Islamic banks prove resilient in face of economic headwinds
Islamic banks in the UAE have once again proved that they are better equipped to deal with a difficult operating environment than their conventional peers, with all leading institutions reporting strong growth in assets, profits and asset quality in 2015. Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE by total assets, reported a group net profit of Dh3.83 billion, up 37 per cent compared Dh2.8 billion in 2014. Total income increased to Dh7.54 billion, up 21 per cent compared with Dh6.23 billion for 2014. Net revenue increased to Dh6.48 billion, up 19 per cent compared with Dh5.43 billion for the year 2014. DIB's total assets were up 21 per cent to Dh149.9 billion at the end of 2015, compared to Dh123.9 billion at end of 2014.
While net financing assets touched Dh97.2 billion in 2015, growing 31 per cent year-on-year from Dh73.9 billion in 2014, on the liability side, DIB's customer deposits for 2015 increased by 19 per cent to Dh110 billion from Dh92.3 billion at end of 2014. Current and savings accounts [CASA] continues to be a significant portion, comprising 41 per cent of total deposits contributing to the low cost of funds.
"The full-year 2015 results demonstrated the strength of and commitment to our strategic growth agenda built around a transformed and new-look DIB. We have managed another record-breaking year and a historic landmark as the bank joins the billion dollar profit club in the UAE," said Dr Adnan Chilwan, DIB group chief executive officer. The bank reported robust improvement in asset quality, with impairment losses declining 42 per cent in 2015 to Dh410 million, compared with Dh703 million for the year 2014. Non-performing assets showed a consistent decline with the non-performing loans (NPL) ratio, improving to 5 per cent in 2015, compared with 8 per cent in 2014. The bank's overall coverage ratio, including collaterals, at discounted values stood at 147.6 per cent at the end of 2015.
Meanwhile, Abu Dhabi Islamic Bank's (ADIB) full-year net profit stood at Dh1.93 billion in 2015, growing 10.5 per cent on the previous year. The bank's total assets increased 5.8 per cent to Dh118.4 billion in the same period. Customer deposits rose 12 per cent to Dh94.9 billion, while net customer financing grew 7.4 per cent to Dh78.4 billion. Amidst a dampened credit environment, total non-performing accounts as a percentage of gross customer financing fell to 3.9 per cent as at year-end 2015, from 4.4 per cent a year earlier. Credit provisions and impairments for 2015 increased by 8.2 per cent year-on-year to Dh820 million.
"Despite a more challenging operating environment in the UAE, we have seen continued growth in our customer numbers, and the strength of our balance sheet and our liquidity position will enable us to continue investing in our product capabilities and support the financial needs of our clients," said Tirad Al Mahmoud, chief executive officer of ADIB. Emirates Islamic, the Islamic financial institution belonging to the Emirates NBD Group, reported a 2015 net profit of Dh641 million, up 76 per cent year-on-year.
The bank's total net income (net of customers' share of profit) during the period rose to Dh2.43 billion, up 25 per cent compared to Dh1.95 billion in 2014. The bank's financing and investing receivables grew by 31 per cent to Dh34 billion. On the liability side, deposits rose 25 per cent to Dh39.3 billion. "Our strong performance was achieved on the back of robust growth and high customer acquisition across our three core segments, namely corporate, individual and SME, resulting in a 26 per cent increase in our customer base, a key testament to our winning offering," said Jamal Bin Galaita, CEO of Emirates Islamic. Sharjah Islamic Bank's (SIB) net profit for 2015 was up 9 per cent to Dh409.9 million compared to Dh377.2 million in 2014. The bank's total assets were up 14.9 per cent to Dh29.9 billion at end of 2015 compared to Dh26 billion at the end of 2014. SIB's financing facilities increased 13 per cent to Dh16.4 billion compared to Dh14.5 billion in 2014. Customer deposits touched Dh17 billion in 2015, growing 16.2 per cent on the previous year. Provisions net of recoveries stood at Dh350 million, having risen 42 per cent on the 2014 figure of Dh246.5 million.