DIB upbeat about growth prospects as economy rebounds

Dubai Islamic Bank, the UAE’s largest Sharia-compliant lender, is well positioned to capitalise on the economic recovery from the Covid-19 pandemic and optimistic about growth prospects this year despite a 23 per cent drop in first-quarter profit.

Net profit for the three months to the end of March fell to Dh853 million ($234.4m), in the absence of a Dh1 billion one-off gain recorded in the first quarter of last year, the lender said in a filing to the Dubai Financial Market, where its shares are traded.

A rise in quarterly profit from Dh53m in the last three months of last year points to a “clearly improving economic trend”, the company said.

“Amid the ongoing market volatilities, DIB continues to deliver strong operating performance,” said chairman Mohammed Al Shaibani.

“With robust fundamentals in place, DIB is well positioned to connect with the country’s large-scale economic programmes such as the Expo 2020, the Dubai Industrial Strategy 2030 and the Dubai Urban Master Plan that will support future growth of the bank.”

Government measures to support the economy and rapid Covid-19 vaccination campaigns are expected to “accelerate consumer spending and business activities in the coming periods”, he said.

A further extension in the Targeted Economic Support Scheme – a Dh50bn zero-cost liquidity programme provided by the UAE Central Bank – will support the banking sector and DIB “remains aligned to providing support to the domestic economy”, said Mr Al Shaibani.

Earlier this month, the central bank extended parts of Tess until June 30, 2022, to soften the economic blow of Covid-19. Overall, the UAE has unveiled economic support packages worth Dh388bn since the onset of the pandemic.

DIB, which acquired rival Noor Bank to create one of the largest Islamic banks in the world last year, said its profit before impairments rose to Dh1.61bn at the end of March, up from Dh1.59bn a year ago.

Impairment charges fell by 49 per cent from a year earlier to Dh751m, which the bank said signified the success of its risk management strategy.

Customer deposits are up by 4 per cent so far this year and by 7 per cent from a year ago to Dh214bn.

Total assets grew by 6 per cent to Dh291.71bn.

Lenders globally are benefitting from improved operating conditions as businesses stabilise and economies emerge from the coronavirus-induced slowdown.

Still, there are “significant headwinds” in the current environment and DIB will “continue to approach the year with extreme prudence, with focus on low-risk sectors and those showing consistent signs of recovery as the market improves”, said group chief executive Adnan Chilwan.

The bank, which continues to invest in digitisation, said mobile banking users grew by a fifth while banking transactions done through mobile phones rose by 43 per cent from a year ago. Internet banking users and transactions also grew by 15 per cent and 57 per cent, respectively.