Dubai Islamic Bank PJSC, the biggest Shariah-compliant lender in the United Arab Emirates, jumped the most in more than a month after the Islamic lender’s annual profit beat analysts’ estimates.
The shares soared as much as 7.6 percent before paring gains to 5.3 percent at the close. The stock was the biggest contributor to the DFM General Index’s 2 percent advance as traders exchanged about 11 million shares, the most in three months.
The bank’s net profit rose to 3.6 billion dirhams ($980 million) in 2015 from 2.7 billion dirhams a year earlier, beating the mean estimate of seven analysts surveyed by Bloomberg by more than 10 percent. The lender’s loan growth increased 31 percent in 2015 and may climb as much as 15 percent this year.
"Their loan-to-deposit ratio is low and they have lots of cash to lend," said Nabil Farhat, an Abu Dhabi-based partner at Al Fajr Securities. "Their loan portfolio experienced higher growth than an average bank in U.A.E. and also lower loan-loss provisions."
Banks in the U.A.E. are bracing for a decline in government spending, slower economic growth and falling asset quality as oil is posed to remain lower for longer. Still, Dubai Islamic’s non-performing loan ratio dropped to 5 percent at the end of last year, compared to 8 percent in 2014.
"Given liquidity pressures in the industry, we anticipate an increase in costs of funds," said Chief Executive Officer Adnan Chilwan in a conference call on Wednesday. "2016 is going to be a challenging year."