Dubai Islamic Banks - You Can't Tell The Banks Without A Scorecard

A Stroll Down Memory Lane Courtesy of GN's Wayback Machine

GN has changed the picture to DIB.

Just be careful where you get the scorecard from.

AA had to check his spectacles several times today while reading the Gulf News’ article on Dubai Islamic Group  “DIB Group net profit up 14% to Dh. 2.4b”.  

First on the "Top News" Page of the Business Section  above the article on DIB was this picture of Noor Islamic Bank.  

1. Over four years ago (January 2014 to be precise) Noor dropped the word “Islamic” from its name, favoring the punchier “Noor Bank”.   
2. Second, Noor Bank is not part of the Dubai Islamic Bank Group.  NB is owned by various shaykhly personages and government entities, including some rather prominent ones within GN’s home news beat, the Emirate of Dubai.  I guess if you’ve seen one redwood or one Islamic Bank, you’ve pretty much seem them all, even if one (NB) is the self-described “Financial Icon of Dubai”.  
3. As an aside, even though it’s a scant 10 years since NB was founded, based on its status as the FIB (Financial Icon of Dubai), AA for one is ready to bestow the appellation, the “Deutsche Bank” of the GCC on NB. Will GN or Al-Khaleej join me? 

Second, and much more importantly, the following comment caught my eye (italics AA):  

“Non-performing financing ratio and impaired financing ratio improved to 3.3 per cent and 3.2 per cent, respectively, highlighting the quality of new underwriting.

No details on what the levels were at 30 June 2017 or at December 2017 in the GN.  

But AA has your back.  

From DIB's 2018 press release, as of 31 December 2017, the NPA and IFA ratios were 3.4% and 3.2% respectively.  And there has been progress from 2016 as well.

From DIB’s July 2017 press release on 1H earnings, we learn the NPA ratio was 3.6% but there's no information on the IFA ratio.  

Clearly DIB is making progress.  

But if one is touting the fact that new underwriting over the past 12 months or 6 months was of a “high quality” and this reduced the NPA and IFA ratios, does that mean that DIB is admitting that in the past when DIB made loans a good number of them went south within 6 or 12 months of underwriting?  

That would be some really unfortunate careless underwriting.

Dubai Islamic Bank Signs Wakala with UAE Ministry of Finance

Dubai Islamic Bank announced on the Nasdaq Dubai today that "like other national banks", it had signed a Wakala Agreement with the UAE Ministry of Finance.  This is part of the UAE Government's program of providing funding to banks to strengthen their financial resources.  As with the other transactions, the UAE MOF may convert the Wakala Deposit and any accrued but unpaid profit distributions (interest in a conventional financing) to equity in the Bank.

Two intriguing things from this announcement:

1. The agreement was signed on 31 December 2009.  Yet the announcement was only made today 7 February.
2. Apparently, the amount of the Wakala Deposit is a minor detail which need not be disclosed.  At least at this point.

The date of the agreement (just in time for 2009 financials) suggests a pressing need at DIB for additional funds of a capital nature.  AA wonders if the deal was actually signed on 31 December 2009 or if it was signed "as of 31 December 2009".  In the latter case, it may have been signed sometime after 31 December 2009.  And that might explain that the apparent late disclosure was not late after all.  

DIB's Board will meet on 10 February to discuss the fiscal 2009 financials, perhaps another sign that ducks have only  recently been lined up, including this one.

And then again it may just be a case that disclosure standards differ from those AA is familiar with.