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Tue 28 Apr 2009 05:26 PM

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Dubai Islamic Bank's Q1 profits plunge 33%

UAE’s biggest bank complying with Islamic financial law says profits low on provisions for bad loans.

Dubai Islamic Bank (DIB), the UAE’s biggest bank complying with Islamic financial law, announced on Tuesday its first quarter profit plunged 33 percent to AED370m ($101m) following provisions for bad loans.

DIB said it made provisions of AED104m to reflect the bank’s prudent and conservative approach during a period of global financial instability, it said in an emailed statement.

“The first three months of this year were challenging for the global financial services industry, but we are now cautiously optimistic that the worldwide economy will soon begin its gradual recovery,” Mohammed Ibrahim Al Shaibani, chairman of DIB, said.

The banks total assets stood at AED 95bn at the end of March, up 12 percent compared to AED 85bn at the end of 2008.  Customer deposits increased 15 percent to AED 76.6bn.

The bank’s financing-to-deposit ratio stood at 67 percent at the end of March.

Al Shaibani said the bank’s outlook for the future was optimistic.

By the end of the year, DIB is predicting its customer base will increase by approximately 15 percent to reach around 900,000 customers.  The bank’s retail assets business will grow by approximately 20 percent over the same period, it said.

On Monday the bank’s shareholders approved a AED 3bn capital increase.  The shareholders also approved the conversion of a AED 3.75bn of federal government deposits into tier 2 capital, to be used for the bank’s expansion plan, aimed at protecting its lending position during the current economic crisis.

 

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