Dubai Islamic Bank nine months 2021 group financial results, maintained strong operating performance

Dubai Islamic Bank announced its results for the period ending September 30, 2021.

9M 2021 Highlights:

Sustained sequential growth in profitability supported by disciplined cost management and lower impairments.

• Total income increased by 4% QoQ to reach AED 8.9 billion YTD.
• Robust growth in net operating revenues of 5% QoQ and 3% YoY which now stands at AED 7.1 billion YTD.
• Continued reduction in operating expense, down by 12% YoY from AED 2,134 million to AED 1,874 million as investments in digitalization as well as synergies from acquisition continue to realize.
• Profits before impairments of AED 5,275 million up 7% QoQ and 10% YoY.
• Impairment losses of AED 2,174 million lower by 10% QoQ and 18% YoY.
• Net profits maintains its improving trend over the past few quarters with a 19% QoQ jump to reach nearly AED 3.1 billion YTD supported by effective cost management and lower impairments.

Maintained a robust balance sheet with healthy liquidity and improved capitalization.

• Earning assets remained stable with net financing and Sukuk investment at AED 232.7 billion despite significant corporate prepayments which were offset by gross new financing of nearly AED 30 billion YTD.
• Customer deposits improved by 4% YTD now at AED 214.1 billion with CASA stands at 39% amounting to AED 83.9 billion during 9M 2021.
• Liquidity remain strong with finance to deposit ratio of 90% and LCR of 160%.
• Balance sheet remained stable with total assets now at AED 289.4 billion.
• Continued healthy QoQ improvements on ROA and ROE now at 1.4% (+10 bps QoQ) and 10.9% (+50 bps QoQ) respectively.
• Capitalization levels increased with CET1 at 12.8% (+50 bps QoQ) and CAR at 17.5% (+50 bps QoQ), well above the minimum regulatory requirement.
• Total equity now stands at AED 40.6 billion.

Management’s comments for the third quarter ending September 2021:

• The economic recovery of the UAE remains on track with strong performance of the non-oil sectors driven by improving demand of business activities and rising consumer confidence that is supported by high vaccination rates of the domestic population. The successful opening of the World EXPO has demonstrated the nation’s ability to quickly recover from the global pandemic with all key economic sectors geared towards supporting this major event. DIB remains at the forefront of helping businesses as well as government entities deliver a truly remarkable global event.

• The UAE banking sector has remained resilient with healthy liquidity, strong capital buffers and improving profitability since the start of this year. DIB’s net operating revenues has reached AED 7.1 billion, a robust growth of 5% QoQ and 3% YoY on the back of improving economic conditions and the gradual return of business activities.  

• The various structural reforms on employment and residency has made the UAE amongst the top preferred city to live in globally. With the introduction of strategic economic programs to coincide with the nation’s golden jubilee, Dubai is headed towards the fastest pace of recovery throughout this pandemic that any country has seen globally.

• Our funding sources and liquidity continue to be a key strength of the bank with customer deposits now reaching AED 214 billion, a robust growth of 4% YTD primarily supported by the wholesale business representing more than 50% of the deposit base. LCR ratio now stands at 160% up from 129% at YE2020.

• The UAE recovery momentum continues to accelerate following the successful regulatory measures supported by economic stimulus of more than USD 100 billion, high oil prices and a targeted implementation of a robust vaccination campaign nationwide. Aligned to the positive trend,  DIB’s business direction mirrors that of the nation with a strong sequential quarterly growth in total income reaching AED 8.9 billion (+4% QoQ) and net profit of AED 3.1 billion (+19% QoQ) supported further by renewed business optimism with the successful opening of the World EXPO.

• The steady improvement in our profitability is supported by our consistent efforts to continue to extract synergies from the acquisition, whilst pushing for further efficiencies via our digitalization drive and further optimization of our branch and ATM network. Evidence of the success of our cost management approach is clearly visible with OPEX reducing by a considerate 12% YoY to reach AED 1.9 billion thereby leading to one of the lowest cost income ratio in the market at 26.2% (lower by 320 bps YTD).

• Liquidity remains robust as always with Finance to Deposit Ratio at 90%, while capital and profitability remain strong with all key metrics seeing steady sequential QoQ improvements on ROA and ROE now at 1.4% (+10 bps QoQ) and 10.9% (+50 bps QoQ) respectively as well as capitalization levels with CET1 at 12.8% (+50 bps QoQ) and CAR at 17.5% (+50 bps QoQ). 

• As the UAE aims to transition towards the green economy, we remain committed to and fully aligned with the nation’s sustainable ambitions on energy, climate and the society and our future strategic direction will see the bank taking key and decisive steps to protect the future of the nation and the world in line with UN SDGs.

• Whilst the economic recovery continues, our prudent approach to growth and profit protection saw us strengthen our fixed income book with Sukuk investments now reaching AED 40 billion from AED 35 billion at the start of the year depicting a solid growth of 13% YTD and 8% YoY. This portfolio primarily consists of sovereigns and financial institutions and the strategic growth is in line with our objective and focus on extending business in low risk sectors.