DUBAI: Dubai Islamic Bank (DIB), the United Arab Emirates’ largest sharia-compliant lender, posted a 7.2 percent increase in first-quarter net profit on Wednesday on the back of higher revenue and setting aside less cash for bad debts.
The bank made an attributable profit of 875.3 million dirhams ($238.3 million) in the three months to March 31, it said in a statement. This compares with a profit of 816.7 million dirhams in the corresponding period of 2015.
EFG Hermes had forecast DIB would make a quarterly profit of 938 million dirhams.
The bank’s net profit including non-controlling interests jumped 17.7 percent to 1.00 billion dirhams.
DIB said its profit increase was due to higher income, which surged 21.8 percent to 2.11 billion dirhams, and a drop in loan impairments, which fell 13 percent to 118 million dirhams.
Revenue was lifted by a 21.3 percent increase in net income from Islamic financing to 1.53 billion dirhams, and a 37 percent jump in income from fees, commissions and foreign exchange to 417.9 million dirhams.
Fee income has been one of the ways in which regional banks have boosted revenues at a time when record low interest rates have kept net interest margins under pressure.
The bank’s income in recent quarters was driven in part by strong lending growth, which has been above that of many of its peers.
Total lending rose 5.9 percent year-on-year to stand at 102.9 billion dirhams on March 31, with deposits gaining 11.4 percent over the same time frame to 122.5 billion dirhams.
DIB aims to continue that trend in 2016, with chief executive Adnan Chilwan saying in January the bank was targeting loan expansion of between 10 and 15 percent.
Faltering conditions in the UAE economy as a result of lower oil prices are expected to slow banking credit growth to around 5 or 6 percent in 2016, Standard & Poor’s forecast in January.
Copyright Reuters, 2016
Courtesy : BRecorder