Dubai Islamic Bank, the largest Sharia-compliant lender in the UAE by assets, reported a 19 per cent drop in its third-quarter net profit as impairment charges and operating expenses rose amid the coronavirus pandemic.
Net profit attributable to owners of the bank for the three month period ending September 30 declined to about Dh1 billion ($274 million), the lender said in a statement to the Dubai Financial Market, where its shares trade. Impairment charges for the period rose 60 per cent to Dh530.4m from the year-earlier period while operating expenses increased 16 per cent to Dh663.5m.
“The global environment remains uncertain with geographies around the world yet to fully recover," Mohammed Al Shaibani, director-general of the Ruler’s Court of Dubai and chairman of Dubai Islamic Bank, said.
"At home, the UAE remains committed towards economic development with a strong focus on precautionary safety measures as we witness the gradual recovery of trade and business services,” he added.
The country's proactive policies have supported the domestic banks to continue to operate profitably whilst also servicing customers during these trying times, Mr Al Shaibani said.
The bank’s nine-month net profit fell 21 per cent to Dh3.1bn from the year earlier period as impairment charges increased 151 per cent to Dh2.65bn. Total operating expenses during the period rose 23.5 per cent to Dh2.1bn.
Banks globally have reported falling profits and higher provisions in the wake of the pandemic, which disrupted global trade and slowed economic activity as countries implemented lockdowns to contain the coronavirus.
The world economy is in its deepest recession since the Great Depression and is set to shrink 4.4 per cent this year, before it rebounds unevenly in 2021, according to the International Monetary Fund.
In the first nine months DIB customer deposits grew nearly 31 per cent to Dh214.6bn, while net financing and sukuk investments during the period rose 27 per cent to Dh234.5bn.
Earlier this year, the Dubai-based lender completed its acquisition of rival Noor Bank to create one of the largest Islamic banks in the world, with more than Dh275bn in assets.
“The anticipated synergies have already started to materialise which will pave the way for robust growth and greater returns for our shareholders in the years to come,” Mr Al Shaibani, added.