Is­lamic banks prove re­silient in face of eco­nomic head­winds

The Pak Banker - - FRONT PAGE -

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.

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