Dubai Islamic tops forecasts with 60% profit jump

INCREASED DEMAND: Dubai Islamic said second quarter profit hit $203.5 million. (Getty Images)

Dubai Islamic Bank topped analysts' forecasts with a 59.7 percent rise in second-quarter net profit as demand for lending surged on economic growth in the Gulf Arab region.

Net income in the three months to June 30 for the fourth-largest Gulf Arab Islamic lender by market value was 747.46 million dirhams ($203.5 million), according to a calculation by newswire Reuters based on the lender's financial data.

First-half profit grew 46.7 percent to 1.30 billion dirhams compared with 888 million a year ago, excluding the gain on transfer of interest in one of its subsidiaries, the lender said in a statement, without giving the quarterly figure.

"Our strategy of diversifying revenues and operations has paid dividends, and we will continue to execute this strategy going forward," Chairman Mohammed Al-Shaibani said in the statement.

The bank's financing and investment activities advanced 34.2 percent to 60.8 billion dirhams in the first half and the bank's total assets grew 21.1 percent to 91.4 billion dirhams, the lender said.

It gave no details on net interest and non-interest income in the statement.

Dubai Islamic's second-quarter profit topped analysts' forecasts, which ranged from 513.61 million dirhams to 598.9 million dirhams in a Reuters survey last month.

Islamic lenders in the Gulf Arab region have been capitalising on growing demand for financial services that comply wtih Islamic law, including a ban on the receipt of interest, among the world's 1.3 billion Muslims.

Governments in the world's top-oil exporting region have poured billions of dollars into developing mega real estate, infrastructure and industrial projects, creating extensive lending opportunities for banks.

In the first half, the banks's wholly-owned investment banking arm arranged sukuk, or Islmaic bonds, and syndication transactions of more than 20 billion dirhams, it said.

The lender said it financed projects in the contracting sector worth 25 billion dirhams in the first half. Last month, it said it would set up a 2 billion dirham properties joint venture firm with government-owned developer Nakheel.

Dubai Islamic affiliate Deyaar, the emirate's third-largest developer by makret value, almost tripled net profit to 246.9 million dirhams in the second quarter.

The lender's shares have declined more than 13 percent this year, underperforming the main index, which is down 8 percent.

Last month, HC Brokerage initiated coverage of Dubai Islamic Bank with a "buy" rating and forecast the lender would make a net income of 2.55 billion dirhams this year.

Dubai Islamic made 1.08 billion dirhams of profit attributable to shareholders in the second quarter of 2007 and 555.54 million dirhams in the first quarter of this year.

The second-quarter 2007 profit included 617.17 million dirhams of exceptional profit after the initial public offering of Dubai Islamic affiliate Deyaar.

Stripping out the one-off gain, Dubai Islamic made 467.91 million dirhams in the second quarter of 2007. (Reuters)

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