Dubai Islamic Bank First Quarter 2023 Group Financial Results

Press release

Published April 19th, 2023 - 07:56 GMT

Dubai Islamic Bank

Highlights

Dubai Islamic Bank (DFM: DIB), the largest Islamic bank in the UAE, today announced its results for the period ending March 31, 2023.

Q1 2023 Highlights:

·Group Net Profit came in at AED 1,506 million, up 12% YoY compared to AED1,345 million. Growth was driven by rising core revenues and effective cost management.

·Net financing and sukuk investments at AED 240 billion, up 1% YTD with nearly AED 21 billion in new underwriting during Q1 2023 vs AED 15 billion in Q1 2022.

·Total income rose to AED 4,431 million compared to AED 3,016 million, a solid expansion of 47% YoY.

·Net Operating Revenues showed a robust 12% YoY to reach AED 2,755 million.

·Net Operating Profit now at AED 2,013 million, a solid increase of 14% YoY compared to AED 1,770 million in Q1 2022.

·Balance sheet expanded by 1.3% YTD to AED 292 billion.

·Customer deposits now at AED 198 billion with CASA comprising 40% of DIB’s deposit base, a significant achievement given the current rate environment.

·Impairment charges registered AED 496 million, down 24% QoQ, highlighting a positive trend.

·NPF ratio stable YTD at 6.5% however 20 bps lower compared to Q1 2022.

·Cost to income stood at 26.9%, lower 140 bps YoY and well within the annual guidance.

·Liquidity remains healthy with LCR at 156% and NSFR at 108%.

·Continued improvement on ROA, now at 2.1% (+10 bps YTD) and ROTE at 17.5% (+50 bps YTD).

·Capitalization levels remain robust with CET1 at 13.3% (+40bps YTD) and CAR at 17.9% (+30bps YTD), both well above the minimum regulatory requirement. Total equity now stands at AED 43 billion.

Management’s comments for the period ending 31st March 2023:

His Excellency Mohammed Ibrahim Al Shaibani

Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank

leadership-member

Dr. Adnan Chilwan

Group Chief Executive Officer

o The UAE’s economy continue to expand at a fast rate supported by high energy prices, increasing business trade and activities and the return of tourism which has boosted domestic retail spending. The banking sector remains well-insulated from the global contagion and continues to be on a solid footing with steady growth in their balance sheets and rising profitability levels with DIB closing the first quarter of the year with very strong and remarkable set of results.

o The nation’s transition into a green economy is well underway and we at DIB remain fully committed towards sustainable development and have integrated a full-fledged sustainability strategy in our medium- and long- term goals. In addition with this commitment, we also successfully issued our 2nd sustainable sukuk (USD 1 billion) during the quarter which was very well accepted and oversubscribed in the financial markets.

o The UAE’s operating environment has been steadfast amidst the global economy’s complex challenges. The return of trade & tourism, increasing retail spending as well as rising profitability in banking & finance reflect the growing confidence that consumers have on the domestic economy. Accordingly, Government related entities (GREs) continue to maintain strong balance sheets, with cash surplus, on the back of the UAE’s stable economy; allowing them to reinvest in the nation’s expansionary agendas.

o The UAE has also witnessed strong growth in employment, up 38%, in 2022 when compared with 2021, due to 11% growth in new private sector establishments. This is aligned with the country’s continuing commitment to establish a broad knowledge-based economy.

o In light of the global events, DIB’s asset quality has been remained robust with NPF ratio stable at 6.5%. Additionally, our overall coverage ratio and cash coverage ratio have been increasing depicting the bank’s prudent approach to risk management.

o DIB’s profitability during the first quarter continues to impress with net income reaching AED 1.5 billion, up 12% YoY, on the back of stronger margins and ongoing cost controls. Net Profit Margin improved strongly by 50 bps YoY to reach to 3.2% reflecting rising rates globally.

o DIB’s gross new financing during the quarter registered AED 15.8 billion increase up by a sizeable 35% compared to AED 11.7 billion in Q1 2022. This is fueled by both corporate and retail financing underpinning DIB’s strong market position and business appetite for growth. Our fixed income portfolio has now reached AED 55 billion, a 6% YTD growth as the bank continues to invest in primarily highly rated sovereign sukuk instruments

o Our sustainability ambitions have been progressing well as we embark on a refreshed strategy with new commitments towards a low carbon economy and a more sustainable future. These commitments are supported by various initiatives and an established well- structured internal governance operating model that will ensure and oversee the execution of this journey.

Background Information

Dubai Islamic Bank

Since its formation in 1975 as the world’s first full-service Islamic bank, Dubai Islamic Bank has established itself as the undisputed leader in its field, setting the standards for others to follow as the trend towards Islamic banking gathers momentum in the Arab world and internationally.