Dubai Islamic Bank reported a 12% year-on-year rise in net profit in the first quarter of 2023, while total income grew by 47% over the same period – the result of strong income from financing assets and robust cost management.
The steady growth in DIB’s Islamic banking business is driving these results. According to chief executive Adnan Chilwan and chairman Mohammed Ibrahim Al Shaibani, the rising role of Shariah-compliant assets on the balance sheet help keep the bank – and the UAE more broadly – well insulated from global contagion risks.
As of mid April, the bank’s fixed income portfolio, which is invested primarily on highly rated sovereign sukuk instruments, had increased 6% year to date.
Its commitment to sustainable development can be seen in an ambitious sustainability strategy that dovetails with the government’s medium and long-term goals of transitioning towards a green economy. In October 2022, DIB became the first Islamic bank in the UAE to publish a specific sustainable finance framework to help the nation expand the financing of green and social initiatives and projects.
Under the plan, DIB will prioritize finance projects with positive environmental benefits in renewable energy, energy efficiency, clean transportation, green buildings, pollution prevention and control, sustainable water and wastewater management. The bank will also support social initiatives related to creating new employment and affordable housing.
DIB has initiated a series of innovative sustainable offerings in green auto finance for electric and hybrid vehicles. It is also supporting tailor-made home financing solutions to increase the availability of affordable housing in the UAE. Chilwan sees this as a blueprint for accelerating the growth of sustainable financing across multiple formats.
DIB’s commitment to environmental, social and governance (ESG) principles is an important factor in its winning the award for the UAE’s best Islamic bank. The resources it is devoting to this effort has encouraged peers to intensify their own green investment strategies.
DIB’s commitment to ESG principles is an important factor in its winning the award for the UAE’s best Islamic bank
Chilwan notes that there is a close fit between DIB’s strong sustainability commitments and the UAE government’s Net Zero agenda and the Dubai Clean Energy Strategy. The latter aims to generate more than 75% of energy from clean sources by 2050. Success will help transition Dubai into a global centre for clean energy and green economy activity.
DIB has sought outside assessment of the sustainable finance framework. Advisory firm ISS ESG judged that DIB’s scheme is consistent with International Capital Market Association’s green bond principles and the Loan Market Association’s green loan guidelines.
The bank is also playing a direct role in the UAE government’s efforts to diversify the $490 billion economy away from an over-reliance on oil. In April 2023, Abu Dhabi announced a new Islamic Treasury sukuk programme to “support economic diversification and financial inclusion and contribute to achieving comprehensive and sustainable economic and social development goals.”
It chose DIB to be among a handful of banks that will act as primary dealers for the issues.
