DIB's credit growth may climb to 15% this year, Moody's says

Rights issue and $1bn sukuk issuance combined will boost DIB's liquidity levels

The DIB board is recommending its shareholders acquire 100 per cent of Noor shares. Chris Whiteoak / The National

Moody’s expects DIB’s credit growth to be 10 to 15 per cent in 2018, which combined with the capital increase will maintain strong and stable capital buffers over the next 12 to 18 months, the agency said in a note on Saturday.

DIB, the largest shariah-compliant lender in the UAE, closed subscription for around Dh51 billion rights issue towards the end of May, which increased total shareholder equity to Dh31.2bn from Dhs26.1bn as of March 2018.

The rights issue "will support DIB's liquidity" which had been on the decline since 2013 as a result of higher-than-average-credit growth.

The agency expects the rights issue along with the issuance of $1bn of sukuk in January will ensure stable liquidity levels of above 20 per cent of tangible banking assets over the next 12-to-18 months for the Islamic lender.

"The capital increase is credit positive for DIB because it replenishes reserves and enhances loss-absorption buffers .... after high growth during 2013-17," according to Moody's.

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In April, Dubai Islamic Bank posted a 16.4 per cent year-on-year jump in net profit, as revenues climbed on the back of higher income from fees and commission business.

Net income attributable to equity owners surged to Dh1.17bn from Dh1bn reported for the same period in 2017, DIB said in a statement to the Dubai Financial Market at the time. Net revenue for the period amounted to Dh1.97bn, a 9 per cent rise from a year-earlier, supported by 15.5 per cent growth in fees and commissions income, it said.

The results beat five analysts' estimates averaging Dh1.14bn, according to Bloomberg. The first-quarter net income was above SICO Bahrain's forecast by 4 per cent.