DIB board recommends foreign ownership increase as lender reports rise in full-year profit
The lender is now looking to fully integrate Noor Bank into its operations as it pursues growth opportunities
The board of Dubai Islamic Bank, the largest Sharia-compliant lender in the UAE, recommended an increase in the foreign ownership limit of its shares, as the bank reported a 2 per cent rise in full-year net profit for 2019 on higher revenue and assets.
Net profit for the 12-month period ending December 31 climbed to Dh5.1 billion, the lender said in a statement to the Dubai Financial Market, where its shares trade.
“We remain focused on managing the growth and risk of our balance sheet, aligned to the vulnerabilities of the current operating environment and broader market conditions,” said DIB’s group chief executive, Adnan Chilwan. “Prudent risk management practices remain at the core of this growth, in line with our strategies to mitigate risks and build cushions to insulate against any event in today’s ever-changing economic landscape.”
The bank's total income last year rose an annual 17 per cent to Dh13.7bn. Net financing and sukuk investments increased to Dh184.2bn for the reporting period from Dh175.9bn in 2018. Net revenue surged 13 per to Dh9.27bn as the lender remained focused on “optimal cost management”. Net impairment charges, however, more than doubled to Dh1.76bn at the end of the last year, up from Dh833 million reported in 2018, DIB added.
The board recommended an increase in the foreign ownership limit of its shares to 40 per cent from 25 per cent, subject to regulatory and corporate approvals, DIB said.
The move is in line with other financial institutions that are raising ownership caps on their stocks to attract more foreign investors, after the UAE removed restrictions last year. In July, First Abu Dhabi Bank, the biggest lender in the country, proposed removing a cap on foreign ownership. Emirates NBD and Abu Dhabi Islamci Bank are among the other lenders seeking the same.
“As the UAE enters a new phase of economic growth … we will continue to drive our long-term sustainable growth agenda,” Mr Chilwan said.
DIB’s cost-to-income ratio continued to improve in 2019 dropping to 26.9 per cent compared to 28.3 per cent at the end of 2018. Its net profit margin at 3.1 per cent was at the higher end of the guidance for the last year.
The bank’s total assets grew 4 per cent to Dh231.9bn last year, while customer deposits increased 6 per cent to Dh164.4bn.
DIB, which began the process of acquiring its smaller rival Noor Bank, completed the acquisition this year, creating a banking entity with assets in excess of Dh275bn.
DIB is now focused on fully integrating Noor into its operation, as the lender positions itself as one of the largest Islamic banks in the world. The acquisition will also strengthen Dubai’s position as a global centre for Islamic finance and will offer opportunities for DIB to further develop its business, the lender said.
“While our organic growth has been well above the market over the last five years, compound annual growth rate of 13 per cent … we are always on the lookout on how to accelerate this further,” Mr Chilwan said. “The Noor Bank acquisition is a prime example ... and with the transaction completed, we are now fully geared to push forward with the integration in the shortest possible time frame, and realise the extensive synergies expected from this deal."
Updated: February 13, 2020 11:55 AM