Dubai Islamic Bank (DIB), the largest sharia-compliant lender in the emirate, has announced that its second-quarter net profit surged 27 per cent as provisions dropped, surpassing analysts’ forecasts.

The bank had profit of Dh310 million ($84.4 million) in the three months to June 30, up from Dh245 million in the prior-year period, it said in a bourse statement.

Two analysts polled by Reuters forecast net profit of Dh246 million and Dh267 million.

DIB's profit for the first half of the year increased marginally, hitting Dh555 million against $552 million recorded for the first six months of 2011.

A 19.4-per cent drop in impairments in the second quarter boosted the bank's top line. Provisions stood at Dh241 million, down from Dh299 million last year.

"DIB has been able to achieve sustained profitability while continuing to strengthen its balance sheet," Mohammed Ibrahim al-Shaibani, chairman of DIB, said in the statement.

Customer deposits stood at Dh68.3 billion at the end of June, up 5 per cent from the Dh64.8 billion figure at December 31, 2011.

DIB priced a five-year, $500 million Islamic bond, or sukuk, in May, the first time the bank tapped debt capital markets since 2007.

Ahead of the results, the bank's shares rose 1.1 per cent on the Dubai bourse on Tuesday.

“DIB has been able to achieve sustained profitability while continuing to strengthen its balance sheet,” said Mohammed Ibrahim Al Shaibani, the chairman of Dubai Islamic Bank. “Assisted by a prudent strategy of diversifying our funding sources, DIB remains highly liquid and superbly placed to support the financing needs of the UAE, its economy and its people.”

“Moreover, our recent Sukuk, which was four times oversubscribed, served to underscore investor confidence in the DIB business model.”

“Alongside our strong financial performance, the first half of 2012 has been notable for our continued drive to provide customers with the best possible Islamic banking experience and products,” said Abdulla Al Hamli, chief executive officer of DIB.

“With four new branches opened already in 2012, our on-going expansion strategy has brought us even closer to our customers. Yet, it is through alternative banking channels where we have made the most significant advancement.”

“The launch earlier in the year of our exceptional Al Islami Business Online service, a portal enabling companies to access over 75 services at the click of a button, embodies our commitment to being not only the UAE’s, but also the region’s leading Islamic bank,” Al Hamli concluded. – Reuters & TradeArabia News Service