Dubai Islamic Bank posts 12% surge in quarterly profit on higher revenue

Dubai Islamic Bank (DIB), the UAE’s biggest Islamic bank by assets, said its first-quarter net profit jumped 12 per cent year-on-year (YoY) to $410m (Dhs1.51bn) from Dhs1.34bn, driven by higher revenues and effective cost management measures.

DIB’s total income soared to Dhs4.4bn during the quarter, up 47 per cent from Dhs3.02bn the same period a year earlier, thanks to strong income from financing assets.

The banking group’s net operating revenue grew by 12 per cent YoY to reach Dhs2.76bn compared to Dhs2.47bn in the first of 2022 while operating profit stood at Dhs2.01bn a solid 14 per cent YoY increase compared to Dhs1.77bn in Q1 2022.

DIB’s balance sheet expanded by 1.3 per cent year-to-date (YTD) to Dhs292bn while customer deposits settled at Dhs198bn with CASA comprising 40 per cent of the bank’s deposit base.

Tone setting performance by @DIBtoday delivering AED 1.5 bln in Q1 net profit, a 12% YOY increase. DIB’s results are proof of its robust fundamentals & sound financial strength evidenced by recent upgrade of its standalone ratings by Moody’s https://t.co/pvFP2dA4Aq pic.twitter.com/SG05cRrC2s

— Dr. Adnan Chilwan (@AdnanChilwan) April 19, 2023

“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 a very strong and remarkable set of results,” said Mohammed Ibrahim Al Shaibani, chairman of Dubai Islamic Bank.

The Shariah-compliant bank’s net financing and Sukuk investments stood at Dhs240bn, up one per cent YTD with as much as Dhs21bn in new underwriting in the first quarter of 2023 compared to Dhs15bn during the same period last year. DIB attributed the growth in its net financing activities to both corporate and retail financing, which underpins the bank’s strong market position and business appetite for growth.

The group’s fixed income portfolio has reached Dhs55bn, a 6 per cent YTD as the bank continues to invest primarily in highly rated sovereign Sukuk instruments.

Dubai Islamic Bank boosts financing

Meanwhile, DIB said it remains committed to sustainable development and has integrated a full-fledged sustainability strategy in its medium- and long-term goals as the UAE is transitioning into a green economy.

Read: Dubai Islamic Bank successfully prices $1bn sustainable sukuk, its second so far

The bank raised $1bn from its second sustainable Sukuk in Q1 2023 which saw demand for the notes exceeding $2.75bn, excluding interest from joint lead managers. The bank sold $750m of its debut sustainable Islamic bond in November 2022.

The Sukuk, which matures in five years, was sold at 155 basis points (bps) over US Treasuries, tightened from initial guidance of around 175 bps after demand topped $1.6bn.

DIB plans to advance finance environmental and social projects under a new sustainable finance framework that was unveiled in October 2022. The framework will allow the lender to issue green and sustainability-linked Islamic bonds and loans to fund projects in renewable energy, clean transport, green buildings and wastewater management as well as support job creation and affordable housing.

The demand for ESG-linked financing has surged and interest has picked up among GCC investors and the wider Middle East amid an increase in opportunities to invest in projects linked to sustainability and energy transition.

Issuance of green bonds also allows borrowers from the region to diversify their investor base. The UAE is set to host the COP28 climate change conference later this year after the hosting of COP27 by Egypt in 2022.