Dubai Islamic Bank (DIB), the United Arab Emirates' largest sharia-compliant lender, is targeting loan growth of between 10 and 15 percent in 2017 after reporting an estimate-beating 58.4 percent rise in fourth-quarter 2016 net profit.
Aiming to pave the way for the bank's next stage of growth, it also said it would seek shareholder approval next month to raise Tier 1 issued capital by $1 billion, as well as issue senior or subordinated sukuk for up to $5 billion.
Speaking in an earnings conference call after the release of the results, chief executive Adnan Chilwan said the bank was adequately capitalised and had no set timeframe for when it would raise capital.
Its Tier 1 capital adequacy ratio, a crucial indicator of a bank's health, stood at 17.8 percent at the end of December, well above the 8 percent required by the local regulator.
Apart from the third quarter, when earnings were dented by a rise in costs, the bank's earnings growth has outpaced most of its local rivals in recent quarters in a slowing economy.
In the latest quarter, the bank made 1.37 billion dirhams ($370 million) in the three months to Dec. 31, according to Reuters calculations. This compares with a 864.7 million dirhams profit in the corresponding period of 2015.
The result was well ahead of the average forecast of three analysts polled by Reuters, who had forecast a quarterly profit of 850.4 million dirhams.
The bank grew its loan book by 18 percent in 2016, ahead of its target of between 10 and 15 percent for the year.
DIB also said its board proposed a 45 per cent cash dividend to shareholders for the year, the same as for the previous year.
Chiwan said it expected net interest margins for 2017 of 3.25 percent, compared to 3.23 percent achieved in 2016.
Protecting net interest margins -- the difference between the rate paid out on deposits and the rate charged for lending -- has been critical as the drop in oil prices has tightened liquidity across the region.
"The liquidity crisis in 2016 was at its peak but liquidity conditions continue to be a challenge and while that remains the case the cost of funding will remain a challenge," he said.
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