DIB eyes acquisitions in Asian markets

Updated 03 May 2013

DIB eyes acquisitions in Asian markets

DUBAI: Dubai Islamic Bank (DIB) has dealt with much of its balance sheet weakness and should see profits for 2013 grow in the high double digits, allowing it to eye acquisitions in new markets in Asia, officials said.
Leaders at the world’s oldest sharia-compliant lender told Reuters it had put aside around AED 5 billion ($ 1.36 billion) against the sort of soured property loans and transactions which drew into question Dubai’s future as a financial hub in 2009.
In his first media interview since taking over to deal with the fallout of the 2008 global crisis, Chief Executive Abdulla Al-Hamli said the bank was now anxious to expand but was being held back in part by the unrest dominating the Middle East.
His deputy Adnan Chilwan said the bank expects to see close to 17 percent growth in net profit this year after spending the last five years cleaning its books and strengthening its core banking operations.
“I can confidently say that Dubai Islamic Bank has nothing to hide. We are very strong, clean and ready for the next growth phase,” Al-Hamli said.
“2013 has started positively, with first quarter results up by 17 percent compared to last year,” Chilwan said.
“We anticipate similar growth for the remaining part of the year.”
DIB shares are up 43 percent so far this year to 2.88 dirhams, giving it a market capitalization of about AED 10.9 billion. Investment firm Arqaam Capital recently raised its target price for the bank to AED 3 from AED 2.6.
The 38-year-old bank needed government support after the global credit crisis burst the emirate’s property bubble, reducing real estate prices by more than 60 percent over three years after 2008.
Chilwan said the bank had cut real estate investment to 27 percent of its portfolio from 45 percent in 2008 and that it would be happy to trim that exposure further.

“The crisis has made us more aware of our key strengths and focus areas,” he said.
“The bank’s portfolio has changed and will continue to shift away from being real estate specific toward more consumer and wholesale banking.”
DIB’s non performing loans peaked at 14.5 percent after the crisis and dropped to 12 percent by the end of 2012. It hopes to reduce that figure to 10 percent this year.
“Geographically, expansion into Asia makes a lot of sense from where we are placed. One would want to look at Malaysia, Indonesia and maybe India,” Chilwan said.
The bank is also interested in the European markets but won’t be active before the dust settles in the euro zone, he said.
DIB expects to finalize its buyout of Tamweel through a share swap by mid May, Chilwan said, with the sharia-compliant mortgage lender due to be delisted right afterwards.
The bank does not plan to issue more sukuk this year. It was the second Gulf bank to issue a hybrid perpetual sukuk when it priced a $ 1 billion Islamic bond to enhance its Tier 1 capital ratio in March. Its Tier 1 ratio rose to 17.7 percent at the end of March, compared to 13.9 percent as of Dec. 31, 2012.

Automechanika Riyadh opens, featuring leading global suppliers

Updated 15 min 55 sec ago

Automechanika Riyadh opens, featuring leading global suppliers

  • Saudi auto deals grew 40 percent last year with influx of female buyers

RIYADH: Leading names in the global auto services industry are out in force at Automechanika Riyadh — which opened on Monday at Al Faisaliah Hotel — vying to increase their share of a growing market expected to reach a value of $10.15 billion by 2023.

Automechanika Riyadh is the regional arm of the world’s largest trade fair, congress and event organizer, Messe Frankfurt, which has licensed the Automechanika brand to event organizer Al Harithy Company for Exhibitions (ACE) Group.

Mansour Abdullah Al-Shathri, vice chairman of the Riyadh Chamber of Commerce, inaugurated the trade event, which will run from Feb. 24-26.

It was revealed that Saudi auto deals grew approximately 40 percent last year, with female buyers accounting for between 10-15 percent of sales after the landmark decision to allow women to drive in the Kingdom for the first time.  

“International suppliers are stepping up their marketing for the resurgence in Saudi’s market, and this impacts the entire supply chain,” said Mahmut Gazi Bilikozen, show director for Automechanika Riyadh.

“While there is growth potential in the market, it is becoming a more competitive landscape and one which will also have to contend with evolving customer preferences. The conditions are ripe for new business relationships for those wishing to succeed in this transformative environment,” he added.

Zahoor Siddique, vice president of ACE, said: “Future vehicles will become more complex and challenging for the aftermarket industry. It is therefore imperative for manufacturers, local garages, technicians and mechanics to upskill and remain above the curve. 

 “Automechanika Riyadh is one such platform that can enable us to share and learn what the industry needs to unleash its potential.”

Two major US players — disc pad producer Giant Manufacturing and United Motors Mopar, the Kingdom’s sole distributor of Chrysler, Dodge, Jeep and Fiat cars — forecast a bullish market over the next few years.

Giant’s vice president, Eli Youssian, said he believed car sales in the Kingdom would grow by 9 percent annually until 2025, while United Motors District CEO Hassan Elshamarani expected another three million female drivers to be on the Kingdom’s roads by the end of the year.

Both Giant and United Motors launched new products at the show, with the former rolling out its new German-engineered Euro Premium Metallic Disc brake pads, and the latter introducing its Magneti Marelli spare parts.

The high potential of the new-look Saudi automotive landscape has also struck a major chord with South Korean suppliers.

The show’s Korean pavilion is hosting new-to-market entrants and existing suppliers all looking for business partners. With products from wiper blades to filters and air-conditioning parts to brake pads, the Korean contingent was positive about the Kingdom’s prospects.

One exhibitor, D Only Automotive, is looking to ring fence 10 percent of the Saudi brake market. “With more vehicles on the road, demand for brakes will increase, (so) we believe this is possible,” said President Jeon JaeWon.

Global research and analytics firm Aranca — Automechanika’s knowledge partner — has forecast that Saudi Arabia’s automotive spare parts and service market will grow at approximately 6 percent over the next five years to reach a value of $10.15 billion by 2023.

“The spare parts and service market for passenger cars alone is expected to eclipse $6.9 billion by 2023,” said Vishal Sanghavi, Aranca’s automotive practice head.