Dubai Islamic Bank Q4 Net Profit Up 66.2%

Dubai Islamic Bank (DIB), the largest sharia-compliant lender in the emirate, posted a 66.2 per cent jump in fourth-quarter net profit, according to Reuters calculations, on the back of lower financing costs and impairment charges.

Beating analysts’ forecasts, the bank made Dhs518 million ($141 million) in the three months to December 31, up from Dhs311.7 million in the same period the year before.

The average forecast of three analysts polled by Reuters was for a net profit of Dhs412.3 million.

The calculation was based on previous financial statements. DIB said on Wednesday its net profit for the full year increased 42 per cent, hitting Dhs1.72 billion.

DIB also said in the bourse filing that it was proposing a cash dividend of Dhs0.25 per share for 2013. This is higher than the Dhs0.15 per share paid for 2012.

In a rare interview, officials at the bank said last May they expected high-double digit percentage growth in net profit in 2013 after dealing with most of the bad loans which soared after the collapse of the local real estate market at the end of the last decade.

Impairment charges fell to Dhs820 million during 2013 from Dhs1.09 billion in 2012.

The bank reported big jumps in total assets and deposits in its first-quarter numbers – to Dhs120.6 billion and Dhs88.26 billion, respectively – without elaborating on why.

However, both deposits and assets declined later in the year. Customer deposits stood at Dhs79.1 billion at the end of December, up 19 per cent from the end of 2012, while total assets were 15 per cent up year-on-year over the same timeframe at Dhs113.2 billion.

The bank said it had written down some loans to the commercial real estate sector. As a result, total loans and advances grew just three per cent last year to Dhs56.1 billion.

This contrasts with the UAE banking system as a whole, and in particular Dubai, which has enjoyed strong loan growth in 2013 as economic conditions following the real estate crisis.

Loan growth across UAE banks was 7.2 per cent in the first nine months of 2013, according to the latest central bank data.

DIB said on December 25 its board of directors had approved plans to increase the cap on foreign ownership of its shares to 25 per cent from 15 per cent. The move was part of a wider trend of UAE and Qatari firms doing so ahead of their respective bourses’ reclassification by index provider MSCI to emerging market status in May 2014.