UAE’s banking sector acts quickly to provide relief

Business Bureau, Gulf Today

The UAE banking sector is on solid growth track and is marching ahead despite COVID-19 challenges. Mohammed Ibrahim Al Shaibani, Director-General of His Highness The Ruler’s Court of Dubai and Chairman of Dubai Islamic Bank mentioned that over the past few months, countries across the globe have been experiencing unprecedented times, as they come together to combat the current global pandemic.

“Thanks to the strong leadership of the UAE, the country has taken an inspiring and decisive approach by promptly implementing various health and safety measures as well as economic reforms to ensure that our business and services continue to operate optimally in the current environment.”

The UAE banking sector has acted quickly to provide essential support towards the banks and the customers with various relief and stimulus measures amounting to more than $70 billion, executed in line with regulatory guidance.

At DIB, we remain committed to such initiatives undertaken by our government and continue to cooperate and work hand in hand with the appropriate authorities to protect the community and the market.

 Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE, announced its results for the period ending March 31, 2020. DIB continues to deliver profitable results amidst an extraordinary global economic environment.

Total income reached Dhs 3,559 million, compared to Dhs 3,407 million in Q1 2019.

Group net profit for the quarter stood at Dhs 1,111 million supported by robust total income.

The Q1 profitability has been achieved despite a deliberate, conservative and prudent approach adopted by the bank to create additional provisions and buffers of nearly Dhs1.5b (offsetting the over a billion dirham gain on bargain purchase of Noor Bank) to manage the impact, if any, of the COVID-19 pandemic, as well as lower oil prices and interest rates.

Cost to income ratio stood at 29.8% without synergies expected from Noor Bank acquisition yet to materialize over the course of the year.

Net Profit Margin now at 3.00% from 3.15% in 2019 within the guidance.

ROA and ROE stood at 2.08% and 16% respectively for the quarter.

Net Financing & Sukuk investments rose to Dhs 216.2 billion, up by 17% YTD. Total Assets stood at Dhs 276.4 billion, up by 19% YTD.

Customer deposits increased to Dhs 199.9 billion up by 22% YTD. Financing to deposit ratio stood at 90%.

NPF ratio is at 4.3%, with cash coverage ratio at 100%.

Dubai Islamic Bank Managing Director, Abdulla Al Hamli, said: Safety and security of our employees and customers remains top priority for the bank. In this respect, we have implemented a variety of measures across the organisation ranging from technology based work from home platforms for staff, to creating awareness on the health and safety, to ensuring appropriate and optimal management of branches and express centers from hygiene and cleanliness perspective, all in line with guidance from authorities.

At DIB, we believe that we are all “In It Together”. Our crisis management team and the staff working from office or homes remain committed to serve the customers with minimum disruption. The foundations we laid in our digital capabilities are now being optimized for the increased on-line activities and transactions taking place and with capacity enhancements, we assure all our customers that our services remain seamless across all channels during these times.

Dubai Islamic Bank Group Chief Executive Officer, Dr. Adnan Chilwan, said:

2020 has started in a rather explosive manner. The Covid-19 pandemic is destined to create significant headwinds and force a rethinking and recalibration of our strategies. Growth, or at the very least, quantum of growth is sure to be impacted. Our focus will be more on protection and continuity of business and ensuring that the long term returns are there for all stakeholders. Difficult decisions may need to be made in the short term to ensure that we return to normalcy in the fastest possible manner.

We have adopted a highly conservative approach to provisioning in this quarter building coverage and protection against any impacts on asset quality arising out of the current environment. Extraordinary gain and recurring profits allowed us to build further stage 1, 2 & 3 provisions adding to the management overlay totaling Dhs c.1.5 bln to protect the financial position of the bank from any expected impacts emanating from the pandemic, oil price volatility and low interest rate environment.