Dubai Islamic Bank Q3 net profit falls 31%

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Q3 PROFIT: The bank reported a drop in its nine-month earnings to AED1.12bn. (Getty Images)

Dubai Islamic Bank's (DIB) third-quarter net profit fell 31 percent year-on-year, much worse than forecast, as the lender booked higher provisions for exposure to bad loans.

Analysts surveyed by Reuters had forecast the bank's third-quarter profit to range between a 13.8 percent rise to a decline of 28.4 percent.

The bank reported a drop in its nine-month earnings to AED1.12bn ($304.9m), or 35 percent from the year-earlier period, but did not give quarterly figures. Reuters calculated third-quarter profit based on previous periods' data.

The lender booked provisions of AED164m in the three months to September 30, slashing its net profit to AED296.75m.

DIB said earlier this year that it had no exposure to troubled Saudi conglomerates Saad Group and Ahmed Hamad Algosaibi & Bros, whose debt is forcing lenders across the Gulf region to beef up their bad debt cushions.

The lender predicted a better business environment in the coming period.

"The past 12 months have presented a range of unprecedented threats to the stability of the global financial system," Chairman Mohammed al-Shaibani.

"But we are now clearly emerging from that period of instability and moving into a new phase of recovery, evidenced by the more positive growth projections worldwide.

The bank's total assets dropped to AED82.9bn from AED87.8bn at the end of the second quarter. It did not explain the decline.

Rating agency Fitch said late last month that Dubai Islamic was one of eight United Arab Emirates' banks that continue to face rising impairments and other challenges, but can absorb higher impairments as capitalisation has improved and they have a high level of sustainable revenues.

DIB's shares eased 0.32 percent on Thursday to 3.16 dirhams, close to a year high of AED3.37 logged on October 15.

Established in 1975, Dubai Islamic Bank is one of the oldest players in the fast-growing Islamic banking sector. (Reuters)

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