960402

Largest Islamic

bank reports

34pc surge

in profits

DUBAI: The biggest Islamic bank in the world boosted its profits by around 34 percent in 1995 although it was hit by the collapse of the Bank of Credit and Commerce International, its balance sheet showed Tuesday.

Net profits by the Dubai Islamic Bank (DIB) stood at 282 million dirhams ($76.8 million) in 1995 compared with nearly 211 million dirhams ($57.5 million) in 1994, showed the sheet, which was approved late Monday.

The profits included 40.5 million dirhams (11 million dollars) for shareholders and the rest for depositors.

Operating income, mostly from investment in Islamic institutions and financing projects, surged by 19.5 percent to 457.3 million dirhams ($124.6 million). The bank approved 10 percent cash dividend for shareholders.

Around 87 million dirhams were set aside for reserves to make up for losses from the collapse of BCCI, which was controlled by Abu Dhabi emirate.

DIB had a deposit of nearly 315 million dirhams ($85.8 million) with BCCI, which was closed worldwide in July 1991 after allegations of massive fraud.

DIB has been asked by the United Arab Emirates (UAE) central bank to transfer part of its profits to provisions over a period of four years to offset the loss from its BCCI deposit. With the latest transfer, DIB has covered 92.5 percent of that deposit, according to DIB sources.

The balance sheet showed DIB's assets grew by 12.7 percent to 6.17 billion dirhams ($1.68 billion) in 1995 and deposits by 11 percent to around 5.74 billion dirhams ($1.56 billion).

Shareholders equities, which include the capital and reserves, jumped by 39.7 percent to 432.8 million dirhams ($117.9 million).

The rise was due to an increase in the bank's capital following a decision by shareholders in 1992 to double it to 420 million dirhams ($114.4 million) by the end of 1996. This made it the world's biggest Islamic bank.

The balance sheet showed DIB's capital adequacy, the ratio between shareholders equities and assets, averaged 7.2 percent at the end of 1995. The level is lower than the eight-percent floor recommended by the Bank for International Settlement for banks worldwide.

DIB does not deal in interest, which is prohibited as usury in Islam. It charges a certain percentage of profits from the project it finances.-AFP