Dubai Islamic Bank First Half 2021 Group Financial Results
- Improving profitability with total income of AED 5.8 bln and net profit of AED 1.9 bln, up 5% and 18% QoQ respectively.
- Net operating profit before impairments reaches AED 3.4 bln, up 4% YoY and 10% QoQ.
- Robust growth in customer deposits of 6% year to date to reach to AED 218.3 bln.
- Efficiency build up continues with OPEX declining by 15% YoY to AED 1.2 bln.
- Sector leading cost income ratio of 26.9%.
Financial Review:
Income statement summary
AED millions |
H1 2021 |
Q1 2021 |
QoQ % change |
H1 2020 |
YoY % change |
Total Income |
5,842 |
2,847 |
5% |
6,824 |
(14%) |
Depositors’/ Sukuk holders share of profit |
(1,214) |
(621) |
(5%) |
(2,101) |
(42%) |
Net Operating revenue |
4,628 |
2,226 |
8% |
4,723 |
(2%) |
Operating expenses |
(1,246) |
(612) |
4% |
(1,471) |
(15%) |
Profit before impairment losses & income tax |
3,382 |
1,614 |
10% |
3,252 |
4% |
Impairment losses |
(1,498) |
(751) |
(1%) |
(2,120) |
(29%) |
Gain on bargain purchase |
- |
- |
- |
1,015 |
- |
Income tax |
(20) |
(10) |
10% |
(30) |
(32%) |
Net profit for the period |
1,864 |
853 |
18% |
2,118 |
(12%) |
Key Ratios (%) |
H1 2021 |
Q1 2021 |
H1 2020 |
Net Profit Margin % |
2.5% |
2.5% |
2.8% |
Cost to income ratio % |
26.9% |
27.5% |
29.4% |
Return on average assets % |
1.3% |
1.2% |
1.9% |
Return on average equity % |
10.4% |
9.6% |
15.5% |
Balance Sheet Summary
AED millions |
Jun 2021 |
Dec 2020 |
YTD % change |
Net Financing and Sukuk Investments |
232,807 |
232,044 |
0.3% |
Interbank placement & CDs |
28,309 |
23,949 |
18% |
Equities & Properties Investments |
10,408 |
10,388 |
- |
Cash & Other assets |
22,259 |
23,176 |
(4%) |
Total assets |
293,782 |
289,556 |
1.5% |
|
|
|
|
Customers’ deposits |
218,309 |
205,925 |
6% |
Sukuk financing instruments |
20,594 |
18,744 |
10% |
Total liabilities |
254,259 |
246,426 |
3% |
Shareholder Equity & Reserve |
28,664 |
28,606 |
- |
Tier 1 Sukuk |
8,264 |
11,937 |
(31%) |
Non-Controlling interest |
2,595 |
2,587 |
- |
Total liabilities and equity |
293,782 |
289,556 |
1.5% |
Key Ratios (%) |
Jun 2021 |
Dec 2020 |
Jun 2020 |
Net Financing to customer deposit |
89.0% |
96.0% |
97.0% |
CET 1 ratio |
12.3% |
12.0% |
12.3% |
CAR |
17.0% |
18.5% |
16.7% |
NPF ratio |
6.3% |
5.7% |
4.5% |
Coverage ratio |
74.0% |
76.0% |
80.5% |
Operating Performance
The bank’s total income in the first half of 2021 grew by 5% QoQ to reach to AED 5,842 million. The steady increase in total income over the past few quarters reflects the gradual re opening of the economy and business activities supported by well-managed vaccination rollout across the emirate whilst adhering to pre cautionary safety measures. Net operating revenue, however remained largely stable year on year to reach AED 4,628 million.
Operating expenses declined to AED 1,246 million compared to AED 1,471 million in the same period of last year, an improvement of over 15%. The reduction in operating expenses is attributed to the continued integration synergies achieved as well as a disciplined approach to cost management. The lower expenses have led to an improvement in cost to income ratio by nearly 250 bps year to date, which now stands at 26.9% vs 29.4% for FY2020, clearly a market leading position on this metric.
As a result, pre-impairment profit during the first half increased by 4% YoY and 10% QoQ reaching to AED 3,382 million compared to AED 3,253 million in the same period of last year.
Impairment charges declined by 29% year on year to AED 1,498 million, reflecting the bank’s continued prudent approach to underwriting risk given the current market conditions.
The net profit of the bank for the first half of 2021 reached to AED 1,864 million. The bank has sustained a strong growth of 18% on a quarterly basis despite the subdued operating environment.
Net profit margin continues to be stable at 2.5% despite the low-rate environment. ROA and ROE continue to remain healthy at 1.3% and 10.4% respectively.
Balance Sheet Trends
Net financing & Sukuk investments remained stable at AED 232.8 billion in the first half of 2021, despite early settlements from large corporates during the first half amounting to more than AED 8 billion. Sukuk investments now stands at AED 38.5 billion depicting a YTD growth of 9%.
Customer deposits increased to AED 218.3 billion in the first half of 2021, from AED 205.9 billion at year-end 2020 reflecting a robust rise of 6% YTD. CASA now stands at AED 90.2 billion representing about 41% of customer deposits. Liquidity coverage ratio (LCR) at 152% remains well above regulatory requirement which along with the finance to deposit ratio of 89% denotes an extremely healthy liquidity position.
Non-performing financing (NPF) ratio stood at 6.3%, with impaired financing at AED 13.1 billion vs AED 12.1 billion in end of 2020. The coverage ratio stands at 74% and overall coverage including collateral at 103%. Cost of risk on gross financing assets continue to be on a downward trend and now stands at 103 bps compared from 137 bps in year-end 2020.
Capital ratios continue to be stable with CAR ratio at 17.0% and CET 1 ratio is stable at 12.3% during the first half of 2021, both well above the regulatory requirement.
Business Performance
The bank’s business model remains well diversified with consumer banking contributing 36% to the bank’s H1 2021 net operating revenue whilst the corporate banking generated 40%. The latter continues to be the largest business segment within DIB comprising nearly 50% of the bank’s asset base followed by consumer and treasury combined at to about 31% as of H1 2021.
Gross new consumer financing of more than AED 6.5 billion during the first half was achieved driven by a healthy growth in the mortgage and personal financing portfolio while another AED 12 billion came from corporate.
A new business banking proposition was introduced during the quarter which provides a suite of variants for a diverse range of clients and customers from small businesses to medium-sized establishments. The proposition is also designed to evolve and provide complete digital eco-system to the SMEs in the UAE in order to become the transactional bank of choice.
In June, the bank successfully closed the lowest priced USD 1 billion senior sukuk which was 3x oversubscribed. The landmark success is a testament to the bank’s strong credit profile and standing with the international and regional investors.
Year to Date Industry Awards (2021)
Date |
Award Giving Body |
Award Received |
June 2021 |
Forbes ME |
DIB ranked 15th amongst Top 100 Companies in the Middle East 2021 |
June 2021 |
Emirates Institute for Banking and Financial Studies |
Dubai Islamic Bank was recognized for its efforts in the Emiratisation domain |
January 2021 |
Islamic Finance News Awards |
Best Islamic Retail Bank |
January 2021 |
Islamic Finance News Awards |
Commodity Murabahah / Tawarruq Deal of the Year |
January 2021 |
Islamic Finance News Awards |
Indonesia Deal of the Year |
January 2021 |
Islamic Finance News Awards |
Mudarabah Deal of the Year |
January 2021 |
Islamic Finance News Awards |
Perpetual Deal of the Year |
January 2021 |
Islamic Finance News Awards |
UAE Deal of the Year |
January 2021 |
Islamic Finance News Awards |
Best Islamic Bank in Kenya |
January 2021 |
Islamic Finance News Awards |
Structured Finance Deal of the Year (DIB Pakistan) |
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