Dubai's Noor Bank first-half net profit surges 29% to Dh410m

First-half revenues jump 7% while assets rose 4%

Noor Bank says its first-half income climbed 29 per cent. Jeffrey E Biteng / The National 

Dubai’s Noor Bank, a Sharia-compliant lender being acquired by its larger rival Dubai Islamic Bank, reported a 29 per cent rise in its first half-net profit as revenues rose and expenses fell.

Net profit at the end of the first six months to June-end climbed to a record Dh410 million, the lender said in a statement on Wednesday. Revenue for the period rose by 7 per cent, driven by income from net financing and investments as well as non-funded income.

“Stringent expense management” helped restrict costs and improve the cost-to-income ratio to 33.5 per cent, the lender said.

“We attribute our record results in the first half to our robust balance sheet and solid performance across our businesses,” John Iossifidis, chief executive of Noor Bank, said. “Our disciplined cost management and lower impairment charges have significantly contributed to the surge in net profit with an improved cost-to-income ratio.”

The bank said its balance sheet remained robust with improving asset quality, helped by strong liquidity and improving capital ratios. The impaired financing ratio improved to 4.3 per cent, with cost of risk falling to 1.9 per cent.

The capital adequacy ratio reached 17.2 per cent for the period, while the common equity Tier 1 ratio stood at 11.5 per cent, a 1.1 per cent improvement over the first half of 2018, it noted.

Noor Bank achieved a 16.1 per cent annualised return on shareholders’ equity. Its total assets rose 4 per cent, while customer financing and customer deposits rose 5 and 11 per cent, respectively.

Noor is in the process of a merger with DIB, whose board has recommended the takeover of the smaller bank to its shareholders.

Acquiring Noor Bank would be beneficial to DIB and help consolidate the UAE's overcrowded banking sector, Egyptian investment bank EFG Hermes said in a note to investors last month.

Mergers of lenders across the region are gathering pace. Abu Dhabi Commercial Bank’s consolidation with Union National Bank and takeover of Al Hilal Bank was the latest deal to be concluded in the UAE, and created the third-biggest lender in the country. In Saudi Arabia, National Commercial Bank is pursuing a merger with Riyad Bank.