Dubai Islamic Bank and Emirates Islamic posted large drops in impairment charges for the first half of the year, citing economic recovery.
DIB reported a 29% fall in impairment losses to 1.5 billion dirhams ($0.41 billion) although net profit dropped by 12% year-on-year to 1.86 billion dirhams, according to a bourse filing on Wednesday (July 28).
Emirates Islamic saw its impairment allowances slashed by 85.56% year-on-year to 85.2 million dirhams, according to a statement on Wednesday.
The bank’s net profit surged to 568.71 million dirhams compared to 11.85 million dirhams for the first six months of 2020, a 4,700% increase.
A subsidiary of Emirates NBD, Dubai’s biggest lender, Emirates Islamic has cause to cheer as it was the only standalone Shariah-compliant bank in the UAE last year to post a loss.
The UAE central bank in its most recent quarterly report, for the first three months of the year, forecasted GDP growth of 2.4% for 2021 from a contraction of 6.1% last year. This remains below the 2019 pre-pandemic level of 3.4%.
The non-oil sector showed improvement in the first quarter, benefiting from the pick-up in global travel, said the central bank. Oil production fell by 17.6% year-on-year in the first quarter and the central bank expects real oil GDP to contract by 1% this year.
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