Abu Dhabi Islamic profit up as payouts fall

Abu Dhabi Islamic Bank (ADIB), the emirate's only sharia lender, posted its second-largest profit ever in the first quarter after generating more income from lending and paying out less in profit.

Net income in the three months to March 31 - after depositors' share - surged 47% to 244.25 million dirhams ($66.5 million), or 0.124 dirhams per share, compared with 165.78 million dirhams, or 0.109 dirhams per share in the year-earlier period, the bank said in a statement on the Abu Dhabi bourse website.

Net income from murabaha, mudaraba, ijara and other types of Islamic lending jumped 31% to 481.1 million dirhams, the bank said.

Distribution of profit to depositors - the equivalent of interest payments - and to holders of the bank's Islamic bonds fell 31% to 243.8 million dirhams, the bank said.

In a survey last month by newswire Reuters, Egyptian investment bank EFG-Hermes said ADIB would probably make a profit of 188 million dirhams.

Demand for financial services that comply with Islamic law has been surging in the UAE as the oil-driven economy grows and Muslims seek to adhere more with their beliefs.

Last month, investors offered $13.1 billion, or almost 86 times more than was sought, towards the initial public offering (IPO) of Ajman Bank, the UAE's seventh Islamic lender.

It was the most heavily oversubscribed IPO in the UAE, the second-largest Arab economy, since the government of Dubai offered shares in a public and private sale of Dubai Financial Market Company in 2006.

Among other tenets, Islam bans the receipt of interest, equating it with usury, and instead encourages banks to share in the profit or loss of investors.

UAE bank assets that comply with Islamic law account for about 15% of total industry assets, Ajman Bank Chief Executive Yousif Khalaf said in February.

Globally, Islamic banks controlled assets worth about $750 billion at the end of 2006, a figure which may rise to more than $1 trillion by 2010 as the industry expands, according to US management consultants McKinsey & Company.

Shares of ADIB have risen just over 2% this year, the second-best performance among the three publicly listed Islamic banks in the UAE. Sharjah Islamic Bank is up almost 4%. (Reuters)

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