Dubai's DIB third quarter net profit rises 1% on investment income boost

The bank's quarterly income beats analysts' estimates

A pedestrian checks her smartphone while passing a Dubai Islamic Bank PJSC bank branch in Dubai, United Arab Emirates, on Tuesday, Sept. 4, 2018. Abu Dhabi is engineering a second bank merger in its latest attempt to stay competitive in the era of lower oil prices. Photographer: Christopher Pike/Bloomberg
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Dubai Islamic Bank, the largest Sharia-compliant lender in the country, reported a 1 per cent rise in its third quarter net profit, topping the analysts’ estimates, as income from financing and investments climbed.

Net profit for the three months ending September 30 climbed to Dh1.25 billion, the lender said in a statement to the Dubai Financial market, where its shares trade. DIB beat the average estimate of Dh1.17bn from analysts polled by Bloomberg.

The bank's third quarter total income rose to Dh3.27bn from Dh2.96bn. The overall income from Islamic financing jumped to Dh2.7bn during the three-month period this year, up from Dh2.48bn reported a year-earlier, it said.

Net impairment charges, however, climbed to Dh331.6 million for the reporting period, rising from Dh177.9m for the same period in 2018, the lender added.

DIB Group's net profit for the first nine months of the year also climbed 8 per cent to 4.02 billion. Its total income for the period reached Dh10.25bn, up by 20 per cent year-on-year.

Its net income grew to Dh6.88bn, surging 14 per cent from Dh6.01bn recorded for the first nine months of 2018. The lender’s cost-to-income ratio improved to 27.9 per cent, from 28.3 per cent at the end of 2018, while its return on assets increased to 2.36 per cent and return on equity reached 17.6 per cent, both in line with the bank's earlier guidance.

“DIB’s fundamentals remain strong …. while focus on delivering strong returns to our shareholders continues,” Adnan Chilwan, DIB Group chief executive, said.

“Focus on quality growth has seen a double-digit rise in the top line income of 20 per cent, which combined with efficient cost management, has translated into cost-to-income ratio being stable .… amongst the best in the market.”

DIB, which reported a 14 per cent rise in its second-quarter net profit earlier this year, said it is acquiring fellow Islamic lender Noor Bank to boost growth.

“The acquisition of Noor Bank is in line with our disciplined yet flexible growth strategy which strikes the perfect balance between market dynamics and shareholder interest," Mr Chilwan said in a July 17 statement.

The economics of the deal will allow DIB the opportunity to capitalise on “synergies, notably cost efficiencies, digitisation, product and business development and most importantly the customer experience", he said at the time.

DIB has hired HSBC to advise on the deal. Noor Bank is working with Barclays on the transaction that would create an Islamic lender with Dh275bn in assets, The National reported in June.