Dubai Islamic Bank Achieves 47% Growth in Total Income in Q1-2023

Dubai Islamic Bank (DIB) on Thursday announced a 47% increase in total income to $1.2 billion for the first three months of 2023 compared with $820 million during the same period last year.

This delivered a net profit of $410 million, which works out to a year-on-year growth of 12% YoY compared with $370 million. This growth was driven by rising core revenues and effective cost management.

The net financing and sukuk investments of Dubai Islamic Bank stood at $65.36 billion, up 1% Year-to-Date with nearly $5.72 billion in new underwriting during Q1 of 2023 as against $4.08 billion in Q1 of 2022.

The net operating revenues of Dubai Islamic Bank showed a robust 12% YoY to reach $750 million while the net operating profits were $550 million, an increase of 14% YoY compared with $770 million in Q1 of 2022.

While the balance sheet expanded by 1.3% YTD to $79.52 billion, the customer deposits were $53.92 billion with CASA comprising 40% of DIB’s deposit base, a significant achievement given the current rate environment.

In his comments, H E Mohammed Ibrahim Al Shaibani, Director-General of His Highness the Ruler’s Court of Dubai, and Chairman of Dubai Islamic Bank, said that the UAE’s economy continues to expand at a fast rate supported by high energy prices, increasing business trade and activities and the return of tourism which has boosted domestic retail spending.

The banking sector remains well-insulated from the global contagion and continues to be on a solid footing with steady growth in their balance sheets and rising profitability levels with DIB closing the first quarter of the year with strong and remarkable set of results, he said.

“The nation’s transition into a green economy is well underway and we remain fully committed towards sustainable development and have integrated a full-fledged sustainability strategy in our medium- and long- term goals,” he said.

“In addition, with this commitment, we also successfully issued our 2^nd sustainable sukuk ($1 billion) during the quarter which was very well accepted and oversubscribed in the financial markets,” he added.

The sukuk is a 5.5-year senior issue with a profit rate of 4.80% per annum representing a spread of 102.4 bps over 5-Year US Treasuries. The issuance was oversubscribed three times and this deal achieved several landmarks including the largest issuance by a Middle East financial institution in the international capital markets since June 2021 and the largest-ever Sustainable issuance by a Middle East Financial Institution.

Steadfast Operating Environment

Dr. Adnan Chilwan, Group Chief Executive Officer of Dubai Islamic Bank, said that the UAE’s operating environment has been steadfast amidst the global economy’s complex challenges. The return of trade & tourism, increasing retail spending as well as rising profitability in banking and finance reflected the growing confidence that consumers have on the domestic economy.

Accordingly, Government related entities (GREs) continue to maintain strong balance sheets, with cash surplus, on the back of the UAE’s stable economy; allowing them to reinvest in the nation’s expansionary agendas.

The UAE has also witnessed robust growth in employment, up 38%, in 2022 when compared with 2021, due to 11% growth in new private sector establishments. This is aligned with the country’s continuing commitment to establish a broad knowledge-based economy.

Considering the global events, DIB’s asset quality has been remained robust with NPF ratio stable at 6.5%. Additionally, our overall coverage ratio and cash coverage ratio have been increasing depicting the bank’s prudent approach to risk management, he pointed out.

“Our sustainability ambitions have been progressing well as we embark on a refreshed strategy with new commitments towards a low carbon economy and a more sustainable future. These commitments are supported by various initiatives and an established well- structured internal governance operating model that will ensure and oversee the execution of this journey,” he added.