Dubai Islamic Bank, the largest Islamic bank in the UAE, on Tuesday announced that its net profit rose 26 per cent to Dh7.01 billion for the period ending December 31, 2023, supported by significant asset growth, stable costs, and strong margins, solid recoveries thus reflecting healthy economic conditions.

The bank’s balance sheet grew by 9 per cent year-on-year to Dh314 billion. Financing book rose by 7 per cent year-on-year to Dh199 billion across corporate and consumer businesses reinforced by a surge in corporate cross border and private sector financing. Including Sukuk, the bank’s financing and sukuk assets have grown 12 per cent, surpassing full year guidance.

The bank’s total income rose to Dh20.142 billion in FY 2023, a growth of 43 per cent compared to Dh14.101 billion in the previous year, driven by strong income from funded and non-funded income. Non-funded income advanced by 23 per cent year-on-year over the reporting period supported by fees and commissions and income from investment properties in line with Dubai’s strong property rental market in addition to other income account due to one off item gains. Particularly in Q4 2023, non-funded income exhibited a strong quarter, year-on-year and quarter-on-quarter up by 48 per cent and 19 per cent, respectively, as commissions rose by almost 40 per cent (on a year-on-year basis) due to higher financing processing fees while also other income supported the growth. This was reflected in the net operating revenue, which grew by 11 per cent year-on-year to reach to Dh11,665 million compared to Dh10,467 million last year.

Pre-impairment profit increased by 10 per cent year-on-year reaching to Dh8.503 billion compared to Dh7.734 billion. Impairment charges stood at Dh1.396 billion, down by 34 per cent year-on-year. Q4 2023 witnessed reversal of impairment charges in tune of Dh13 million.

Operating expenses amounted to Dh3.162 billion for the year vs Dh2.733 billion in FY2022, a 16 per cent year-on-year increase. Cost income ratio registered 27.1 per cent, up 100 bps year-on-year.

Net profit margin increased to 3.1 per cent (10 bps year-on-year) with ROA and ROTE at a healthy 2.3 per cent and 20 per cent up by 30 bps and 300 bps year-on-year respectively.

DIB witnessed stellar disbursements in its gross new financing and sukuk portfolio during FY 2023 amounting to nearly Dh88 billion, up 40 per cent compared to Dh63 billion in FY 2022. The bank’s sukuk portfolio continued its resilience witnessing gross new investment of Dh21 billion up 52 per cent year-on-year compared to FY2022.

Gross corporate financing origination surpassed Dh45 billion, (45 per cent year-on-year), driven mainly by large corporates and regional cross border financing, while new bookings from consumer financing followed suit up 22 per cent to Dh22 billion driven by automotive, personal finance and SME business underpinning DIB’s strong franchise despite a competitive market. This resulted in gross new financing of Dh67 billion up 37 per cent.

Mohammed Ibrahim Al Shaibani (left) and Dr Adnan Chilwan

Mohammed Ibrahim Al Shaibani (left) and Dr Adnan Chilwan

Customer deposits registered Dh222 billion as of FY 2023 up by 11.8 per cent year-on-year equally supported by the consumer and corporate accounts. CASA now stands at Dh82 billion, comprising 37 per cent of deposits. Migration to wakala deposits (investment deposits) was a persistent trend over the year due to the current global rate scenario. “This is reflected through an increase in contribution of investment deposits to the total deposit base to 63 per cent from 56 per cent in FY 2022. Liquidity coverage ratio (LCR) at 188.7 per cent, up from 150.4 per cent FY 2022, remains above regulatory requirement, depicting strong liquidity position,” the bank said.

Non-performing financing (NPF) ratio improved to 5.4 per cent, down 110 bps compared to FY 2022 NPF ratio of 6.5 per cent. Core DIB NPF account which comprises 83 per cent of the total NPF account was the main contributor to the improvement in the asset quality.

Mohammed Ibrahim Al Shaibani, director-general of The Ruler’s Court of Dubai and chairman of Dubai Islamic Bank, said: “The UAE economy continues to expand amidst the tightening of global financial conditions owing to elevated inflation levels and moderate global growth. The GCC financial markets had a strong year with Dubai showcasing a robust double-digit gain of more than 20 per cent year-on-year supported by a strong pipeline of IPOs and rising volume trades. The banking sector also showed strong resilience with healthy and growing balance sheets and higher earnings.”

Dr. Adnan Chilwan, group chief executive officer, said: “Over the year 2023, Dubai’s economy has propelled at exceptional rate due to the structural and cyclical factors as well as deleveraging. Dubai’s PMI data has ended the year at an exceptional level ticking at 57.7 in December, marking healthy acceleration. Banks’ credit have grown reflecting ample opportunity and liquidity aligned with the buoyant economic activities across all industries.”

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