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Tuesday, 7 May 2013

UAE: Dubai Islamic Bank eyes double-digit profit growth, acquisitions

Dubai: The Dubai Islamic Bank (DIB) has dealt with much of its balance sheet weakness and should see profits for 2013 grow in the high double digits, allowing it to eye acquisitions in new markets in Asia, officials said.
Leaders at the world’s oldest sharia-compliant lender told Reuters it had put aside around Dh5 billion ($1.36 billion) against the sort of soured property loans and transactions which drew into question Dubai’s future as a financial hub in 2009.
In his first media interview since taking over to deal with the fallout of the 2008 global crisis, Chief Executive Abdulla Al Hamli said the bank was now anxious to expand but was being held back in part by the unrest dominating the Middle East.
His deputy Adnan Chilwan said the bank expects to see close to 17 per cent growth in net profit this year after spending the last five years cleaning its books and strengthening its core banking operations.
I can confidently say that Dubai Islamic Bank has nothing to hide. We are very strong, clean and ready for the next growth phase,” Al Hamli told Reuters in the interview on Wednesday.
“2013 has started positively, with first quarter results up by 17 per cent compared to last year,” Chilwan said. “We anticipate similar growth for the remaining part of the year.”
DIB shares are up 43 pct so far this year to 2.88 dirhams, giving it a market capitalisation of about 10.9 bln dirhams. Investment firm Arqaam Capital last month raised its target price for the bank to 3 dirhams from 2.6 dirhams.
The 38-year-old bank, 30 per cent-owned by Investment Corporation of Dubai, needed government support after the global credit crisis burst the emirate’s property bubble, reducing real estate prices by more than 60 per cent over three years after 2008.
Chilwan said the bank had cut real estate investment to 27 per cent of its portfolio from 45 per cent in 2008 and that it would be happy to trim that exposure further.
“The crisis has made us more aware of our key strengths and focus areas,” he said. “The bank’s portfolio has changed and will continue to shift away from being real estate specific towards more consumer and wholesale banking.”
DIB’s non performing loans peaked at 14.5 per cent after the crisis and dropped to 12 per cent by the end of 2012. It hopes to reduce that figure to 10 percent this year.
“Geographically, expansion into Asia makes a lot of sense from where we are placed. One would want to look at Malaysia, Indonesia and maybe India,” Chilwan said. The bank is also interested in the European markets but won’t be active before the dust settles in the euro zone, he said.
DIB expects to finalise its buyout of Tamweel through a share swap by mid May, Chilwan said, with the sharia-compliant mortgage lender due to be delisted right afterwards.

(Gulfmews.Com / 05 May 2013)

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