DIB gets shareholders’ nod for $5bn sukuk issuance programme

The stakeholders have also authorised the board to issue up to $2bn in a separate sukuk to boost capital

DIB says it is considering acquiring Noor Bank. Courtesy Dubai Islamic Bank

Dubai Islamic Bank, the largest Sharia-compliant lender in the emirate, received approval from shareholders to set up a $5 billion (Dh18.35bn) sukuk programme, as well as issue up to $2bn in capital-boosting Islamic bonds.

DIB shareholders unanimously approved a resolution to authorise the board to issue senior sukuk or similar debt instruments. These will be non-convertible into shares with an aggregate value of $5bn, or equivalent in other currencies, the lender said on Thursday in a statement to the Dubai Financial Market, where its shares are traded.

The board was also allowed to decide on the timing and mechanism of the transactions under the programme, DIB said.

Separately, the shareholders also agreed that the board can issue $1bn each in tier-1 and tier-2 sukuk, which will boost the bank's capital, at an appropriate time.

Banks and corporations in the region are looking to shore up their capital amid a relatively lower interest rate regime.

Last year, DIB raised Dh5.1bn through a rights issue that received subscriptions in excess of Dh14bn, with more than half of the demand coming from foreign investors.

The bank announced the issuance of 1.6 billion additional shares at a price of Dh3.11 per share in April to boost its core capital. The deal, which closed in May, was part of the bank's strategy to pre-emptively create capacity to support its growth plans, it said in a June statement.

DIB in January reported an 11 per cent rise in full-year 2018 net profit, beating analysts’ estimates as its revenues grew and asset base expanded.

The group net profit for the 12 months ending December 31 climbed to Dh5bn. The mean estimate of DIB’s full-year net income by three analysts polled by Bloomberg came in marginally above Dh4bn.

Net revenue for the year increased 6.7 per cent to Dh8.2bn, while DIB’s net operating income before impairment charges rose by 10 per cent year-on-year to Dh5.88bn. Net financing and sukuk investments were up 11.8 per cent to Dh175.9bn, the lender said.

The bank's performance “is a clear indication of the success of our sustained and continued execution of our proven strategy", said DIB’s group chief executive Adnan Chilwan in a bourse filing at the time. "Focus on profitability remains the core driver in our growth agenda."