Dubai Islamic Bank completes integration of Noor Bank

The lender now has more than Dh300 billion of assets

Abu Dhabi, United Arab Emirates, October  23, 2020.    Friday morning at central Abu Dhabi.  Dubai Islamic Bank.
Victor Besa/The National
Section:  NA
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Dubai Islamic Bank completed the integration of Noor Bank ahead of schedule, creating the UAE's biggest Islamic lender with assets of more than Dh300 billion.

The consolidation was completed in 283 days, which was "well ahead" of its projected deadline of a year, DIB said.

The integration marks "another significant milestone in the bank's rich history", chief executive Adnan Chilwan said in a statement to the Dubai Financial Market, where its shares trade.

"The transition was smooth and the project concluded successfully and all services restored prior to scheduled resumption with minimal customer impact," Mr Chilwan said.

DIB first revealed it was considering a tie-up with Noor Bank in April last year. The Investment Corporation of Dubai held significant stakes in both lenders and now holds 25.82 per cent of the combined entity, according to market data.

Dubai Islamic Bank is now the third-biggest Islamic lender in the Gulf by assets, according to S&P Global's 2021 Islamic Finance Outlook, behind Saudi Arabia's Al Rajhi Bank and Kuwait Finance House. The deal to combine the two lenders is part of an ongoing consolidation trend among banks in the Gulf. S&P Global forecast a "second wave" of consolidation among Gulf banks in its September report as lenders face tougher operating conditions, although most remain well-capitalised.

"The first wave was spurred by shareholders’ desire to reorganise their assets. The second wave will be more opportunistic and driven by economic rationale," the ratings agency's report said.

"The current environment might push some banks to find a stronger shareholder or join forces with peers to enhance resilience."

Dubai Islamic Bank, which last month reported a 22 per cent fall in net profit for the nine months to September 30 to Dh3.1bn and included a Dh1bn gain related to the Noor Bank acquisition, said the integration had been completed quickly despite unfavourable circumstances, including periods of remote working as a result of Covid-19 restrictions.

"The successful completion of this acquisition clearly evidences the alignment of Dubai Islamic Bank to Dubai’s role as a global hub for Islamic finance, encouraging greater investment and growth in key sectors," Mr Chilwan said.