Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review

Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review

Reference Code: GDFS28938FSA

Source : www.globalcompanyintelligence.com Page 1


Reference Code: GDFS28938FSA Publication Date: APR 2011

PO Box 1080 Phone +971 4 2953000 Revenue (2009) 5,133 (million AED)

Dubai, Dubai Fax +971 4 2954111 Net Profit (2009) 1,207.49 (million AED)

Website www.dib.ae Employees 6,894

United Arab Emirates Exchange DIB [Dubai Stock Exchange] Industry Financial Services

Company Overview

Dubai Islamic Bank P.J.S.C. (DIB or bank) offers banking services which is based on the Islamic Sharia. The bank offers retail and corporate services to its retail and institutional customers. The retail banking products and services of the bank include current, savings and investment accounts; home and personal finance; credit cards; and safe deposit boxes. The wholesale banking products and services offered by the bank include letters of credit, letters of guarantee, Murabaha, Sukuk, Istisna, Ijara, Musharika and Mudaraba. The bank also provides direct equity investment, international investment and treasury services. In addition, DIB provides real estate services like property management, community services and real estate financing. DIB is headquartered at Dubai, the UAE.

Key Executives

Name Title

H.E. Mohammad Ibrahim Abdulrahman Alshaibani

Chairman

H.E. Sheikh Khaled Bin Zayed Al Nehayan

Vice Chairman

Ahmad Mohammad Saeed Bin Humaidan

Director

Saeed Mubarak Abdulla Mohammed Al Muhairi

Director

Abdulrahman Hareb Rashed Alhareb

Director

Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData

Share Data

Dubai Islamic Bank P.J.S.C.

Share Price (AED) as on 31-Mar-2011 2.22

EPS (AED) 0.32

Market Cap (million AED) 8,429

Enterprise Value (million AED) 7,450

Shares Outstanding (million) 3,797


SWOT Analysis

Dubai Islamic Bank P.J.S.C., SWOT Analysis

Strengths Weaknesses

Leading Islamic Bank

Financial Stability

Asset Quality

Exposure to Real Estate

Opportunities Threats

Expansion of Distribution Channel

Launch of Products

Intense Competition

Regulatory Changes


Financial Performance

Source: Annual Report, Company Website, Primary and Secondary Research

Key Developments

Feb 24, 2010 Dubai Islamic Bank Introduces New Sharia-compliant Investment Plan

Feb 08, 2010 DED Signs Agreement With Dubai Islamic Bank To Offer e-Payment Services

Jan 11, 2010 Dubai Islamic Bank Expands In UAE

Jan 02, 2010 Dubai Islamic Bank Launches Accidental Death, Disability Insurance Plan





Table of Contents Table of Contents ..................................................................................................................................................................................................... 2

List of Tables ............................................................................................................................................................................................................ 4

List of Figures ........................................................................................................................................................................................................... 4

Section 1 - About the Company ................................................................................................................................................................................ 5

Dubai Islamic Bank P.J.S.C. - Key Facts .................................................................................................................................................................. 5

Dubai Islamic Bank P.J.S.C. - Key Employees ......................................................................................................................................................... 6

Dubai Islamic Bank P.J.S.C. - Key Employee Biographies ........................................................................................................................................ 7

Dubai Islamic Bank P.J.S.C. - Major Products and Services ..................................................................................................................................... 8

Dubai Islamic Bank P.J.S.C. - History ....................................................................................................................................................................... 9

Dubai Islamic Bank P.J.S.C. - Company Statement .................................................................................................................................................11

Dubai Islamic Bank P.J.S.C. - Locations And Subsidiaries ......................................................................................................................................12

Head Office .......................................................................................................................................................................................................12

Other Locations & Subsidiaries .........................................................................................................................................................................12

Section 2 – Company Analysis ................................................................................................................................................................................14

Dubai Islamic Bank P.J.S.C. - Business Description ................................................................................................................................................14

Dubai Islamic Bank P.J.S.C. - Corporate Strategy ...................................................................................................................................................16

Dubai Islamic Bank P.J.S.C. - SWOT Analysis ........................................................................................................................................................17

SWOT Analysis - Overview ...............................................................................................................................................................................17

Dubai Islamic Bank P.J.S.C. - Strengths ...........................................................................................................................................................17

Strength - Leading Islamic Bank .................................................................................................................................................................17

Strength - Financial Stability .......................................................................................................................................................................17

Strength - Funding Profile ...........................................................................................................................................................................17

Dubai Islamic Bank P.J.S.C. - Weaknesses ......................................................................................................................................................18

Weakness - Asset Quality ...........................................................................................................................................................................18

Weakness - Exposure to Real Estate ..........................................................................................................................................................18

Weakness - Reliance on the Domestic Economy ........................................................................................................................................18

Dubai Islamic Bank P.J.S.C. - Opportunities......................................................................................................................................................18

Opportunity - Expansion of Distribution Channel .........................................................................................................................................18

Opportunity - Launch of Products ................................................................................................................................................................18

Opportunity - Growing Global Islamic Finance Market .................................................................................................................................19

Dubai Islamic Bank P.J.S.C. - Threats...............................................................................................................................................................19

Threat - Intense Competition .......................................................................................................................................................................19

Threat - Regulatory Changes ......................................................................................................................................................................19

Threat - Fluctuations in Interest Rates ........................................................................................................................................................19

Dubai Islamic Bank P.J.S.C. - Key Competitors .......................................................................................................................................................20

Section 3 – Company Financial Ratios ....................................................................................................................................................................21

Financial Ratios - Capital Market Ratios ............................................................................................................................................................21

Financial Ratios - Annual Ratios .......................................................................................................................................................................21

Performance Chart ............................................................................................................................................................................................23

Financial Performance ......................................................................................................................................................................................23

Financial Ratios - Interim Ratios ........................................................................................................................................................................24

Financial Ratios - Ratio Charts ..........................................................................................................................................................................25

Section 4 – Company‟s Key Developments .............................................................................................................................................................26

Feb 24, 2010: Dubai Islamic Bank Introduces New Sharia-compliant Investment Plan ................................................................................26

Feb 08, 2010: DED Signs Agreement With Dubai Islamic Bank To Offer e-Payment Services ....................................................................26

Jan 11, 2010: Dubai Islamic Bank Expands In UAE ....................................................................................................................................26




Jan 02, 2010: Dubai Islamic Bank Launches Accidental Death, Disability Insurance Plan ...........................................................................27

Section 5 – Appendix ...............................................................................................................................................................................................28

Methodology .....................................................................................................................................................................................................28

Ratio Definitions ................................................................................................................................................................................................28

About GlobalData ..............................................................................................................................................................................................32

Contact Us ........................................................................................................................................................................................................32

Disclaimer .........................................................................................................................................................................................................32




List of Tables

Dubai Islamic Bank P.J.S.C., Key Facts .................................................................................................................................................................. 5

Dubai Islamic Bank P.J.S.C., Key Employees .......................................................................................................................................................... 6

Dubai Islamic Bank P.J.S.C., Key Employee Biographies ........................................................................................................................................ 7

Dubai Islamic Bank P.J.S.C., Major Products and Services ..................................................................................................................................... 8

Dubai Islamic Bank P.J.S.C., History ....................................................................................................................................................................... 9

Dubai Islamic Bank P.J.S.C., Other Locations ........................................................................................................................................................12

Dubai Islamic Bank P.J.S.C., Subsidiaries ..............................................................................................................................................................12

Dubai Islamic Bank P.J.S.C., Key Competitors .......................................................................................................................................................20

Dubai Islamic Bank P.J.S.C., Ratios based on current share price .........................................................................................................................21

Dubai Islamic Bank P.J.S.C., Annual Ratios ...........................................................................................................................................................21

Dubai Islamic Bank P.J.S.C., Interim Ratios ...........................................................................................................................................................24

Currency Codes .....................................................................................................................................................................................................28

Capital Market Ratios .............................................................................................................................................................................................28

Equity Ratios ..........................................................................................................................................................................................................29

Profitability Ratios ...................................................................................................................................................................................................29

Cost Ratios .............................................................................................................................................................................................................30

Liquidity Ratios .......................................................................................................................................................................................................30

Leverage Ratios .....................................................................................................................................................................................................31

Efficiency Ratios .....................................................................................................................................................................................................31

List of Figures

Dubai Islamic Bank P.J.S.C., Performance Chart (2005 - 2009) .............................................................................................................................23

Dubai Islamic Bank P.J.S.C., Ratio Charts..............................................................................................................................................................25




Section 1 - About the Company

Dubai Islamic Bank P.J.S.C. - Key Facts

Dubai Islamic Bank P.J.S.C., Key Facts

Corporate Address PO Box 1080, Dubai, Dubai, United Arab Emirates

Ticker Symbol, Exchange DIB [Dubai Stock Exchange]

Telephone +971 4 2953000 No. of Employees 6,894

Fax +971 4 2954111 Fiscal Year End December

URL www.dib.ae Revenue (in USD Million) 1,398.6 (2009)

Industry Financial Services Revenue (in AED Million) 5,132.9 (2009)

Locations Egypt, Pakistan, Turkey, United Arab Emirates Source: Annual Report, Company Website, Primary and Secondary Research

GlobalData




Dubai Islamic Bank P.J.S.C. - Key Employees

Dubai Islamic Bank P.J.S.C., Key Employees

Name Job Title Board Level Since Age

H.E. Mohammad Ibrahim Abdulrahman Alshaibani

Chairman Non Executive Board

H.E. Sheikh Khaled Bin Zayed Al Nehayan

Vice Chairman Non Executive Board

Ahmad Mohammad Saeed Bin Humaidan

Director Non Executive Board

Saeed Mubarak Abdulla Mohammed Al Muhairi


Abdulrahman Hareb Rashed Alhareb


Tariq Humaid Matar Mohammed Al Tayer


led Mohammad Ali Alkamda Director Non Executive Board

h Saeed Ahmad Lootah Director Non Executive Board

Abdulla Ali Al Hamli Chief Executive Officer Senior Management

Ahmed Fathy Al-Gebali Chief Financial Officer Senior Management 2011


GlobalData




Dubai Islamic Bank P.J.S.C. - Key Employee Biographies

Dubai Islamic Bank P.J.S.C., Key Employee Biographies

Ahmed Fathy Al-Gebali

Job Title: Chief Financial Officer

Board Level: Senior Management

Since: 2011

Mr. Ahmed Fathy Al-Gebali has been the Chief Financial Officer of DIB since 2011. Prior to this, he served as the Chief Financial Officer of Boubyan Bank. He also served in various senior positions in Gulf Investment House, Global Investment House, Kuwait Financial Center and International Financial Advisors.


GlobalData




Dubai Islamic Bank P.J.S.C. - Major Products and Services

Dubai Islamic Bank P.J.S.C. is a financial services company based in United Arab Emirates. The bank's key services include:

Dubai Islamic Bank P.J.S.C., Major Products and Services

Services:

Retail Banking

Private Banking

Johara Banking

Business Banking

Corporate Banking

Investment Banking

Mobile banking

Phone banking

Online banking

Real Estate finance

Contracting finance

Sharia Board services

Structure Trade Finance

Treasury & Investment

Asset Management

Syndication services

Project Financing


GlobalData




Dubai Islamic Bank P.J.S.C. - History

Dubai Islamic Bank P.J.S.C., History

2010 New Products/Services DIB launched Real Estate Investment Trust.

2010 New Products/Services The bank launched new product, Al Islami Salam Finance, which offers liquidity through personal financing.

2010 Corporate Awards DIB named as the Best Islamic Bank by Global Finance magazine.

2010 Corporate Awards The bank named as the Best Islamic Bank in the UAE by Asiamoney magazine.

2010 New Products/Services DIB launched new accidental death and disability insurance plan, Al Islami Takaful Riayati.

2010 Corporate Changes/Expansions The bank opened a branch in Al Nahda.

2010 Regulatory Approval DIB received the ISO accreditation for quality management.

2010 Corporate Changes/Expansions The bank's subsidiary Jordan Dubai Islamic Bank, opened a new branch in Amman.

2010 New Products/Services DIB launched Al Islami Muthmir, an investment plan that offers a built-in family takaful cover.

2009 New Product Approvals Launch of Wajaha which is a distinguished Wealth Management service for ultra high net worth individuals

2009 Corporate Changes/Expansions Dubai Islamic Bank opened three new branches in the UAE.

2008 Acquisitions/Mergers/Takeovers Dubai Islamic Bank entered into a strategic alliance with Nakheel

2008 Corporate Changes/Expansions Dubai Islamic Bank introduced a new subsidiary.

2008 Acquisitions/Mergers/Takeovers Dubai Islamic Bank, Jordan Dubai Capital and Dubai International Capital LLC acquired certail interest in International Development Bank.

2008 Corporate Awards The bank was named as world‟s Best Islamic Retail Bank by Global Finance.

2008 Corporate Awards DIB won „Best Islamic Bank at Banker' in Middle East Awards.

2008 Contracts/Agreements The bank signed an AED 266 million Islamic financing agreement with Parkway International Contracting.

2007 Corporate Awards DIB won Euromoney 'Best Islamic Bank in the Middle East' award.




2007 Corporate Awards DIB won Real Estate 'Best Investment Management' Bank Award.

2006 Acquisitions/Mergers/Takeovers Deyaar acquired Omega Engineering Co.

2006 Corporate Awards DIB won Euromoney‟s Best Islamic Bank in Middle East and Best Global Sukuk House Awards.

2006 Corporate Awards DIB won Golden Trophy in UAE Web Awards Ceremony.

2005 Acquisitions/Mergers/Takeovers DIB acquired Al Khartoum Bank SA privatized by Sudan.

2005 Corporate Awards DIB received JPMorgan Chase 2004 Elite Quality Recognition Award.

2005 Corporate Awards DIB won the Best Consumer Internet Bank Award by Global Finance.

2004 Corporate Awards DIB won J. P. Morgan Chase Quality Recognition Award.

2001 Acquisitions/Mergers/Takeovers DIB acquired Arab Islamic Insurance Company.

1975 Incorporation/Establishment DIB was incorporated in 1975.


GlobalData




Dubai Islamic Bank P.J.S.C. - Company Statement

A statement from the Dubai Islamic Bank P.J.S.C‟s mission and vision is given below. The statement has been taken from the company‟s website:

Vision

To be the leading provider of innovative financial services in accordance with the legislation of Allah.

Mission

We are proud to be the first Islamic Bank worldwide that has translated true Islamic economic principles into practice, out of firm belief in the need of mankind for an economic system based on the final Revelation. By partnering with our customers in halal earnings, employing best business practices, the latest financial services technologies and placing our trust in Allah, we are confident of our success.




Dubai Islamic Bank P.J.S.C. - Locations And Subsidiaries

Head Office

Dubai Islamic Bank P.J.S.C.

PO Box 1080

Dubai

Dubai

United Arab Emirates

Tel: +971 4 2953000

Fax: +971 4 2954111

Other Locations & Subsidiaries

Dubai Islamic Bank P.J.S.C., Other Locations

AL Ain Mall

AL Ain


Tel: +971 03 7515155

Fax: +971 03 7516060

Sharjah

Sharjah


Tel: +971 06 5726444

Fax: +971 06 5727555

Kalba

Kalba


Tel: +971 09 2772338

Fax: +971 09 2775799

Ras Al Khaimah

Ras Al Khaimah


Tel: +971 07 2284888

Fax: +971 07 2284788

Fujairah

Fujairah


Tel: +971 09 2221550

Fax: +971 09 2229249


GlobalData

Dubai Islamic Bank P.J.S.C., Subsidiaries

Deyaar Development PJSC

P O Box 30833

Dubai


Tel: +971 4 2955844

Fax: +971 4 2954029

Url: www.deyaar.ae

Millennium Finance Corporation Ltd.

Level 2, The Gate

PO Box 121299

Dubai


Tel: +971 4 2075224

Fax: +971 4 2950633




DIB Lease One Ltd.

Bahamas

Zone One Real Estate Management Co.

Cayman Islands

Al Islami Real Estate Investments Ltd.


Rhein Logistics Gmbh

Germany

DIB Capital Ltd.

DIFC, The Gate

East Wing

Dubai

Dubai


Tel: +971 4 3634100

Fax: +971 4 3620548

Url: www.dibcapital.com

Dubai Islamic Bank Pakistan Ltd.

2nd floor, Hassan Chambers

DC-7 Block# 7

Karachi

Pakistan

Tel: +92 21 5368527

Url: www.dibpak.com

Petra Limited

Cayman Islands

Jef Holdings BV

Netherlands


GlobalData




Section 2 – Company Analysis

Dubai Islamic Bank P.J.S.C. - Business Description

Dubai Islamic Bank P.J.S.C. is a financial service provider based in UAE. The bank offers retail banking, wealth management, business banking, wholesale banking, private banking, Johara banking, investment banking, real estate finance, and contracting finance services. The bank operates in Bahamas, Cayman Islands, Ireland, Pakistan, Sudan and UAE. The bank also has business operations in Bosnia, Bahrain, Lebanon, Turkey, Cayman Islands, Sudan, the UK and Yemen. In the UAE, the bank jointly operates with Al Bustan Center Company L.L.C., Waqf Trust Services L.L.C., Gulf Tankers L.L.C. and Al Rimal Development. As of December 31, 2010, the bank operated through a network of 66 branch.

The bank also provides specialist banking services for women customers namely, Johara services. The bank service includes a wide range of banking facilities which offers shopping discounts and health and educational benefits. Johara offers exclusive health privileges in the UAE at renowned hospitals and health clubs. The shopping discounts are offered at selected stores for perfumes, clothing and accessories, books, etc. The bank offers Johara services in 10 branches throughout the UAE.

The bank‟s operates its business under four reportable segments namely, Retail and Business Banking; Wholesale and Investment Banking; and Real Estate and Others.

The bank through its Retail and Business Banking segment manages deposits of small and medium businesses and individual customers. The segment products include current, savings and investment accounts, home and personal finance, and credit cards. It provides consumer and commercial murabahats, ijarah, credit card and funds transfer facilities, and trade finance facilities. The bank has a wide network of branches and ATM‟s in the UAE. The bank‟s services are integrated with its complete range of electronic solutions such as Internet, mobile phone and telephone banking. The bank offers business banking solutions including short-term loans; ease cash-flow management; financing property, import and export shipping, mergers and acquisitions, and the other requirements related to business environment. During the fiscal year ended 2010, the segment generated a net operating revenues of AED1,615.12m, representing 49.3% of the company‟s total net revenues.

The bank's Wholesale and Investment Banking segment manages financing and offers other credit facilities and deposit and current accounts to corporate and institutional customers as well as investment banking services. The bank provides these services to large corporate, public sector and middle markets. The segment provides services including advice on corporate strategy and structure, capital-raising in equity and Islamic funding markets and risk management. During the fiscal year ended 2010, the segment generated a net operating revenues of AED1,076.99m, representing 32.9% of the company‟s total net revenues.

Through Real Estate segment the bank provide services including property development and other real estate investments activities. The bank has strong footstep in Commercial Real Estate Finance in UAE regions. The bank also supports real estate development. It includes construction of commercial property, multi-storey buildings and residential estates. The Real Estate Finance team offers advisory services, project funding and new product development services.

The Treasury segment of the company manages liquidity and market risk of the company. The bank provides treasury services to its customers. I also manage its own Islamic sukuk portfolios and financial instrument book. During the fiscal year ended 2010, the segment generated a net operating revenues of AED360.22m, representing 11.0% of the company‟s total net revenues.

The Others segment of DIB includes functions other than core business. During the fiscal year ended 2010, the segment generated a net operating revenues of AED435.66m, representing 13.3% of the company‟s total net revenues.

The bank also offers private banking and contracting finance services to its customers. The bank also offers services such as online banking, mobile banking, phone banking and e-statement to its customers. The bank operates its business through its 44 subsidiaries and 25 associate companies in different geographic locations.




Geographically, the bank operates in two major regions, namely, Domestic, and International. In 2010, the Domestic region accounted for 88.4%, followed by International 11.6% of the bank‟s total gross income.

In March 2011, the bank received the HR Development Award in Banking and Financial category at the Sharjah National Career Exhibition. In February 2011, the bank received the „A‟ rating in the Fitch Ratings, a global ratings agency headquartered in London. In November 2010, the bank entered into a joint venture to launch Real Estate Investment Trust (REIT).




Dubai Islamic Bank P.J.S.C. - Corporate Strategy

Dubai Islamic Bank P.J.S.C. is one of the largest Islamic banks in the UAE offering full range of products and services in compliance with Sharia. DIB, the first full-service Islamic bank, provides retail banking, wealth management service, business banking, corporate banking, investment banking, real estate finance and contracting finance services. The bank is focused on building its retail banking services which already serves more than 1 billion customers. DIB‟s strategic focus is on diversification and managed organic growth, including expansion of branch network and growth in its overall customer base. The bank also takes part in various government initiatives for the overall development of the economy of the UAE.




Dubai Islamic Bank P.J.S.C. - SWOT Analysis

SWOT Analysis - Overview

Dubai Islamic Bank P.J.S.C. is a UAE-based Islamic banking institution offering a wide range of products and services to its clients. The bank‟s market position as a leading Islamic bank, its financial stability, and funding profile are its major strengths, even as asset quality and exposure to real estate remain areas of concern. Going forward, regulatory changes and stiff competition may impact the bank‟s performance. However, expansion of distribution channel and growing global Islamic finance market could present growth opportunities for the bank.

Dubai Islamic Bank P.J.S.C. - Strengths

Strength - Leading Islamic Bank

Incorporated in 1975, DIB is the oldest full-service Islamic bank in the world. DIB is one of the largest Islamic Banks in the UAE, complying with Sharia. As of December 31, 2010, the bank reported total assets of AED90.14 billion in 2010, as compared to AED84.3 billion in 2009, representing an increase of 6.9%. DIB provides a broad range of financial products and services that comply with Islamic Sharia as alternatives to conventional banking products and services. The bank provides retail banking; wajah banking, wealth management service; johara banking, banking services for women; business banking; corporate banking; investment banking; real estate finance; and contracting finance services to more than 1.2 billion customers. The leading market position of the bank enables it to attract deposits and increase its lending portfolio. In 2010, DIB recorded total financing assets of AED57.1 billion, as compared to AED49.9 billion in 2009, representing an increase of 14.4%. DIB‟s leadership position in the growing Islamic finance sector was reaffirmed by various industry recognition and awards. DIB was named as the „Best Local Investment Bank‟, for third consecutive year, at emeafinance magazine‟s annual Middle East Banking Awards in November 2010. Dar Al Sharia, the Sharia consultancy and Sharia advisory subsidiary of DIB, was recognized as the „Best Sharia Advisory Firm‟ and „Best Islamic Consultancy Firm‟ by the Islamic Finance News (IFN) Awards Best Service Providers Poll in October 2010. Earlier in 2010, DIB was named as the „Best Islamic Bank‟ by Asiamoney Magazine.

Strength - Financial Stability

DIB has strong financial stability and strong capitalization, which enhance operational flexibility and reduces business risk related to its operations. DIB‟s strong capital base of AED10.53 billion as of December 2010, 17.2% higher than previous year, ensures capital adequacy to support its organic and inorganic growth with the secured and unsecured nature of its lending. The bank reported total regulatory capital ratio (Basel II) of 17.8% in 2010, as compared to 17.5% in 2009 and Tier 1 capital ratio (Basel II) of 12.7% in 2010, as compared to 12.1% in 2009. The increase in such ratios was due to a significant AED264.7m or 254.5% increase in retained earnings 2010 and also due to an issue of bonus shares worth AED 179.55m during. The bank‟s ownership structure, and strategic importance in retail lending in the UAE lend further long-term stability. DIB‟s largest shareholder with 29.8% share holding, Investment Corporation of Dubai, is the investment arm of the Dubai government. Other major shareholder of the bank with 7.2% share holding, the Lootah family, is the founding shareholder and a prominent Dubai based business family. The strong capital adequacy of DIB and support from the government strengthens its risk profile.

Strength - Funding Profile

The bank leverages on its branch network and market position to attract a large deposit base which forms a major part of its funding mix. DIB reported total deposits of AED63.45 billion in 2010, as compared to AED64.2 billion in 2009, representing a slight decline of approximately 1%. However, the bank maintained a healthy financing to loan ratio of 90% in 2010. DIB sources a large proportion of such deposits from the retail sector which ensures a low cost stable deposit base. The current accounts and savings accounts, combined, formed 39.6% and 37.2% of the total customer deposit base in 2010 and 2009, respectively. The strong customer deposit base of DIB ensures a healthy liquidity position for the bank and the low cost of such funds improves its core earnings.




Dubai Islamic Bank P.J.S.C. - Weaknesses

Weakness - Asset Quality

The bank‟s lending portfolio was troubled with asset quality concerns resulting in high impairment charges. DIB‟s core pre-provisioning earnings was troubled by continuous increase in impairment charges. The bank‟s Retail and Business Banking segment reported provision for impairment of AED178.14m in 2010, as compared to AED134.04m in 2009, representing an increase of 32.9%. DIB‟s Wholesale Banking segment reported from the provision for impairment of AED677.29m in 2010, as compared to AED671.89m in 2009, representing an increase of 0.8%. Problems in the private sector corporate and commercial real estate related issues led to the increase in such impairment charges. The rise in impairment charges led to a decline in net income of DIB which was partially affected by low investment returns. The bank might continue to incur such impairment charges in the future, although at a slower growth rate.

Weakness - Exposure to Real Estate

Historical focus on the real estate sector and asset based lending in Islamic finances exposes DIB to fluctuations in the real estate sector. In 2010, the Real Estate Segment of the bank reported net loss of AED1.15 billion, as compared to AED354.09m in 2009. DIB held a large portfolio of property investments which added to its exposure to the real estate segment. The bank holds a 45% stake in Deyaar Development PJSC, an associate company, which is one of the major real estate developers based in Dubai. In November 2010, DIB increased its stake in DIB increased its stake in Tamweel, the UAE‟s key mortgage entity, to 57.33%. The decision was part of a Dubai government led rescue effort to save Tamweel, after the Dubai real estate collapse. DIB could report future losses from its real estate portfolio due to the weak real-estate market in the UAE.

Weakness - Reliance on the Domestic Economy

The bank limits its revenue generation opportunities by having its operations confined to a geographical region. DIB gets directly linked to the social, political and economical conditions prevailing in its country of operations. The financial services sector going global has seen many companies expanding their foreign operations to enhance revenue generation. Many foreign companies have also entered the Middle East market, which has shown high growth potential in the recent past. In 2010, the bank generated almost all its revenues from the UAE. The bank could look forward to expand its operations geographically to mitigate the current concentration risk.

Dubai Islamic Bank P.J.S.C. - Opportunities

Opportunity - Expansion of Distribution Channel

The focus on distribution network expansion could provide new growth opportunities to the bank. During 2010, the bank introduced six new branches taking the total number of branches to 66 as of December 31, 2010. Two of the six new branches were opened in November 2010, one in Abu Dhabi and two in Dubai. DIB aims to strengthen its UAE-wide branch network by 10 more branches in 2011. DIB opened 44 ATMs during 2010 taking the total of ATMs to over 450 as of December 31, 2010. The bank added 100,000 new customers in 2010. DIB also expanded services offered through other alternative delivery channels such as online banking and mobile banking, offering enhanced services to its customers. In 2010, DIB launched a new booking payment method for flydubai for its customers. The bank also introduced its Al Islami Mobile Banking service which provides a wide range of secure and convenient banking services through a customized mobile-based website. The bank having presence in Pakistan, Jordan and Turkey could look forward to expand such businesses to mitigate its geographic concentration. The expansion of bank‟s distribution network could deliver strong revenue growth and also strengthen its market position.

Opportunity - Launch of Products

The new products and services launched by the bank would help it sustain in the highly competitive financial services market. In November 2010, DIB entered into a joint venture with Eiffel Management, a France-based company, to launch Dubai‟s first Real Estate Investment Trust (REIT), Emirates REIT. In June 2010, the bank launched three new account options; Al Islami 2-in-1 Account, Al Islami Current Account Plus and Al Islami E-Savings Account, to meet the needs of different customer segments. The bank launched a two-year Islamic Certificate linked to the RBS Crescent Dynamic Middle East 2 Strategy. This US dollar-denominated certificate issued by the Royal Bank of Scotland Group and distributed by DIB‟s Wealth Management division offers a unique investment solution. DIB also introduces a new Sharia-compliant product, Al Islami Salam, which offers liquidity through personal financing. The introduction of these products and services would facilitate the bank to earn more revenues and strengthen its market position.




Opportunity - Growing Global Islamic Finance Market

Through its geographical presence, DIB is well positioned to benefit from the growing global Islamic finance market. Islamic banking and Islamic insurance products and services have registered strong growth around the world; especially in Asian countries such as Malaysia, and the Middle East. According to the Malaysia International Islamic Financial Centre, in 2010, the global Shariah-complaint market comprising 628 players with presence across 48 countries was valued at $1 trillion, of which Islamic banking accounted for 83% , followed by sukuk with 12%, Islamic funds with 4%, and takaful with 1%. The global Islamic finance market is forecast to increase at a CAGR of 15% per annum until 2015, with Islamic banking (comprising of retail, commercial and sukuk) driving growth. As of 2015, Shariah-complaint assets are expected to account for 2.5% of the global banking assets.

The demand drivers of Islamic finance market are MENA/GCC and East Asian countries with strong economic growth, high Muslim concentration, abundant liquidity and strong government and regulatory support. In addition, emerging market such Egypt, Turkey, Pakistan, Bangladesh, Indonesia, and the UAE are expected to drive growth in retail, SME, commercial, and wealth, equity and fund management markets. While global financial centers such as London, New York, Hong Kong, Frankfurt, Sydney, Singapore, Tokyo, and Seoul are expected to drive growth in sukuk, corporate, commercial, and treasury and private equity markets. Participating in such demanding markets could offer ample growth opportunities to the bank.

Dubai Islamic Bank P.J.S.C. - Threats

Threat - Intense Competition

DIB operates in a highly competitive financial services market. The bank competes with various conventional and Islamic banks. As of February 2011, the UAE had 23 local and 28 foreign banks offering banking and financial services. A few of DIB‟s key competitors include First Gulf Bank PJSC, Emirates NBD PJSC, Mashreqbank psc, Abu Dhabi Commercial Bank P.J.S.C., Abu Dhabi Islamic Bank, and Commercial Bank of Dubai. Intense competition from established players and consolidation of their financial products could have a negative impact on the bank‟s operations. This highly competitive market could adversely affect DIB‟s profitability, if it fails to retain and attract clients and customers. The bank should come up with innovative ways of serving its customers so as to remain profitable in the highly competitive financial services market.

Threat - Regulatory Changes

DIB‟s operations are subject to regulation and supervision in each of the jurisdictions where it is domiciled and licensed to conduct business. It has been supervised and administrate by regulators for issues such as licenses, standards of solvency, capital adequacy, policy forms, investments, security deposits, and methods of accounting. Due to the recent economic crisis, the regulatory agencies around the world are expected to adopt stricter norms for the banking sector. Implementation of new global regulatory standards such as BASEL III may impact the capital adequacy and liquidity position of banks. In February 2011, the UAE Central Bank issued a statement detailing new borrowing limits and caps on fees charged by banks in the UAE, which might bring changes in operations for many banks. New regulations, which are outside the bank‟s control, may increase its compliance cost and cost of capital.

Threat - Fluctuations in Interest Rates

The fluctuation in interest rates could have a material adverse effect on the book value of the bank. DIB‟s investment portfolio contains interest rate sensitive-investments, such as municipal and corporate bonds. The increase in market interest rates would decrease unrealized capital gains on fixed income securities of investment portfolio. However, the decline in market interest rates could have an adverse impact on the bank‟s investment income. The bank could witness pressure on interest rate margins if the domestic interest rate increased in future. A large proportion of Islamic financing is on fixed rates and such a scenario could aggressively impact interest earnings of the bank if interest rate were to significantly change. DIB‟s earnings from investments, especially Sukuk and inter-bank placements could also be affected due to change in interest rates. Interest rates are highly sensitive to governmental monetary policies, domestic and international economic and political conditions and other factors beyond the bank‟s control.

NOTE:

* Sector average represents top companies within the specified sector

The above strategic analysis is based on in-house research and reflects the publishers opinion only




Dubai Islamic Bank P.J.S.C. - Key Competitors

Dubai Islamic Bank P.J.S.C., Key Competitors

Name Headquarters Revenue (US$ m)

Abu Dhabi Islamic Bank United Arab Emirates 1,122

Abu Dhabi Commercial Bank P.J.S.C. United Arab Emirates 2,010

First Gulf Bank PJSC United Arab Emirates 1,793

Al Salam Bank BSC Bahrain 111

Emirates NBD Bank PJSC. United Arab Emirates 2,943

Mashreqbank psc United Arab Emirates 1,176


GlobalData




Section 3 – Company Financial Ratios

Financial Ratios - Capital Market Ratios

Dubai Islamic Bank P.J.S.C., Ratios based on current share price

Key Ratios 31-Mar-2011

P/E (Price/Earnings) Ratio 6.98

EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 6.11

Enterprise Value/Sales 1.45

Enterprise Value/Operating Profit 2.20

Enterprise Value/Total Assets 0.09

Dividend Yield 0.06

Note: Above ratios are based on share price as of 31-Mar-2011, the above ratios are absolute numbers


GlobalData

Financial Ratios - Annual Ratios

Dubai Islamic Bank P.J.S.C., Annual Ratios

Key Ratios Unit/Currency 2005 2006 2007 2008 2009

Equity Ratios

EPS (Earnings per Share) AED 0.30 0.56 0.50 0.41 0.32

Dividend per Share AED 0.28 0.26 0.36 0.23 0.14

Dividend Cover Absolute 1.08 2.17 1.37 1.80 2.23

Book Value per Share AED 1.04 2.40 2.74 2.30 2.36

Profitability Ratios

Gross Margin % 63.23 58.95 58.54 64.38

Operating Margin % 39.55 34.61 30.93 31.17

Net Profit Margin % 39.36 34.09 41.10 29.49 23.52

Profit Markup % 185.63 153.50 148.70 190.27

PBT Margin (Profit Before Tax) % 39.55 34.61 30.93 29.45 23.75

Return on Equity % 28.54 18.27 24.01 17.77 13.45

Return on Assets % 2.47 2.42 2.96 1.83 1.43

Return on Fixed Assets % 4.13 4.37 4.37 4.12 4.03

Growth Ratios

EBITDA Growth % 48.54 18.78 -17.50 -21.46

Net Income Growth % 47.03 60.27 -37.84 -22.31

EPS Growth % 88.11 -11.20 -17.61 -22.22

Cost Ratios

Operating Costs (% of Sales) % 34.06 38.41 39.37 33.73 33.88

Leverage Ratios

Debt to Equity Ratio % 110.27 54.47 47.97 69.56 84.86

Net Debt to Equity % 110.27 54.47 47.97 69.56 84.86

Debt to Capital Ratio % 9.53 7.22 5.92 7.18 9.03

Efficiency Ratios

Asset Turnover Absolute 0.06 0.07 0.07 0.06 0.06

Capital Employed Turnover Absolute 0.73 0.54 0.58 0.60 0.57




Net Income per Employee AED 175,151

Capex to Sales % 2.63 2.71 5.42 7.84 2.87

Efficiency Ratio Absolute 0.26 0.27 0.30 0.37 0.42


GlobalData




Performance Chart

Dubai Islamic Bank P.J.S.C., Performance Chart (2005 - 2009)


GlobalData

Financial Performance

The bank reported interest income of (Untd. Arab Dirham) AED 5,132.92 million during the fiscal year ended December 2009, a decrease of 2.61% from 2008. The net interest income after loan loss provision of the bank was AED 3,393.72 million during the fiscal year 2009, a decrease of 2.83% from 2008. The net profit of the bank was AED 1,207.49 million during the fiscal year 2009, a decrease of 22.31% from 2008.




Financial Ratios - Interim Ratios

Dubai Islamic Bank P.J.S.C., Interim Ratios

Key Ratios Unit/Currency Dec-2009 Mar-2010 Jun-2010 Sep-2010

Interim EPS (Earnings per Share) AED 0.02 0.05 0.13 0.07

Dividend per Share AED 0.14

Book Value per Share AED 2.36 2.29 2.33 2.43

Net Profit Margin % 6.71 18.55 22.81 25.05

PBT Margin (Profit Before Tax) % 6.90 18.70 22.99 25.13

Operating Costs (% of Sales) % 32.46 34.02 32.45 31.40

Debt to Equity Ratio % 84.86 85.59 81.87 87.96

Net Debt to Equity % 84.86 85.59 81.87 87.96

Debt to Capital Ratio % 9.03 8.78 8.65 9.91

Efficiency Ratio Absolute 0.61 0.47 0.45 0.43


GlobalData




Financial Ratios - Ratio Charts

Dubai Islamic Bank P.J.S.C., Ratio Charts

EPS

Operating Margin

Return on Equity

Return on Assets

Debt to Equity Ratio


GlobalData




Section 4 – Company’s Key Developments

Feb 24, 2010: Dubai Islamic Bank Introduces New Sharia-compliant Investment Plan

Dubai Islamic Bank (DIB) has launched a new Sharia-compliant investment plan Al Islami Muthmir to offer a built-in family takaful cover.

Al Islami Muthmir is a medium- to long-term plan that offers investors an access to a range of top performing Sharia-compliant funds. It is a single contribution investment plan with a minimum contribution and it is expected to be suitable for high net worth individuals.

Based on the Wakalah principle of Islamic banking, the plan allows customers to invest in a selection of funds based on their investment needs and can be partially or fully withdrawn at any time.

Through Al Islami Muthmir, customers may invest in a range of managed and specialist funds, switch without cost between funds and choose automatic fund re-balancing to maintain fund allocation levels.

Adnan Chilwan, chief of retail and business banking at Dubai Islamic Bank, said: “The Al Islami Muthmir plan offers customers a range of Sharia compliant investment options with a family takaful cover that protects the contributed amount in the case of death.

"DIB's investment products have met with immense success over the years, and we are confident that our customers will take advantage of the combined benefits of takaful and investment returns offered by the Al Islami Muthmir plan.”

Feb 08, 2010: DED Signs Agreement With Dubai Islamic Bank To Offer e-Payment Services

Dubai Department of Economic Development (DED) and Dubai Islamic Bank (DIB) have signed a co-operation agreement to facilitate electronic payment of new trade licenses fees, as well as renewed and amended licenses through DIB's branches in Dubai.

The initiative is part of DED and DIB efforts to enhance productivity and save time and efforts for investors. As per the agreement, Dubai Islamic Bank will provide DED with electronic systems services to facilitate the review of banking settlement and also present a weekly detailed report covering all transactions and procedures that took place during the preceding week.

Sami Al Qamzi, director general of DED, said: “We are pleased to sign the agreement with Dubai Islamic Bank, which will contribute in enhancing the level of services provided to customers and enable them to process their documents electronically without having to visit DED offices.”

Abdulla Al Hamli, CEO of Dubai Islamic Bank, said: “Through our line of innovative electronic banking services, we are pleased to offer a convenient payment solution to entrepreneurs and investors seeking to establish their businesses here. We are confident that our electronic payment services will further add to the ease of doing business in Dubai. We encourage investors and customers to benefit from this service.”

Jan 11, 2010: Dubai Islamic Bank Expands In UAE

Dubai Islamic Bank (DIB) has opened a new branch in Al Nahda, Dubai, bringing the bank's UAE network to a total of 62 branches, including three express banking locations, reported AME Info.

The expansion of the bank's network is in line with its retail strategy, which will contribute to its annual balance sheet growth. The retail banking business is expected to account for approximately 47% of the bank's 2009 revenues.

Adnan Chilwan, chief of retail and business banking at DIB, said: "The opening of our latest branch in Al Nahda is in response to the growing needs of our customers, and a clear indicator of the healthy growth in popularity of Dubai




Islamic Bank in the UAE. In addition to the growth in number of customers, our retail deposits as well as financing businesses are expected to show healthy growth as a result of deepening relationships with our existing customers."

Rashid Mahboob, head of branches management at DIB, said: "Research conducted prior to opening in Al Nahda showed a strong demand for a branch in the area. As a result, we are confident we are making banking with DIB easier and more convenient for customers who live and work in this area. We welcome all our customers in the Al Nahda area to the new branch and look forward to opening more branches across the UAE in the months to come."

Jan 02, 2010: Dubai Islamic Bank Launches Accidental Death, Disability Insurance Plan

Provides benefits in the unfortunate event of accidental death or disability

Dubai Islamic Bank (DIB) has launched Al Islami Takaful Riayati, accidental death and disability insurance plan. This Sharia-compliant product is underwritten by Salama-Islamic Arab Insurance Company, and complements the bank‟s existing portfolio of diverse products and services.

The company claims that its new product, Al Islami Takaful Riayati, provides benefits in the unfortunate event of accidental death or disability. With annual contributions payable at just AED250 for an individual, and AED400 for a plan holder plus spouse.

Dubai Islamic Bank said that its new product covers family benefit of AED100,000 in the event of accidental death, or permanent total or partial disability caused by an accident.

In addition, plan holders are eligible for weekly benefits in the unfortunate event of temporary total disability due to an accident, and the reimbursement of medical expenses, including hospital stays and repatriation/transportation of the body.

Adnan Chilwan, chief of retail and business banking at Dubai Islamic Bank, said: “We are very pleased that the Al Islami Takaful Riayati product provides just that - peace of mind at a price that is easily affordable. Al Islami Takaful Riayati has been designed keeping everyone in mind. Therefore, it is not only affordable, but also extremely simple and convenient.”




Section 5 – Appendix

The data and analysis within this report is driven by GlobalData. GlobalData gives you key information to drive sales, investment and deal making activity in your business.

Our coverage includes 165,000 + reports on 150,000+ companies (including 100,000+ private) across 200+ countries and 29 industries. The key industries include Alternative Energy, Oil & Gas, Clean Technology, Technology and Telecommunication, Pharmaceutical and Healthcare, Power, Financial Services, Chemical and Metal & Mining.

Methodology

GlobalData company reports are based on a core set of research techniques which ensure the best possible level of quality and accuracy of data. The key sources used include:

Company Websites

Company Annual Reports

SEC Filings

Press Releases

Proprietary Databases

Currency Codes

Currency Code Currency

AED Untd. Arab Dirham GlobalData

Ratio Definitions

Capital Market Ratios

Capital Market Ratios measure investor response to owning a company's stock and also the cost of issuing stock.

Price/Earnings Ratio (P/E)

Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual income earned per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of income, so the stock is more expensive compared to one with lower P/E ratio. A high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. Price per share is as of previous business close, and EPS is from latest annual report.

Calculation: Price per Share / Earnings per Share

Enterprise Value/Earnings before Interest, Tax, Depreciation & Amortization (EV/EBITDA)

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with, or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE ratio is that it is unaffected by a company's capital structure. It compares the value of a business, free of debt, to earnings before interest. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.

Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net Income + Interest + Tax + Depreciation + Amortization)

Enterprise Value/Sales

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy the company's sales. EV/Sales is seen as more accurate than Price/Sales because market capitalization does not take into account the amount of debt a company has, which needs to be paid back at some point. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.

Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales

Enterprise Value/Operating Profit

Enterprise Value/Operating Profit measures the company's enterprise value to the operating profit. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.

Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating Income




Enterprise Value/Total Assets

Enterprise Value/Total Assets measures the company's enterprise value to the total assets. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.

Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total Assets

Dividend Yield

Dividend Yield shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock.

Calculation: Annual Dividend per Share / Price per Share GlobalData

Equity Ratios

These ratios are based on per share value.

Earnings per Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.

Calculation: Net Income / Weighted Average Shares

Dividend per Share

Dividend is the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Dividend Cover

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to shareholders.

Calculation: Earnings per share / Dividend per share

Book Value per Share

Book Value per Share measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly.

Calculation: (Shareholders Equity - Preferred Equity) / Outstanding Shares

Cash Value per Share

Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance sheet) that is determined by dividing cash & equivalents by the total shares outstanding.

Calculation: Cash & equivalents / Outstanding Shares

GlobalData

Profitability Ratios

Profitability Ratios are used to assess a company's ability to generate earnings, based on revenues generated or resources used. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

Gross Margin

Gross margin is the amount of contribution to the business enterprise, after paying for direct-fixed and direct-variable unit costs.

Calculation: {(Revenue-Cost of revenue) / Revenue}*100

Operating Margin

Operating Margin is a ratio used to measure a company's pricing strategy and operating efficiency.

Calculation: (Operating Income / Revenues) *100

Net Profit Margin

Net Profit Margin is the ratio of net profits to revenues for a company or business segment - that shows how much of each dollar earned by the company is translated into profits.

Calculation: (Net Profit / Revenues) *100

Profit Markup

Profit Markup measures the company's gross profitability, as compared to the cost of revenue.

Calculation: Gross Income / Cost of Revenue

PBIT Margin (Profit Before Interest & Tax)

Profit Before Interest & Tax Margin shows the profitability of the company before interest expense & taxation.

Calculation: {(Net Profit+Interest+Tax) / Revenue} *100

PBT Margin (Profit Before Tax)

Profit Before Tax Margin measures the pre-tax income over revenues.

Calculation: {Income Before Tax / Revenues} *100

Return on Equity Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners.

Calculation: (Net Income / Shareholders Equity)*100




Return on Capital Employed

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a company's capital investments. ROCE should always be higher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholders' earnings.

Calculation: EBIT / (Total Assets – Current Liabilities)*100

Return on Assets

Return on Assets is an indicator of how profitable a company is relative to its total assets, the ratio measures how efficient management is at using its assets to generate earnings.

Calculation: (Net Income / Total Assets)*100

Return on Fixed Assets

Return on Fixed Assets measures the company's profitability to its fixed assets (property, plant & equipment).

Calculation: (Net Income / Fixed Assets) *100

Return on Working Capital

Return on Working Capital measures the company's profitability to its working capital.

Calculation: (Net Income / Working Capital) *100

GlobalData

Cost Ratios

Cost ratios help to understand the costs the company is incurring as a percentage of sales.

Operating costs (% of Sales)

Operating costs as percentage of total revenues measures the operating costs that a company incurs compared to the revenues.

Calculation: (Operating Expenses / Revenues) *100

Administration costs (% of Sales)

Administration costs as percentage of total revenue measures the selling, general and administrative expenses that a company incurs compared to the revenues.

Calculation: (Administrative Expenses / Revenues) *100

Interest costs (% of Sales)

Interest costs as percentage of total revenues measures the interest expense that a company incurs compared to the revenues.

Calculation: (Interest Expenses / Revenues) *100

GlobalData

Liquidity Ratios

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern.

Current Ratio

Current Ratio measures a company's ability to pay its short-term obligations. The ratio gives an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point.

Calculation: Current Assets / Current Liabilities

Quick Ratio

Quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets.

Calculation: (Current Assets - Inventories) / Current Liabilities

Cash Ratio

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It only looks at the most liquid short-term assets of the company, which are those that can be most easily used to pay off current obligations. It also ignores inventory and receivables, as there are no assurances that these two accounts can be converted to cash in a timely matter to meet current liabilities.

Calculation: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

GlobalData




Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses.

Debt to Equity Ratio

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries tend to have a higher debt-equity ratio.

Calculation: Total Liabilities / Shareholders Equity

Debt to Capital Ratio

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing its operations, along with some insight into its financial strength. The higher the debt-to-capital ratio, the more debt the company has compared to its equity. This indicates to investors whether a company is more prone to using debt financing or equity financing. A company with high debt-to-capital ratios, compared to a general or industry average, may show weak financial strength because the cost of these debts may weigh on the company and increase its default risk.

Calculation: {Total Debt / (Total assets - Current Liabilities)}

Interest Coverage Ratio

Interest Coverage Ratio is used to determine how easily a company can pay interest on outstanding debt, calculated as earnings before interest & tax by interest expense.

Calculation: EBIT / Interest Expense

GlobalData

Efficiency Ratios

Efficiency ratios measure a company's effectiveness in various areas of its operations, essentially looking at maximizing its use of resources.

Fixed Asset Turnover

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to generate sales. A higher ratio indicates the business has less money tied up in fixed assets for each currency unit of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets.

Calculation: Net Sales / Fixed Assets

Asset Turnover

Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales revenue to the company. A higher asset turnover ratio shows that the company has been more effective in using its assets to generate revenues.

Calculation: Net Sales / Total Assets

Current Asset Turnover

Current Asset Turnover indicates how efficiently the business uses its current assets to generate sales.

Calculation: Net Sales / Current Assets

Inventory Turnover

Inventory Turnover ratio shows how many times a company's inventory is sold and replaced over a period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying.

Calculation: Cost of Goods Sold / Inventory

Working Capital Turnover

Working Capital Turnover is a measurement to compare the depletion of working capital to the generation of sales. This provides some useful information as to how effectively a company is using its working capital to generate sales.

Calculation: Net Sales / Working Capital

Capital Employed Turnover

Capital employed turnover ratio measures the efficiency of a company's use of its equity in generating sales revenue to the company.

Calculation: Net Sales / Shareholders Equity

Capex to sales

Capex to Sales ratio measures the company's expenditure (investments) on fixed and related assets' effectiveness when compared to the sales generated.

Calculation: (Capital Expenditure / Sales) *100

Net income per Employee

Net income per Employee looks at a company's net income in relation to the number of employees they have. Ideally, a company wants a higher profit per employee possible, as it denotes higher productivity.

Calculation: Net Income / No. of Employees




Revenue per Employee

Revenue per Employee measures the average revenue generated per employee of a company. This ratio is most useful when compared against other companies in the same industry. Generally, a company seeks the highest revenue per employee.

Calculation: Revenue / No. of Employees

Efficiency Ratio

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company is losing a larger percentage of its income to expenses. If the efficiency ratio is getting lower, it is good for the bank and its shareholders.

Calculation: Non-interest expense / Total Interest Income

GlobalData

Notes

Financial information of the company is taken from the most recently published annual reports or SEC filings

The financial and operational data reported for the company is as per the industry defined standards

Revenue converted to USD at average annual conversion rate as of fiscal year end

About GlobalData

GlobalData is one of the world‟s leading providers of company operational data and strategic analysis, providing detailed information on tens of thousands of companies globally. Our highly qualified team of Analysts, Researchers, and Solution Consultants use proprietary data sources and various tools and techniques to gather, analyze and represent the latest and the most reliable information essential for businesses to sustain a competitive edge. Data is continuously updated and revised by large teams of research experts, so that it always reflects the latest events and information. With a large dedicated research and analysis capability, GlobalData employs rigorous primary and secondary research techniques in developing unique data sets and research material for this series and its other reports. GlobalData offers comprehensive geographic coverage across world‟s most important sectors, focusing particularly on energy and healthcare.

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Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review

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