Introduction
Dubai Islamic Bank (Public Joint Stock Company) ("the bank") was incorporated by an Amiri Decree issued on 29 Safar 1395 Hijri, corresponding to 12 March 1975 by His Highness, the Ruler of Dubai, to provide banking and related services based on Islamic Shari'a principles. It was subsequently registered under the Commercial Companies Law number 8 of 1984 (as amended) as a Public Joint Stock Company.
It is the first Islamic bank to have incorporated the principles of Islam in all its practices and is the largest Islamic bank in the UAE. Dubai Islamic Bank is a public joint stock company, and its shares are listed on the Dubai Financial Market. The bank enjoys a reputation as a leader and innovator in maintaining the quality, flexibility and accessibility of its products and services. The bank currently operates 62 branches in the UAE & 35 branches in Pakistan. Its customer base increased by 15% last year reaching approximately 900,000 customers as of 31st December, 2009 and it employs 6984 staff as of 31st December 2007. It has the unique distinction of being the world's first fully-fledged Islamic bank.
DIB has won the respect of its peers around the world for many years, and its leading position has been reaffirmed by the 34 awards that it has won in 2008 and 24 accolades in 2009, across diversified areas, including retail, corporate and investment banking. The bank was recently named "Best Islamic Bank" for the fourth consecutive year by Banker Middle East magazine. DIB has also received many awards from international organisations, such as the prestigious "Bank of the Year" award from The Banker (Financial Times), along with prestigious accolades from UK-based Euromoney and NY-based Global Finance magazines.
Why it started
In the light of Allah's commands, it is obligatory on us to try to discover and adopt the right banking system, one that obey the commands of ALLAH. Those who learn to differentiate between what has been allowed and what has been forbidden will be the ones with a clear conscience when they assemble in front of the Creator on the Day of Judgment. Allah has clearly ordained the prohibition of Riba in the Glorious Quran. Verses [2:278-279] translate into:
278. O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are Indeed believers.
279. If ye do not, take notice of war from Allah and His Messenger: but if ye repent, ye shall have your capital sums; Neither will you deal with others unjustly, nor shall you be dealt with unjustly.
Beware! false interpretations of these verses has led many individuals to assume that the prohibition only relates to situations where the creditor is likely to charge exploitatively high rates of interest. It is wrong to see the above translation as proof that the (sole) objective served by the prohibition of Riba is the avoidance of injustice (in the sense of exploitation of the poor debtor by the rich creditor). In Islam, there is no room for Riba, marginal or otherwise.
Islam attempts to create a fair economic system. It is based on profit & loss sharing. Islamic banks enter into trade and investment to earn halal profits and don't enter into loans advancing nor take any deposits. Riba gives birth to an economic system that is unjust; one that favours the rich at the expense of the poor. Rather than reward for effort and entrepreneurship with profit, the Riba based economic system rewards capitalists.
Further, the Islamic modes of finance and investment used by these banks must fulfil the basic conditions of these contracts to be considered Shari'a compliant.
Sharia Board
It consists of the following members:
Chairman Prof. Dr. Hussain Hamed Hassan
Secretary Muhammad Abdulhakim Zair
Member Prof. Dr. Ali Muhieddine Al Qarra Daghi
Member Sheikh Muhammad Abdulrazzaq Al Siddiq
Member Prof. Dr. Ajil Jassem Al Nashmi
BOARD OF DIRECTORS
Chairman H.E. Mohammad Ibrahim Abdulrahman Alshaibani
Vice Chairman H.E. Sheikh Khaled Bin Zayed Al Nehayan
Member Mr. Ahmad Mohammad Saeed Bin Humaidan
Member Mr. Saeed Mubarak Abdulla Mohammed Al Muhairi
Member Mr. Abdulrahman Hareb Rashed Alhareb
Member Dr. Tariq Humaid Matar Mohammed Al Tayer
Member Mr. Saleh Saeed Ahmad Lootah
Member Mr. Khaled Mohammad Ali Alkamda
RISK POSITIONING (GOVERNANCE & RISK MANAGEMENT)
Corporate Governance:
Significant related party exposures, in line with other government related banks in UAE
In line with other government-related banks in the UAE, significant related-party exposures characterise DIB's corporate governance framework. DIB's controlling shareholder - the Dubai government, with two representatives on the board of directors - is also one of the bank's main borrowers, resulting in a high level of related-party exposure. However, the bank has at least two independent members on its board of directors, a factor that helps to bolster its corporate governance assessment. It also has a well-qualified and highly dedicated management team, enabling the bank to transform itself and bring itself back to the forefront of the banking industry.
Control & Risk Management:
DIB's risk management systems are adequate, while still evolving. While the systems and processes are being streamlined to align with the business risks encountered, there remains room for improvement. One of the issues being looked at is the appointment of a chief risk officer and an independent risk management framework and reporting line.
With the implementation of Basel II (standardised approach from January 2008, advancing to the establishment of an internal ratings-based (IRB) approach in 2011) and the 90-day benchmark to delineate non-performing loans from January 2008, the Central Bank of the UAE has imposed higher credit standards, with the latter expected to adversely affect asset quality at several banks.
Financial Reporting Transparency:
The bank reports under IFRS on a quarterly basis. Financial and management analysis provide some
information regarding the bank's financial and business performance, with relatively adequate disclosures regarding risk-weighted assets and Tier 1 capital.
Credit Risk Concentration:
DIB's largest sectoral exposure is to real estate, which directly and indirectly accounts for about 20% of the bank's assets. We view positively the bank's effort to diversify its financing portfolio and to reduce the proportion of its financing channelled towards real estate.
Liquidity Management:
DIB enjoys a wide, stable and relatively affordable deposit base, although it exhibits some concentration, especially in the corporate funding pool. The remaining part of the deposit base, which is steadily increasing, is composed of more granular retail funds. While it ranks fifth in terms of assets, DIB has built up the third-largest deposit base in the country, benefiting from its profile as the world's first Islamic bank, its relationship with the Dubai government and its good product-innovation approach.
Presence in the world:
It has its presence in
UAE (62 branches);
Pakistan(35 branches);
Iran;
Jordan; &
Turkey.
Products on offer:
Bank's products are structured into Eight segments, namely
Retail Banking:
DIB offers unique approach to Retail Banking. It has the most extensive network of branches and ATM's across the UAE. It provides the following products to its customers in Retail Banking:
Current accounts,
Savings accounts,
Investment accounts,
Home and personal finance,
Credit cards
Wala'a Dirhams (Platinum, Platinum Plus, Gold, Gold Premium & Classic Cards); &
Infinite Card (Exclusively for the exclusive & by invitation only with elite privileges).
safe deposit boxes.
Private Banking
For discerning clients, who expect nothing but the best, Private Banking - an exclusive service from Dubai Islamic Bank - offers a wide array of sophisticated Islamic banking products and services in the convenience of an exclusive banking centre. This is privileged banking at its very best.
Johara Banking
Recognising women's needs for specialist banking services, Johara combines a comprehensive range of banking facilities with privileges such as shopping discounts and health and educational benefits. Johara offers a friendly and professional customer service to meet all banking and financial requirements. Since its beginning in 2003, Johara services are now available in 10 branches across the UAE.
Business Banking
DIB's Business Banking service features a range of products and solutions - tailor-made and perfected for each client based on different variables such as nature of business, products or services, annual turnover, and stage in the business life cycle.
Businesses can also fulfil their medium to long-term finance requirements, using flexible repayment and take-up options that enable reduction of risk while improving cash flow. And high-growth businesses have solutions available to ease the strain on working capital and the heavy weighting towards domestic or international debtors that such business typically experience.
Corporate Banking
It provides the following services in Corporate sector:
letters of credit;
letters of guarantee;
Murabaha(finance acquisition covering the purchase of property);
Sukuk;
Istisna (Finance for construction of property);
Ijara (leasing);
Musharika &
Mudaraba.
Investment Banking
DIB provides a full range of investment banking and commercial banking products and services, which includes, advising the clients on corporate strategy and structure, capital-raising in equity and Islamic funding markets and sophisticated risk management. IBG also commits the Bank's own capital to proprietary investment and trading activities.
Real Estate Finance
Being the leading provider of Commercial Real Estate Finance, DIB plays a major role in supporting real estate developments, comprising construction of commercial property, residential estates and multi-storey buildings.
A team of experts provide advisory services, project funding and new product development tailored to meet clients needs. DIB's financing solutions are designed to be flexible and can be simply adapted to suit your precise requirements, and have the overriding benefit of being Sharia compliant.
Real estate finance products comprise
Istisna
Murabaha
Diminishing Musharaka
Ijarah
Contracting Finance
DIB started its Contracting Finance Decision in 2004. Since then, it has made a significant contribution in this field. The Division projects cover contractors undertaking the execution of various contracts like buildings, electrical & mechanical, infrastructure, oil & gas, power & water, etc. Remaining true to the nature of Islamic banking, structured credit facilities that comply with Sharia guidelines and principles have been developed and are in practise.
In UAE and select foreign markets, its specialised services and financial solutions have supported contractors on over 70 projects with a total value exceeding AED 15 billion. Further, during this period it have been able to increase its customer base to more than 100.
SERVICES
The bank provides its services through the following channels
Online Banking:
Dubai Islamic Bank keeps innovating to serve its customers better. The all-new Al Islami Online Banking is the latest of these initiatives. The new Al Islami Online Banking is faster, easier and the new benchmark in Internet banking.
It provides its customers with the following services:
Fund Transfers:
Bill Payments
Account Related Transactions
Card Related Transactions
Electronic Banking Channels
Phone Banking:
Using the phone banking, its customers can:
Utility Payments;
Investment Deposit;
Finance;
Electronic Banking Services;
Other Services (i.e. complaints, promotion & information, update details etc.
Mobile Banking (via text services)
Mobile banking is a convenient way to manage day to day banking requirements including:
Bill Payments;
Account Enquiries; &
Notification Alerts.
Electronic Statements
The customers can now receive their current account & credit card statements delivered electronically via email, which are more fast, convenient, secure, flexible and free of cost.
KEY PLAYERS IN BANKING MARKET IN UAE/MIDDLE EAST REGION
Existing Players in the market:
The market in Middle east region is highly saturated and it is really hard for any bank to establish itself in the market. The following is the list of some of its competitors:
Kuwait Finance House;
Sharjah Islamic Bank;
Qatar Islamic Bank;
Abu Dahbi Islamic Bank;
Al - Rajhi Bank;
Islamic Bank of Asia;
ABC Islamic Bank (E.C);
New Entrants
Morgan Stanley
Merrill Lynch;
Credit Suisse; &
PERFORMANCE
On 12th, of February 2010, Dubai Islamic Bank (DIB) announced its financial results for the 12 months ending Dec 31, 2009, demonstrating the bank's resilience in the face of challenging global conditions, which continue to impact the performance of financial services firms worldwide.
For the full year 2009, the DIB reported a net profit of AED 1.2 billion(30% decline over the last year), compared to last year of AED 5.2 billion(Subject to rectification). This decline is primarily due to the conservative and prudent approach adopted by the bank in continuing with the policy of enhancing provision for impairment from AED 520 million in 2008 to AED 818 million in 2009.
Its total assets as of Dec 31, 2009, stood at AED 84.3 billion, slightly lower than AED 84.6 billion at the end of the same period in 2008. The bank's total financing assets reached AED 49.9 billion as of Dec 31, 2009, a slight decline compared to AED 52.7 billion in 2008, due to the bank's conservative policy of managing the financing portfolio in these times.
In the 12 months ending Dec 31, 2009, customer deposits stood at AED 64.2 billion, compared to AED 62.6 billion at the end of 2008.
(http://news.brunei.fm/2010/02/12/dubai-islamic-bank-announces-2009-net-profit-of-aed-1-2-billion/)
Financial Summary as at Dec 31st, 2008
Revenue
AED 5,544,857,000.00
Revenue (USD)
$ 1,506,754,619.57
Net profit
AED 1,730,290,000.00
Net Profit (USD)
$ 471,096,408.83
Total Assets
AED 85,031,113,000.00
Total Asset (USD)
$ 23,150,946,935.66
Paid-up share capital
AED 3,445,400,000.00
Market Capitalisation
AED 8,303,414,000.00
Dividend Cover
1.38X
Dividend Yield
11.06X
Total Asset to equity
9.53X
Return on Equity
17.6%
Share price (as on 15th, April 2009)
AED 2.41
Price earnings Ratio
3.7X
(Extracted from DIB Annual Report 2008 Issued in March 2009)
ACHIEVEMENTS
The list is endless, but here is the list of few achievements & awards the bank has banked to its name
Top distributor of Takaful Products in Feb 2010;
'Best Bank' at Islamic Business & Finance Awards for the 4th time in Dec 2009;
'Best Internet Banking Service' Award from Banker Middle East in Feb 2009;
Named world's Best Islamic Retail Bank by Global Finance in 2008;
Best Islamic Credit Card Product Award in Feb 2008;
Best Islamic Bank and Best Islamic Wealth Management Firm Awards in 2007;
Best Islamic Bank and Product Innovation awards from Banker ME Magazine in 2006;
Best Islamic Bank in Middle East at Gulf Wealth Forum in Feb 2006;
Received JPMorgan Chase 2004 Elite Quality Recognition Award in June 2005;
Ranked as world's No1 Islamic finance Deals lead manager in 2004.
