Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
Reference Code: GDFS28938FSA
Source : www.globalcompanyintelligence.com Page 1
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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
Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData
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
Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData
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
Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
Reference Code: GDFS28938FSA
Source : www.globalcompanyintelligence.com Page 2
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
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
Reference Code: GDFS28938FSA
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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
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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. (DIB) - Financial and Strategic SWOT Analysis Review
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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
Director Non Executive Board
Abdulrahman Hareb Rashed Alhareb
Director Non Executive Board
Tariq Humaid Matar Mohammed Al Tayer
Director Non Executive Board
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
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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.
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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.
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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.
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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.
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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
United Arab Emirates
Tel: +971 03 7515155
Fax: +971 03 7516060
Sharjah
Sharjah
United Arab Emirates
Tel: +971 06 5726444
Fax: +971 06 5727555
Kalba
Kalba
United Arab Emirates
Tel: +971 09 2772338
Fax: +971 09 2775799
Ras Al Khaimah
Ras Al Khaimah
United Arab Emirates
Tel: +971 07 2284888
Fax: +971 07 2284788
Fujairah
Fujairah
United Arab Emirates
Tel: +971 09 2221550
Fax: +971 09 2229249
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
Dubai Islamic Bank P.J.S.C., Subsidiaries
Deyaar Development PJSC
P O Box 30833
Dubai
United Arab Emirates
Tel: +971 4 2955844
Fax: +971 4 2954029
Url: www.deyaar.ae
Millennium Finance Corporation Ltd.
Level 2, The Gate
PO Box 121299
Dubai
United Arab Emirates
Tel: +971 4 2075224
Fax: +971 4 2950633
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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DIB Lease One Ltd.
Bahamas
Zone One Real Estate Management Co.
Cayman Islands
Al Islami Real Estate Investments Ltd.
United Arab Emirates
Rhein Logistics Gmbh
Germany
DIB Capital Ltd.
DIFC, The Gate
East Wing
Dubai
Dubai
United Arab Emirates
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
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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.
Dubai Islamic Bank P.J.S.C. (DIB) - Financial and Strategic SWOT Analysis Review
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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. (DIB) - Financial and Strategic SWOT Analysis Review
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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. (DIB) - Financial and Strategic SWOT Analysis Review
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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. (DIB) - Financial and Strategic SWOT Analysis Review
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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.
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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
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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
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
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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
Source: Annual Report, Company Website, Primary and Secondary Research
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
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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
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
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Performance Chart
Dubai Islamic Bank P.J.S.C., Performance Chart (2005 - 2009)
Source: Annual Report, Company Website, Primary and Secondary Research
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.
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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
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
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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
Source: Annual Report, Company Website, Primary and Secondary Research
GlobalData
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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
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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.”
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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
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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
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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
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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
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Source : www.globalcompanyintelligence.com Page 32
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
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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
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