Dubai Islamic Bank growth is strongest yet among lenders
Dubai Islamic Bank (DIB) said profit in the first quarter more than doubled, the biggest year-on-year growth so far among banks that have reported in the past weeks. That comes as companies and consumers tap lenders for loans amid in an economic rebound that has boosted the value of property and listed equities.
The bank’s chief executive Adnan Chilwan said he was unfazed by concerns of a credit bubble in the making, saying that demand for property in the UAE is being propelled more by end users than flippers.
Mr Chilwan said there was still value to be had in the bank’s stock, which has more than tripled since last year, as the lender recovers from the 2009 global debt crisis. The bank was hit particularly hard because of its exposure to commercial property.
DIB is also forging ahead with expansion into Indonesia, where it is in talks to buy a 40 per cent stake in an Islamic lender, as well as opening shop in Kenya, where it will seek to tap East African growth. The entry into those countries is expected to be done before the end of the year, Mr Chilwan said.
DIB, which is the UAE’s oldest Islamic lender, said profit in the first three months of the year jumped to Dh636.6 million from Dh301.7m in the same period the previous year. Net funded income grew 21.6 per cent to Dh822.4m due to the rise in credit and measures taken by the bank to reduce its cost of funding, it said.
“We have shown a strong profitability trend over the last few quarters along with continuously improving asset quality, coverage and core revenue growth,” Mr Chilwan said. “With ample liquidity, we are now well on our way to deploy the same effectively across all key sectors of the economy leading not only to higher profitability and asset growth but also to more efficiency across the balance sheet.”
The economy of the UAE grew by more than 4 per cent last year. Stocks and property bounced back sharply with Dubai’s main benchmark more than doubling and the value of property in the emirate rising by more than 30 per cent. Government spending on infrastructure, a rebound in trade and tourism, Dubai’s Expo 2020 win, the country’s upgrade to emerging markets at MSCI and low interest rates have all helped to boost business confidence and activity.
DIB, like a number of UAE banks and companies, recently increased its foreign ownership limit to 25 per cent ahead of the country’s inclusion in the MSCI Emerging Market Index. Mr Chilwan said that DIB now met all criteria that would make it a candidate for inclusion.
On the consumer banking front, DIB plans to expand its consumer loan book to half of its total lending portfolio from the current 42 per cent. While the retail banking space is competitive and has seen outfits such as Royal Bank of Scotland and Barclays sell out in recent years, Mr Chilwan is counting on leveraging his bank’s 1.4 million existing customers to propel that growth.
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Published: May 1, 2014 04:00 AM