Study And Overview Of The Dubai Islamic Bank Finance Essay

September 22, 2017 Management

Introduction

Dubai Islamic Bank ( Public Joint Stock Company ) ( “ the bank ” ) was incorporated by an Amiri Decree issued on 29 Safar 1395 Hijri, matching to 12 March 1975 by His Highness, the Ruler of Dubai, to supply banking and related services based on Islamic Shari’a rules. It was later registered under the Commercial Companies Law figure 8 of 1984 ( as amended ) as a Public Joint Stock Company.

It is the first Islamic bank to hold incorporated the rules of Islam in all its patterns and is the largest Islamic bank in the UAE. Dubai Islamic Bank is a public articulation stock company, and its portions are listed on the Dubai Financial Market. The bank enjoys a repute as a leader and pioneer in keeping the quality, flexibleness and handiness of its merchandises and services. The bank presently operates 62 subdivisions in the UAE & A ; 35 subdivisions in Pakistan. Its client base increased by 15 % last twelvemonth making about 900,000 clients as of 31st December, 2009 and it employs 6984 staff as of 31st December 2007. It has the alone differentiation of being the universe ‘s first fully-fledged Islamic bank.

DIB has won the regard of its equals around the universe for many old ages, and its prima place has been reaffirmed by the 34 awards that it has won in 2008 and 24 awards in 2009, across diversified countries, including retail, corporate and investing banking. The bank was late named “ Best Islamic Bank ” for the 4th back-to-back twelvemonth by Banker Middle East magazine. DIB has besides received many awards from international administrations, such as the esteemed “ Bank of the Year ” award from The Banker ( Financial Times ) , along with esteemed awards from UK-based Euromoney and NY-based Global Finance magazines.

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Why it started

In the visible radiation of Allah ‘s bids, it is obligatory on us to seek to detect and follow the right banking system, one that obey the bids of ALLAH. Those who learn to distinguish between what has been allowed and what has been forbidden will be the 1s with a clear scruples when they assemble in forepart of the Creator on the Day of Judgment. Allah has clearly ordained the prohibition of Riba in the Glorious Quran. Verses [ 2:278-279 ] translate into:

278. O ye who believe! Fear Allah, and give up what remains of your demand for vigorish, if ye are Indeed trusters.

279. If ye do non, take notice of war from Allah and His Messenger: but if ye repent, ye shall hold your capital amounts ; Neither will you cover with others unjustly, nor shall you be dealt with unjustly.

Beware! false readings of these poetries has led many persons to presume that the prohibition merely relates to situations where the creditor is likely to bear down exploitatively high rates of involvement. It is incorrect to see the above interlingual rendition as cogent evidence that the ( sole ) aim served by the prohibition of Riba is the turning away of unfairness ( in the sense of development of the hapless debitor by the rich creditor ) . In Islam, there is no room for Riba, fringy or otherwise.

Islam efforts to make a just economic system. It is based on net income & A ; loss sharing. Muslim Bankss enter into trade and investing to gain halal net incomes and do n’t come in into loans progressing nor take any sedimentations. Riba gives birth to an economic system that is unfair ; one that favours the rich at the disbursal of the hapless. Rather than honor for attempt and entrepreneurship with net income, the Riba based economic system wagess capitalists.

Further, the Islamic manners of finance and investing used by these Bankss must carry through the basic conditions of these contracts to be considered Shari’a compliant.

Sharia Board

It consists of the undermentioned members:

Chairman Prof. Dr. Hussain Hamed Hassan

Secretary Muhammad Abdulhakim Zair

Member Prof. Dr. Ali Muhieddine Al Qarra Daghi

Member Sheikh Muhammad Abdulrazzaq Al Siddiq

Member Prof. Dr. Ajil Jassem Al Nashmi

BOARD OF DIRECTORS

Chairman H.E. Mohammad Ibrahim Abdulrahman Alshaibani

Vice Chairman H.E. Sheikh Khaled Bin Zayed Al Nehayan

Member Mr. Ahmad Mohammad Saeed Bin Humaidan

Member Mr. Saeed Mubarak Abdulla Mohammed Al Muhairi

Member Mr. Abdulrahman Hareb Rashed Alhareb

Member Dr. Tariq Humaid Matar Mohammed Al Tayer

Member Mr. Saleh Saeed Ahmad Lootah

Member Mr. Khaled Mohammad Ali Alkamda

Hazard POSITIONING ( GOVERNANCE & A ; RISK MANAGEMENT )

Corporate Administration:

Significant related party exposures, in line with other authorities related Bankss in UAE

In line with other government-related Bankss in the UAE, important related-party exposures characterise DIB ‘s corporate administration model. DIB ‘s commanding stockholder – the Dubai authorities, with two representatives on the board of managers – is besides one of the bank ‘s chief borrowers, ensuing in a high degree of related-party exposure. However, the bank has at least two independent members on its board of managers, a factor that helps to bolster its corporate administration appraisal. It besides has a well-qualified and extremely dedicated direction squad, enabling the bank to transform itself and convey itself back to the head of the banking industry.

Control & A ; Risk Management:

DIB ‘s hazard direction systems are equal, while still germinating. While the systems and procedures are being streamlined to aline with the concern hazards encountered, there remains room for betterment. One of the issues being looked at is the assignment of a main hazard officer and an independent hazard direction model and coverage line.

With the execution of Basel II ( standardised attack from January 2008, progressing to the constitution of an internal ratings-based ( IRB ) attack in 2011 ) and the 90-day benchmark to define non-performing loans from January 2008, the Central Bank of the UAE has imposed higher recognition criterions, with the latter expected to adversely impact plus quality at several Bankss.

Fiscal Reporting Transparency:

The bank studies under IFRS on a quarterly footing. Financial and direction analysis provide some

information sing the bank ‘s fiscal and concern public presentation, with comparatively equal revelations sing risk-weighted assets and Tier 1 capital.

Recognition Risk Concentration:

DIB ‘s largest sectoral exposure is to existent estate, which straight and indirectly histories for approximately 20 % of the bank ‘s assets. We view positively the bank ‘s attempt to diversify its funding portfolio and to cut down the proportion of its funding channelled towards existent estate.

Liquidity Management:

DIB enjoys a broad, stable and comparatively low-cost sedimentation base, although it exhibits some concentration, particularly in the corporate support pool. The staying portion of the sedimentation base, which is steadily increasing, is composed of more farinaceous retail financess. While it ranks 5th in footings of assets, DIB has built up the third-largest sedimentation base in the state, profiting from its profile as the universe ‘s first Islamic bank, its relationship with the Dubai authorities and its good product-innovation attack.

Presence in the universe:

It has its presence in

UAE ( 62 subdivisions ) ;

Pakistan ( 35 subdivisions ) ;

Iran ;

Jordan ; & A ;

Turkey.

Merchandises on offer:

Bank ‘s merchandises are structured into Eight sections, viz.

Retail Banking:

DIB offers alone attack to Retail Banking. It has the most extended web of subdivisions and ATM ‘s across the UAE. It provides the undermentioned merchandises to its clients in Retail Banking:

Current histories,

Savingss histories,

Investing histories,

Home and personal finance,

Recognition cards

Wala’a Dirhams ( Platinum, Platinum Plus, Gold, Gold Premium & A ; Classic Cards ) ; & A ;

Infinite Card ( Entirely for the sole & A ; by invitation merely with elect privileges ) .

safe sedimentation boxes.

Private Banking

For spoting clients, who expect nil but the best, Private Banking – an sole service from Dubai Islamic Bank – offers a broad array of sophisticated Islamic banking merchandises and services in the convenience of an sole banking Centre. This is privileged banking at its really best.

Johara Banking

Recognizing adult females ‘s demands for specializer banking services, Johara combines a comprehensive scope of banking installations with privileges such as shopping price reductions and wellness and educational benefits. Johara offers a friendly and professional client service to run into all banking and fiscal demands. Since its beginning in 2003, Johara services are now available in 10 subdivisions across the UAE.

Business Banking

DIB ‘s Business Banking service features a scope of merchandises and solutions – tailor-made and perfected for each client based on different variables such as nature of concern, merchandises or services, one-year turnover, and phase in the concern life rhythm.

Businesss can besides carry through their medium to long-run finance demands, utilizing flexible refund and take-up options that enable decrease of hazard while bettering hard currency flow. And high-growth concerns have solutions available to ease the strain on working capital and the heavy weighting towards domestic or international debitors that such concern typically experience.

Corporate Banking

It provides the undermentioned services in Corporate sector:

letters of recognition ;

letters of warrant ;

Murabaha ( finance acquisition covering the purchase of belongings ) ;

Sukuk ;

Istisna ( Finance for building of belongings ) ;

Ijara ( renting ) ;

Musharika & A ;

Mudaraba.

Investing Banking

DIB provides a full scope of investing banking and commercial banking merchandises and services, which includes, reding the clients on corporate scheme and construction, capital-raising in equity and Islamic support markets and sophisticated hazard direction. IBG besides commits the Bank ‘s ain capital to proprietary investing and trading activities.

Real Estate Finance

Bing the taking supplier of Commercial Real Estate Finance, DIB plays a major function in back uping existent estate developments, consisting building of commercial belongings, residential estates and multi-storey edifices.

A squad of experts provide consultative services, undertaking support and new merchandise development tailored to run into clients demands. DIB ‘s funding solutions are designed to be flexible and can be merely adapted to accommodate your precise demands, and have the overruling benefit of being Sharia compliant.

Real estate finance merchandises comprise

Istisna

Murabaha

Decreasing Musharaka

Ijarah

Contracting Finance

DIB started its Contracting Finance Decision in 2004. Since so, it has made a important part in this field. The Division undertakings cover contractors set abouting the executing of assorted contracts like edifices, electrical & A ; mechanical, substructure, oil & A ; gas, power & A ; H2O, etc. Staying true to the nature of Islamic banking, structured recognition installations that comply with Sharia guidelines and rules have been developed and are in practise.

In UAE and choice foreign markets, its specialized services and fiscal solutions have supported contractors on over 70 undertakings with a entire value transcending AED 15 billion. Further, during this period it have been able to increase its client base to more than 100.

Services

The bank provides its services through the undermentioned channels

Online Banking:

Dubai Islamic Bank keeps introducing to function its clients better. The all-new Al Islami Online Banking is the latest of these enterprises. The new Al Islami Online Banking is faster, easier and the new benchmark in Internet banking.

It provides its clients with the undermentioned services:

Fund Transportations:

Bill Payments

Account Related Minutess

Card Related Minutess

Electronic Banking Channelss

Telephone Banking:

Using the phone banking, its clients can:

Utility Payments ;

Investing Deposit ;

Finance ;

Electronic Banking Services ;

Other Services ( i.e. ailments, publicity & A ; information, update inside informations etc.

Mobile Banking ( via text services )

Mobile banking is a convenient manner to pull off twenty-four hours to twenty-four hours banking demands including:

Bill Payments ;

Account Enquiries ; & A ;

Presentment Alerts.

Electronic Statements

The clients can now have their current history & A ; recognition card statements delivered electronically via electronic mail, which are more fast, convenient, secure, flexible and free of cost.

KEY PLAYERS IN Banking Market IN UAE/MIDDLE EAST REGION

Existing Players in the market:

The market in Middle east part is extremely saturated and it is truly difficult for any bank to set up itself in the market. The followers is the list of some of its rivals:

Kuwait Finance House ;

Sharjah Islamic Bank ;

Qatar Islamic Bank ;

Abu Dahbi Islamic Bank ;

Al – Rajhi Bank ;

Islamic Bank of Asia ;

ABC Islamic Bank ( E.C ) ;

New Entrants

Morgan Stanley

Merrill Lynch ;

Credit Suisse ; & A ;

Performance

On 12th, of February 2010, Dubai Islamic Bank ( DIB ) announced its fiscal consequences for the 12 months stoping Dec 31, 2009, showing the bank ‘s resiliency in the face of disputing planetary conditions, which continue to impact the public presentation of fiscal services houses worldwide.

For the full twelvemonth 2009, the DIB reported a net net income of AED 1.2 billion ( 30 % diminution over the last twelvemonth ) , compared to last twelvemonth of AED 5.2 billion ( Subject to rectification ) . This diminution is chiefly due to the conservative and prudent attack adopted by the bank in go oning with the policy of heightening proviso for damage from AED 520 million in 2008 to AED 818 million in 2009.

Its entire assets as of Dec 31, 2009, stood at AED 84.3 billion, somewhat lower than AED 84.6 billion at the terminal of the same period in 2008. The bank ‘s entire funding assets reached AED 49.9 billion as of Dec 31, 2009, a little diminution compared to AED 52.7 billion in 2008, due to the bank ‘s conservative policy of pull offing the funding portfolio in these times.

In the 12 months stoping Dec 31, 2009, client sedimentations stood at AED 64.2 billion, compared to AED 62.6 billion at the terminal of 2008.

( hypertext transfer protocol: //news.brunei.fm/2010/02/12/dubai-islamic-bank-announces-2009-net-profit-of-aed-1-2-billion/ )

Fiscal Summary as at Dec 31st, 2008

Gross

AED 5,544,857,000.00

Gross ( USD )

$ 1,506,754,619.57

Net net income

AED 1,730,290,000.00

Net Net income ( USD )

$ 471,096,408.83

Entire Assetss

AED 85,031,113,000.00

Entire Asset ( USD )

$ 23,150,946,935.66

Paid-up portion capital

AED 3,445,400,000.00

Market Capitalization

AED 8,303,414,000.00

Dividend Cover

1.38X

Dividend Output

11.06X

Entire Asset to equity

9.53X

Tax return on Equity

17.6 %

Share monetary value ( as on 15th, April 2009 )

AED 2.41

Price net incomes Ratio

3.7X

( Extracted from DIB Annual Report 2008 Issued in March 2009 )

Accomplishments

The list is eternal, but here is the list of few accomplishments & A ; awards the bank has banked to its name

Top distributer of Takaful Merchandises in Feb 2010 ;

‘Best Bank ‘ at Islamic Business & A ; Finance Awards for the 4th clip in Dec 2009 ;

‘Best Internet Banking Service ‘ Award from Banker Middle East in Feb 2009 ;

Named universe ‘s Best Islamic Retail Bank by Global Finance in 2008 ;

Best Islamic Credit Card Product Award in Feb 2008 ;

Best Islamic Bank and Best Islamic Wealth Management Firm Awards in 2007 ;

Best Islamic Bank and Product Innovation awards from Banker ME Magazine in 2006 ;

Best Islamic Bank in Middle East at Gulf Wealth Forum in Feb 2006 ;

Received JPMorgan Chase 2004 Elite Quality Recognition Award in June 2005 ;

Ranked as universe ‘s No1 Islamic finance Deals lead director in 2004.

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