Dubai Islamic Bank plans to boost capital after surge in lending

Dubai Islamic Bank (DIB) will need to boost capital in 2016, Chief Executive Adnan Chilwan said on Wednesday, after a period of strong lending.

"We will require capital. It will be a combination of Tier 1 and Tier 2," Chilwan said on an analysts' conference call.

The United Arab Emirates' largest Shariah-compliant bank's loan growth rose by 25 per cent in the first three quarters of the year.

That topped its stated annual target of 15 to 20 per cent and the level achieved by many lenders at a time of softening growth in the UAE's economy.

DIB's capital adequacy ratio, a combination of Tier 1 and Tier 2 capital and an important indicator of a bank's health, stood at 16.5 per cent at the end of the third quarter, up from 14.9 per cent at the end of 2014, Chilwan told analysts.

That is above the 12 per cent required by the UAE's Central Bank.

In May, the bank issued a $750 million sukuk after a $1 billion capital-boosting issue in January.

Chilwan was speaking after the bank posted a 43.6 per cent increase in third-quarter net profit buoyed by higher income from Islamic lending, investing and fees while impairment charges dropped.

Beating analysts' forecasts, the bank made Dh972.1 million ($265 million) in the three months to Sept. 30, it said in a statement, up from Dh676.8 million a year earlier.

That beat the Dh949 million forecast by EFG Hermes and the Dh900 million expected by HSBC.

The results were among the strongest so far after a patchy earnings season for UAE banks as impairments rose for bad loans.

DIB's income from Islamic financing and investing deals rose to Dh1.43 billion from Dh1.15 billion.

Fee income has been one of the ways banks in the region have been able to boost revenue at a time when record low interest rates have kept net interest margins under pressure.

DIB's income from commissions, fees and foreign exchange rose to Dh346.1 million from Dh249.5 million while its impairment charges fell by 64.4 per cent to Dh64.92 million.