Dubai Islamic Bank (DIB), the UAE’s largest Sharia-compliant lender, is well positioned to capitalise on the economic recovery from the Covid-19 pandemic and is upbeat about growth prospects this year despite a 23 per cent drop in first quarter profit.
Net profit for the three months to the end of March declined to Dh853 million ($234.4m), in the absence of a Dh1 billion one-off gain recorded in the first quarter of 2020, the lender said in a statement to the Dubai Financial Market, where its shares trade.
The rise in profit from Dh53m recorded in the last three months of 2020 points to a “clearly improving economic trend”.
“Amidst the ongoing market volatilities, DIB continues to deliver strong operating performance,” Mohammed Al Shaibani, chairman of DIB, said.
“With robust fundamentals in place, DIB is well positioned to connect with the country’s large-scale economic programmes such as the World Expo, Dubai Industrial Strategy 2030 and the Dubai Urban Master Plan that will support future growth of the bank.”
Government measures to support the economy and a quick rollout of Covid-19 vaccination are expected to “accelerate consumer spending and business activities in the coming periods”, he said.
A further extension in the Targeted Economic Support Scheme – a Dh50bn zero-cost liquidity facility provided by the Central Bank of the UAE – will support the banking sector and DIB “remains aligned to providing support to the domestic economy”, Mr Al Shaibani added.
Earlier this month, the central bank extended parts of Tess until the end of June 2022 to help cushion the impact the Covid-19 pandemic on the economy.
Overall, the UAE has rolled out economic support packages worth Dh388bn since the onset of the pandemic.
DIB, which completed its acquisition of rival Noor Bank to create one of the largest Islamic banks in the world last year, said its profit before impairments rose to Dh1.61bn at the end of March from Dh1.59bn in the same period last year.
Impairment charges dropped 49 per cent from a year earlier to reach Dh751m, which the bank said signifies “the success of risk management strategy”.
Customer deposits at the end of the first quarter marked a 4 per cent year-to-date increase and 7 per cent year-on-year rise to Dh214bn. Total assets grew 6 per cent to Dh291.71bn.
Lenders globally are facing improved operating conditions as businesses stabilise and economies gradually emerge from the pandemic-driven slowdown.
Still, there are “significant headwinds” in the current environment and DIB will “continue to approach the year with extreme prudence.—Agencies