Dubai Islamic Bank nine months 2022 group financial results

Dubai Islamic Bank (DFM: DIB), the largest Islamic bank in the UAE, today announced its results for the period ending September 30, 2022.

9M 2022 Highlights:

• Substantial growth in Group Net Profit of 34% YoY to AED 4,101 million vs AED 3,069 million in same period last year. The strong growth was driven by rising core revenues and sustained lower impairments.
• Net financing and sukuk investments grew by 3.3% YTD to AED 236 billion. The bank attained nearly AED 43 billion YTD in gross new underwriting.  
• Total income reached to AED 9,873 million compared to AED 8,946 million, double digit growth of 10% YoY and 11% QoQ.
• Net Operating Revenues showed a robust 7% YoY increase and 2% sequentially to reach AED 7,653 million. 
• Net Operating Profit now at AED 5,612 million, a strong increase of 6% compared to AED 5,275 million in 9M 2021.
• Balance sheet remains robust at AED 275 billion, marginally lower by 1.5% YTD.  
• Customer deposits now at AED 187 billion with CASA comprising 42% of the deposit base.
• Impairment charges continue to decline registering AED 1,450 million against AED 2,174 million in previous year, lower by 33% YoY, demonstrating resilience of the financing book.
• NPF ratio continues its downward momentum now at 6.5% lower by 30 bps YTD compared to 6.8% in 2021.
• Cost to income still strong at 26.7% down 10 bps from YE2021. 
• Liquidity remains healthy with LCR of 123%.
• Continued healthy improvement on ROA now at 2.0% (+50bps YTD) and ROTE at 16.8% (+380bps YTD).
• Capitalization levels remain robust with CET1 at 13.9% (+150bps YTD) and CAR at 18.6% (+150bps YTD), both well above the minimum regulatory requirement. Total equity now stands at AED 43 billion.

Management’s comments for the period ending 30th September 2022:

Financial Review: 

Income statement summary

Balance Sheet Summary

Operating Performance

The bank’s total income rose to AED 9,873 million in 9M 2022 demonstrating a healthy YoY growth of 10% compared to AED 8,946 million in same period of last year driven by strong income from financing assets. This is clearly reflected in the Net Operating Revenue which grew by 7% YoY to reach to AED 7,653 million compared to AED 7,149 million last year.

Pre-impairment profit during 9M 2022 increased by 6% YoY reaching to AED 5,612 million compared to AED 5,275 million.  Underwriting quality remains robust resulting in significantly lower impairment charges amounting to AED 1,450 million vs AED 2,174 million last year, an improvement of 33% YoY.  

Operating expenses amounted to AED 2,040 million during 9M 2022 vs AED 1,874 million in 9M 2021 exhibiting a 9% YoY increase. The bank continues to focus on scaling up critical support functions in line with increasing regulatory requirements and strengthening group wide control oversight including enhanced monitoring on the bank’s subsidiaries. Following higher revenue growth, cost income ratio is still maintained at a sector leading position at 26.7%. 

As a result, the bank’s Group Net Profit witnessed a significant rise of 34% YoY to reach AED 4,101 million vs AED 3,069 million in 9M 2021.

Net profit margin increased to 2.9% (+30bps YTD) with ROA and ROTE at a healthy 2% and 16.8% respectively.

Balance Sheet Trends

Net financing & Sukuk investments stood at AED 236 billion, a rise of 3% YTD from AED 228.5 billion in 2021. Sukuk investments, another key focus of the bank, grew strongly by 17% YTD to reach to AED 49 billion.

DIB witnessed YTD growth in new corporate financing origination of nearly AED 20 billion driven mainly by public and private sectors, while new bookings from consumer financing accounted for AED 13 billion, exhibiting DIB’s prowess in deploying financing assets despite the ongoing market volatilities, offset by routine repayment of AED 9 billion and AED 11 billion from Corporate and Consumer financing respectively. This new underwriting has been offset by early settlements in the corporate portfolio to the tune of AED 13 billion YTD as the segment witnessed a sharp rise in settlements during the 3rd quarter on the back of a rising rate environment and excess liquidity, primarily stemming from large corporate government and related entities.

Customer deposits stood at AED 187 billion at the end of 9M 2022 with CASA now standing at AED 77 billion sitting comfortably at 42% of deposits. The increasing competitive environment has led to deposits declining by 9% YTD, primarily driven by DIB’s deliberate policy to release high cost deposits and protect the margins. Despite this, liquidity coverage ratio (LCR) at 123% remains above regulatory requirement, depicting balance sheet efficiency.

Credit quality remained intact with non-performing financing (NPF) ratio seeing a decline of 30bps YTD to 6.5% and stable QoQ. NPF has now declined by a healthy 4% YTD to AED 13,227 million from AED 13,784 million. The main improvement came from DIB’s core NPF portfolio which improved by 3% while NMC and NOOR POCI (which constitute 17% of NPFs) both declined by a combined 10%, due to ongoing recoveries. Stage 3 coverage accordingly improved to nearly 60%, (+310 bps) from YE2021.  Stage 2 loans dropped to AED 17 billion versus AED 20 billion during YE2021, a 15% drop depicting improving quality of the book. Stage 2 coverage accordingly improved to 6.9% compared to 5.6% in YE2021. 

Cash coverage ratio improved to 76% (+400 bps YTD) and overall coverage including collateral at 105% (+280bps YTD) underpinning DIB’s overall prudent risk strategy. Cost of risk on gross financing assets now stands at 79 bps compared to 99 bps for the year 2021, an improvement of 20 bps YTD.

Capital ratios continue to remain strong with CAR now at 18.6% and CET 1 ratio at 13.9%, both well above the regulatory requirement.

Business Performance (Year to Date)

Consumer Banking remains solid with total new underwriting of AED 13 billion YTD driven by Personal Finance and Home Finance which had a combined new underwriting of AED 9 billion YTD. The consumer portfolio now stands at AED 53 billion marginally up from AED 51 billion in YE 2021. The business generated AED 3 billion in revenues during the nine-month period up 11% YoY from AED 2.7 billion during 9M 2021. Blended yield on consumer financing grew by 22bps YoY to reach to 5.81%.

Corporate banking portfolio now stands at AED 144 billion with government and service sectors contributing strongly to this portfolio. The business booked AED 20 billion in new underwriting year to date despite global market volatilities as UAE continues its economic rebound this year. YTD revenues grew strongly to reach to AED 2.7 billion, up 14% YoY compared to AED 2.3 billion during 9M 2021. Yield on corporate financing portfolio continues its upward trend now reaching 3.4%, an increase of 66 bps YoY.

Key Business Highlights (Year to Date)

• In line with the bank’s corporate sustainability strategy demonstrating commitment to support the UAE’s transformation into a green and sustainable economy, DIB unveiled new Green Auto Finance “EVolve”, a holistic solution aiming to contribute to a cleaner environment by providing solutions around buying Electric and Hybrid cars, encouraging customers to invest in environmentally friendly vehicles. With DIB’s EVolve, customers can avail discounted processing fees and market leading preferential profit rates for both brand new and second-hand vehicles. Among the wide range of benefits, DIB customers will also enjoy a completely paperless and hassle-free financing experience that takes no more than a day, with the entire process of application and fulfillment executed digitally. EVolve is another one of the many initiatives the bank has taken in line with the strategy to progress towards a future-proof and sustainable bank. The bank remains committed towards launching more environmentally friendly products to further solidify and preserve the environment for future generations.
• Following on the launch of our inaugural five-year customer experience strategy in early 2022, DIB Customer Service (CS) week was launched to mark the international celebration of the importance of customer service and of the people who serve and support customers on a daily basis. This was the first time DIB celebrates the CS week in line with the initiatives under the “culture and mind shift change” pillar within the Customer Experience Strategy. The objective of the initiative is to raise awareness of the value of customer service, reinforce customer satisfaction across our branches and service centers and boost morale and teamwork. The bank also picked up three awards at the Happiness Annual Awards session in September, aimed at acknowledging and rewarding employees who have a positive impact within their organizations in spreading happiness and great service to internal and external customers.
• Dubai Islamic Bank (DIB) became the world’s first bank to attain ISO 21001:2018 certification, an international standard for organizations providing educational products and services capable of meeting the needs and requirements of learners and other beneficiaries. The award is a well-earned recognition that reflects the commitment and dedication of DIB's teams of the HR- Talent Management and Learning & Development units. By becoming the first bank in the world to achieve an accredited EOMS certification, DIB has set an example for the service industry of many other countries to follow.

DCM and Syndication Deals (Year to Date)

Year to Date Awards List