Tuesday, 14 January 2014

Dubai: World’s first modern commercial Islamic bank continues to drive industry


Nearly 40 years after it pioneered the concept, Dubai Islamic Bank is still setting the benchmark in Islamic finance
Dubai Islamic Bank (DIB) created history in 1975 when it became the first modern commercial Islamic bank in the world. Since then the bank has led from the front, establishing itself as the undisputed leader in the UAE’s Islamic banking industry, while Islamic banking in general becomes more and more globally prominent.
Formed by a decree issued from then-ruler of Dubai, the late HH Sheikh Rashid bin Saeed Al Maktoum, DIB became the first bank in the world to offer services that incorporated the principles of Islam into all of its practices. Prior to the establishment of the bank, customers did not have access to sharia-compliant banking services. DIB pioneered this form of banking, establishing an alternative based on fairness and transparency.
DIB has also grown its network globally and expanded its presence in key markets around the world. The expansion strategy began with the establishment of DIB Pakistan, a wholly owned subsidiary of DIB, which today has a network of 100 branches across 36 major cities in Pakistan. The bank has also increased its footprint by entering other promising markets, including Jordan, Sudan, Turkey and Bosnia.Four decades later, DIB is still setting the standards for others to follow, as the concept of Islamic banking has gathered momentum in the Arab world and internationally. Today, the bank competes on an equal footing with the world’s largest conventional banks by providing high quality products and services at a competitive price under the sharia-compliant umbrella.
Through its focus on innovation and excellence, DIB has progressed from being the pioneer of Islamic finance to attaining the status of the UAE’s largest Islamic bank with a customer base of over 1.4 million customers and a wide network of more than 85 branches.
Professional service

DIB serves consumer, commercial, corporate and institutional clients through dedicated divisions staffed by the industry’s best professionals. With a strong emphasis on providing unparalleled customer service, the bank continually invests in evolving its offerings to meet the changing needs of its customers. Its Johara ladies banking and Wajaha wealth management divisions are specialised departments dedicated to serving women and high-net-worth individuals respectively. Recently, the bank has launched itsTakaful (Islamic insurance) business, while simultaneously creating a new offering for the fast-growing SME sector.

With the above and more, DIB boasts a product suite that encompasses all areas of commercial and investment banking, positioning it as a major player in the overall banking and finance sector in the region.
Additionally, DIB has incorporated several subsidiaries in real estate development and other related financial services companies, including Deyaar Development in 2002, DIB Capital in 2006, and Dar Al Sharia Legal and Financial Consultancy in 2008. In 2013, the bank completed the acquisition of Tamweel, the largest home finance provider in the UAE, having previously been the majority shareholder, allowing DIB to play a more active role in supporting the country’s rapidly growing mortgage market.
As DIB’s branch network has expanded, as have the number of alternative banking channels available to customers, such as internet banking, telephone banking and e-branches. DIB offers online and mobile telephone banking facilities, giving customers greater flexibility to manage their relationship with the bank.The bank has also continued its ambitious plans to expand its physical presence across the UAE, including its in-mall network, which enables customers to conveniently combine banking with shopping activities. This is in line with DIB’s aim to enhance the range of banking channels for its customers. To this end, the bank has improved and developed new e-banking services, including a mobile application and partnerships with organisations like Emaar and Western Union.
DIB has also shown that it is a bank of firsts time and time again. The bank launched Emirates REIT, Dubai’s first real estate investment trust, and was an arranger in the first fully UAE Islamic bank aircraft financing deal for the purchase of an A340-500 by Emirates Airline. In addition to this, DIB has also been involved in several benchmark sukuk transactions over the past year. In March 2013, the bank successfully tapped the capital markets with a tier one sukuk amounting to $1bn (AED 3.7bn), which was oversubscribed 14 times by local and international fixed income investors. With a rating of ‘Baa1’ from Moody’s and ‘A’ from Fitch, and with both ratings carrying a stable outlook, DIB is recognised as a critical pillar in the UAE financial sector.
DIB’s focused strategy to strengthen its balance sheet, diversify risk, and establish a robust platform for growth has yielded huge dividends in 2013. In the first nine months of 2013, the bank surpassed its full year profit number for 2012, with profits up 33.5 percent. With asset quality improving and business growing, the bank’s customer base continues to expand, with deposits reaching AED 79.6bn as of September 30, 2013, giving rise to the best liquidity position in the country.
The bank is also active in promoting Emiratisation, with the aim of encouraging UAE nationals to participate in and improve the economy of the country. DIB has achieved 100 percent Emiratisation at branch manager level and, across the organisation, the figure stands at 46 percent. This achievement was recognised in 2013, when the bank received the Dubai Human Development Award for its proven track record of developing and nurturing UAE National talent.
Community leader

A key component of DIB’s strategy has been to support the advancement of the local community and the development of the UAE. In this regard, the bank has been characterised by a strong commitment to corporate social responsibility and support for programmes aimed at developing the country. From inception, DIB has been guided by outstanding individuals who understand that the bank has a wider role to play in society than simply offering banking services.

As the country has started to recover from the financial crisis, DIB’s contribution to the local community has been vital. The DIB Foundation, a non-profit, social, humanitarian and charitable organisation that distributes millions of dirhams to critical causes at home and abroad each year, has worked tirelessly to support disadvantaged people. The organisation has helped families through a range of social and financial difficulties by helping them with education fees, paying rent on homes, settling fees for medical cases and providing medical equipment to hospitals and health centres.
Education, in particular, has been a significant area of focus. The bank is committed to improving the quality of life and providing job opportunities for people in the UAE. DIB launched the Shaatir Savings Account, a unique savings account just for children, which aims to help them develop their financial knowledge from a young age. The bank’s Masrafi programme, meanwhile, provides unique opportunities for promising young Emirati nationals by training and helping them develop a career in banking.
Worldwide recognition

For its contribution to the banking industry and the wider community, DIB has earned the respect of its peers around the world. The bank’s leading position has been reaffirmed by the more than 175 local, regional and international accolades that it has won since 2004. In 2013, the bank won 11 awards across diversified areas, including retail, corporate and investment banking, as well as corporate social responsibility and consultancy services.

Recent awards include being named ‘Best Islamic Retail Bank’ at the Banker Middle East Industry Awards, ‘Best Sukuk House’ at the EMEA Finance Middle East Banking Awards and receiving the ‘Dubai Human Development Award’ from the Department of Economic Development.
While the bank will always have a historical position as the first Islamic bank, DIB has always had its eyes set firmly on the future. With a challenging goal to become the most progressive Islamic financial institution in the world, DIB is devoted to entrenching its position even further as a cornerstone of the industry. With these objectives in mind, the bank is committed to supporting Dubai’s aim of becoming the capital of the global Islamic economy, which is currently estimated to be worth around $6.7trn.
DIB is excellently positioned to support and benefit from the increasing demand for the products and services that it has pioneered. The consumer segment will likely continue to drive much of that expansion, while the rise of Islamic insurance, or takaful, will also make a lasting contribution. Sukuk, Islamic mortgages and Islamic pension funds represent other key areas of growth.
Since 1975, the landscape of the UAE has changed almost beyond recognition. New roads and bridges have sprung up everywhere, as have awe-inspiring hotels, shopping malls and real estate developments, including, of course, the world’s tallest building. One of the few constants amid this sea of change has been Dubai Islamic Bank. As the future continues to be a promising one for the country, DIB stands firm in its commitments to be a critical part of this growth.
(World Finance / 13 Jan 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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