Dubai Islamic Bank Announces Full Year 2017 Financial Results

Press release
Published January 17th, 2018 - 09:41 GMT
Dubai Islamic Bank's head office
Dubai Islamic Bank's head office

Dubai Islamic Bank (DFM: DIB), the first Islamic bank in the world and the largest Islamic bank in the UAE, today announced its results for the year ended December 31, 2017.

Full Year 2017 Results Highlights

Profitability remains on a robust northbound trajectory driven by core business growth and effective cost management

  • Group Net Profit increased to AED 4,504million, up 11% compared to AED 4,050million for 2016.
  • Total income increased to AED 10,199million, up 18% compared to AED 8,636million for 2016.
  • Net Operating Revenue increased to AED 7,687million, up 14% compared to AED 6,761million for 2016.
  • Efficient and proactive cost management resulted in operating expenses remaining nearly flat at AED 2,336million compared to AED 2,297million for 2016.
  • Net operating income before impairment charges grew by 20% to AED 5,351million compared to AED 4,464million for 2016.
  • Cost of credit risk reduced to 60bps compared to 80bps in 2016.
  • Cost to income ratio declined to 30.4% compared to 34.0% at the end of 2016.

Financing continues to drive balance sheet growth as share of wallet rises to around 9% of the market

  • Net financing assets rose to AED 133.3billion, up by 16%, compared to AED 114.9billion at the end of 2016.
  • Sukuk investments increased to AED 24.0billion, a growth of 3%, compared to AED 23.4billion at the end of 2016.
  • Total Assets stood at AED 207.3billion, an increase of 19%, compared to AED 174.9billion at the end of 2016.

Asset quality improvement continues as the Non Performing Financing Ratio drops to below guidance levels

  • NPF ratio continues its downward trajectory improving to 3.41%, compared to 3.9% in 2016.
  • Cash coverage ratio maintained at 118%.
  • Overall coverage including collateral at discounted value now stands at 157%.

Liquidity impact despite market beating financing growth

  • Customer deposits stood at AED 147.2billion compared to AED 122.4billion at the end of 2016, up by 20%.
  • CASA deposits increased by nearly 13% to AED 53.6billion from AED 47.4billion as at end of 2016 leading to a robust  36% constitution of the total deposit base.
  • Financing to deposit ratio stood at just under 91%, indicating a healthy liquidity position
  • Focus on diversification and securing long term funding saw another successful senior sukuk issuance of USD 1 billion during Q1 2017.

Robust capitalization levels creating growth capacity

  • Capital adequacy remained strong at 17.0%, as against 12% minimum required.
  • Tier 1 CAR stood at 16.5% under Basel II, against minimum requirement of 8%.

Quality growth in profitability continues to support shareholder returns

  • Earnings per share stood at AED 0.78in2017.
  • Return on equity stood at 18.7% in 2017.
  • Return on assets steady at 2.34% in 2017.

Management’s comments on the financial performance for the FY2017

His Excellency Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank, said: The UAE banking system retains its strong financial fundamentals with sector assets crossing the USD 700 bln mark, making it the largest in the GCC. The growth was supported by strong capitalization as well as robust profitability.

  • 2017 has been another remarkable year for the bank as we continue to make progress on our growth and expansionary agenda in both local and international markets.
  • The bank has weathered the challenges across the region as well as those emanating from the global economic slowdown extremely well and with a more positive outlook forecasted for the UAE and global economy, the coming years look even more promising.
  • We remain fully in sync with Dubai and the UAE’s plans in building a diversified and attractive economic hub for Islamic finance that serves to connect the globe from our home base here. 

Dubai Islamic Bank Managing Director, Abdulla Al Hamli, said: The UAE continues to be one of the leading Islamic finance markets, with assets now reaching around $150 billion, a 7% growth this year.

  • We remain well-positioned to capitalize on improving economic conditions in UAE, where GDP is expected to increase in 2018 in the run up towards major economic events such as the EXPO 2020.
  • Our ongoing investments in digital technology and services has transformed DIB into a more efficient and secure banking institution that is able to provide its customers with a highly enhanced banking experience across a diversified and robust network of branches and channels.

Dubai Islamic Bank Group Chief Executive Officer, Dr. Adnan Chilwan, said: Nearly a decade ago, we established our plans to bring the company out from the effects of the global economic meltdown and back on track. As the incredible growth story of DIB unfolded, so did the challenges of oil prices and economic slowdown. But these have only made us stronger, more resilient and even more focused than ever before.

  • The evolution in the last four years has seen a complete transformation in size and business with the balance sheet as well related key metrics of financing and deposits nearly doubling or more during the period. Further, the profitability has risen nearly three times with both ROEs and ROAs witnessing a steep climb as well. Simultaneously, the business model has completely transformed with a significantly more diversified portfolio minimizing concentration risks.
  • The momentum established in the first three year of growth has carried through from the preceding period with the bank registering another 16% jump in the financing book in 2017. Despite this strong performance, liquidity remains intact with 91% Finance to Deposit Ratio as the bank continues to preserve its capacity to maintain the impetus into the new year.
  • A double digit rise of 11% in profitability is a clear indication of the focus on quality growth with Group Net Profit crossing AED 4.5 billion and this will remain a critical objective going into 2018 as well.
  • Creating capacity to support growth and optimizing costs whilst maintaining a competitive edge in offerings and technology will also remain the key drivers in 2018.
  • The constantly improving asset quality with NPF ratio falling below even the guided level to 3.4% has been the result of robust and superior underwriting, a fact recognized by the rating agencies with upgrades and stable outlooks crowning DIB’s performance in 2017.
  • As we enter the second year of the bank’s Growth 2.0 strategic agenda, you will see us remain focused on the quality opportunities within our home base of Dubai and the UAE and the three key “PIK” markets which denote our international forays into Pakistan, Indonesia and Kenya.  

Background Information

Dubai Islamic Bank

Since its formation in 1975 as the world’s first full-service Islamic bank, Dubai Islamic Bank has established itself as the undisputed leader in its field, setting the standards for others to follow as the trend towards Islamic banking gathers momentum in the Arab world and internationally.

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