increase of 7 per cent to Dh1.15 billion from Dh1 billion in the same period in 2015. The marginal increase is primarily due to growth in operational expenses in line with increased business volume.
DIBs capital adequacy ratio (CAR) stands at 18 per cent as of June 30, 2016, and T1 ratio at 17.8 per cent.
“The recent rights issuance has led to enhanced capitalisation with overall CAR standing at 18 per cent and has created room for further advancement and penetration in existing clientele and industry sectors as we push forth our growth strategy for 2016,” said Dr Chilwan.
