ADIB Q1 profit up - Emirates24|7

ADIB Q1 profit up

 

Abu Dhabi Islamic Bank (ADIB), one of three publicly listed Islamic lenders in the United Arab Emirates, posted its second-biggest profit ever in the first quarter after boosting income from lending.

Demand for financial services that comply with Islamic law, including a ban on the receipt of interest, is growing as the world's 1.3 billion Muslims seek to adhere more to their religious beliefs, and record oil prices fuel economic growth in the Gulf.

ADIB's net income in the three months to March 31 -- after distributing profit to depositors -- rose 47 per cent to 244.25 million dirhams ($66.5 million), or 0.124 dirhams per share, versus 165.78 million dirhams, or 0.109 dirhams a share in the year-earlier period, the bank said in a statement on the Abu Dhabi bourse website.

Net income from lending jumped 31 per cent to Dh481.1 million, the bank said.

Distribution of profit to depositors -- the equivalent of interest payments -- and to holders of the bank's $800 million of Islamic bonds fell 31 per cent to Dh243.8 million, the bank said.

"The retail and corporate business have been doing well," Waje Kasmadjian, acting chief financial officer at ADIB, told Reuters on Sunday. The UAE is the second-biggest Arab economy and the world's fifth-largest oil exporter.

PROFIT, LOSS SHARING

As dollar interest rates have fallen, the coupon the bank pays out on its Islamic bonds has declined to about 3.3 per cent in the first quarter, compared with between 5 per cent and 6 per cent in the year-earlier period, Kasmadjian said by telephone from Abu Dhabi, the UAE capital.

Among other tenets, Islam bans the receipt of interest which its equates with usury, and instead encourages banks to share in the profit or loss of investors.

Globally, Islamic banks controlled assets worth about $750 billion at the end of 2006, a figure which may rise to more than $1 trillion by 2010 as the industry expands, said U.S. management consultants McKinsey & Co.

Last month, investors offered $13.1 billion, or almost 86 times more than was sought, towards the initial public offering of Ajman Bank, the UAE's seventh-largest Islamic lender.

It was the most heavily oversubscribed IPO in the UAE, the second-largest Arab economy, since the government of Dubai offered shares in a public and private sale of Dubai Financial Market Co in 2006.

UAE bank assets that comply with Islamic law account for about 15 per cent of total industry assets, Ajman Bank Chief Executive Yousif Khalaf said in February.

Shares of ADIB have risen almost 3 per cent this year, the second-best performance among the three publicly listed Islamic banks in the UAE. Sharjah Islamic Bank is up almost 4 per cent.

In a Reuters survey last month, Egyptian investment bank EFG-Hermes said ADIB would probably make a profit of Dh188 million. (Reuters)

 

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