DUBAI, (Reuters) – Dubai Islamic Bank (DIB) posted a net profit of 450 million dirhams ($122.5 million) in the second quarter, down 40 percent from a year earlier but better than analysts’ forecasts.
The bank, one of the largest Islamic lenders in the Gulf Arab region, said in a statement on Saturday half-year profit stood at 820 million dirhams.
Analysts surveyed by Reuters had forecast earlier this month that the bank’s second-quarter profit would fall between 53 and nearly 67 percent.
The bank said it took a provision of 135 million dirhams in the second-quarter, which is less than amounts announced by several regional banks hit by losses on loans.
“The bank’s total impairment provision for first half of 2009 now stands at 239 million dirhams. This reflects a prudent and conservative approach during a period of marked global financial instability,” the statement said.
DIB said last month it had no exposure to troubled Saudi conglomerates Saad Group and Ahmad Hamad Al Gosaibi Group & Brothers.
The bank’s investment and financing assets fell to 50.7 billion dirhams from 52.6 billion dirhams at the end of 2008, the statement said without elaborating. Total assets rose 3 percent to 87.8 billion dirhams in the same period.
“As we begin to see gradual stabilisation of the markets in the past quarter, DIB is optimistic of the recovery of regional markets,” Chairman Mohammed al-Shaibany said in the statement.
“The bank’s financing-to-deposit ratio stood at 71 percent as of 30 June 2009,” it said, adding this “reflects the bank’s conservative credit policy as well as a strong liquidity position.”
On July 7, Standard & Poor’s Ratings Services lowered its long-term counterparty credit rating on DIB to ‘BBB+’ from ‘A-‘ with a negative outlook but affirmed the ‘A-2’ short-term counterparty credit rating on the bank.
S&P said it expected a decline in the real estate sector in Dubai to put pressure on DIB’s asset quality and profitability, adding the negative outlook reflected it expectation of a weakening of DIB’s financial profile.
Established in 1975, Dubai Islamic Bank is one of the oldest players in the fast-growing Islamic banking sector.