Dubai Islamic Bank shares surged on the bank's report of a 20 per cent rise in annual profits. Mona Al Marzooqi / The National
Dubai Islamic Bank shares surged on the bank's report of a 20 per cent rise in annual profits. Mona Al Marzooqi / The National

Banking

Dubai Islamic Bank annual profits surge 20% to beat estimates

Sharia-compliant lender expects 10 to 15% loan growth in 2018

John Everington

January 17, 2018

Profits at Dubai Islamic Bank (DIB), the emirate's largest Sharia-compliant lender, rose 20 per cent in 2017, beating analysts' estimates, as the growth of Islamic financing offset higher impairment charges.

The bank reported profits of Dh4.32 billion for the past year, compared with Dh3.6bn for 2016, in a regulatory filing on the Dubai stock exchange. The results are 2 per cent ahead of an average of five analyst forecasts compiled by Bloomberg, exceeding the highest estimate of Dh4.29bn from NBAD Securities.

The banks shares, suspended during the morning ahead of the results announcement, rose by as much as 1.2 per cent, eventually closing up 0.8 per cent at Dh6.60. The bank made no disclosure regarding likely dividend payments for the past year.

Net income rose to Dh1.15bn in the fourth quarter, a year-on-year increase of 25 per cent, according to calculations made by The National, again coming in ahead of analyst estimates.

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"The bank has weathered the challenges across the region as well as those emanating from the global economic slowdown extremely well," said Mohammed Al Shaibani, chairman of DIB. "With a more positive outlook forecasted for the UAE and global economy, the coming years look even more promising."

“We remain fully in sync with Dubai and the UAE’s plans in building a diversified and attractive economic hub for Islamic finance that serves to connect the globe from our home base here,” he added.

Net income from Islamic financing rose to Dh7.8bn for the year, a 19.5 per cent increase compared with the previous year.

Impairments for the year rose by 110 per cent year-on-year to Dh823.5 million, but came in below analysts' estimates. DIB's non-performing finance (NPF) ratio dropped 50 basis points during the year to 3.4 per cent.

Speaking on a call with analysts, DIB’s chief executive Adnan Chilwan said the bank is forecasting the NPF ratio to decrease to 3 per cent by the end of 2018, with loans expected to grow 10 to 15 per cent over the coming year.

Mr Chilwan told analysts he did not expect the bank to be impacted by the implementation of IFRS 9 reporting standards from this month onwards, as mandated by the Central Bank of the UAE. Emirates NBD, which announced its results for 2017 on Tuesday, said the implementation of the reporting standards would have an impact this coming year.

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The specs: 2018 Opel Mokka X

Price, as tested: Dh84,000

Engine: 1.4L, four-cylinder turbo

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Power: 142hp at 4,900rpm

Torque: 200Nm at 1,850rpm

Fuel economy, combined: 6.5L / 100km

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Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue  
Stage: Early stage
Investors: Founder's friends and Family

On Women's Day
Dr Afridi's warning signs of digital addiction

Spending an excessive amount of time on the phone.

Neglecting personal, social, or academic responsibilities.

Losing interest in other activities or hobbies that were once enjoyed.

Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.

Experiencing sleep disturbances or changes in sleep patterns.

What are the guidelines?

Under 18 months: Avoid screen time altogether, except for video chatting with family.

Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.

Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.

Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.

Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.

Source: American Paediatric Association

Frankenstein in Baghdad
Ahmed Saadawi
​​​​​​​Penguin Press

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Date started: 2012

Founder: Amir Barsoum

Based: Dubai, UAE

Sector: HealthTech / MedTech

Size: 300 employees

Funding: $22.6 million (as of September 2018)

Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC

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A State of Passion

Directors: Carol Mansour and Muna Khalidi

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The specs

Engine: Four electric motors, one at each wheel

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Expo details

Expo 2020 Dubai will be the first World Expo to be held in the Middle East, Africa and South Asia

The world fair will run for six months from October 20, 2020 to April 10, 2021.

It is expected to attract 25 million visits

Some 70 per cent visitors are projected to come from outside the UAE, the largest proportion of international visitors in the 167-year history of World Expos.

More than 30,000 volunteers are required for Expo 2020

The site covers a total of 4.38 sqkm, including a 2 sqkm gated area

It is located adjacent to Al Maktoum International Airport in Dubai South