Dubai Islamic Bank

Risk Management Structure

General Shareholder
Meeting

Board of Director
.
RM Committee

Management
Internal Audit
RM Mngt &
Control
Treasury

Financing and Invest

Financing
Commodities murabah
International murabah
Vehicles murabahat
Real estate murabaha
Total Murabahat
Istisna'a
Ijara
Islamic credit cards

Less:
Deferred income
Provision for impairm
Contractor & consulta
Total Financing
Investing
Musharakat
Mudarabat
Wakalat

Less Provision for imp

Total Investing
Total Financing & Inve

Customers' Deposit
Current Account (FRA
Saving Account (FRA)
Investment Deposit (R
Margin Account (RSL)
Profit Equalisation Pro
Total

Income Gap Analy

(in AED '000)

FRA -Fixed Rate As

RSA-Rate Sensitive
Total Financing and

FRL-Fixed Rate Lia

RSL-Rate Sensitive
Total Liabilities

Earning at risk:
Income Gap = RSA

Source: Author, calc

investing assets and

Financing and Investing Assets

Financing
Commodities murabahat
International murabahat, long term
Vehicles murabahat
Real estate murabahat
Total Murabahat

2008

2007

24%
5%
19%
19%
67%
0%
24%
29%
1%
121%
0%
0%
-13%
-3%
-4%
100%

8,452,997
2,405,710
4,979,679
6,071,640
21,910,026

Less Provision for impairment

Total Investing
Total Financing & Investing

10,047,283
7,208,814
846,491
18,102,588
(58,337)
18,044,251
52,659,009

56%
40%
5%
100%
0%
100%

4,544,234
5,920,503
186,598
10,651,335
(78,007)
10,573,328
40,534,848

43%
56%
2%
101%
-1%
100%

Customers' Deposit
Current Account (FRA)
Saving Account (FRA)
Investment Deposit (RSL)
Margin Account (RSL)
Profit Equalisation Provision (FRA)
Total

2008
14,060,338
11,151,372
40,608,612
281,497
325,391
66,427,210

%
21%
17%
61%
0%
0%
100%

2007
13,804,657
8,730,070
41,619,982
450,800
570,085
65,175,594

%
21%
13%
64%
1%
1%
100%

Istisna'a
Ijara
Islamic credit cards

Less:
Deferred income
Provision for impairment
Contractor & consultant' istsina contract
Total Financing
Investing
Musharakat
Mudarabat
Wakalat

Income Gap Analysis

(in AED '000)
FRA -Fixed Rate Assset (Financing)
RSA-Rate Sensitive Asset (Investing)
Total Financing and Investing Assets
FRL-Fixed Rate Liabiliaties
RSL-Rate Sensitive Liabiliaties
Total Liabilities

8,328,993
1,779,248
6,735,209
6,431,362
23,274,812

8,443,662
9,946,785
309,800
41,975,059

(4,617,627)
(1,186,864)
(1,555,810)
34,614,758

2008
(in AED '000)
34,614,758
18,044,251
52,659,009
25,537,101
40,890,109
66,427,210

7,511,596
7,147,159
257,373
36,826,154

(4,031,793)
(1,046,662)
(1,786,179)
29,961,520

28%
8%
17%
20%
73%
0%
25%
24%
1%
123%
0%
0%
-13%
-3%
-6%
100%

2007
(in AED '000)
66% 29,961,520
34% 10,573,328
100% 40,534,848

74%
26%
100%

38%
62%
100%

35%
65%
100%

23,104,812
42,070,782
65,175,594

Earning at risk:
Income Gap = RSA - RSL

(22,845,858)

(31,497,454)

Source: Author, calculated from the Notes to Financial Statement no.9 Islamic financing and
investing assets and no 22.Customer deposit

Profit & Lost Statement

INCOME
Islamic Financing and investing assets
Islamic sukuk
International murabahat, short term
Share of profit of associates
(loss)/ income from other investment
Commission, fees and forex income
income from investment properties
income from sales of properties
Other Income
Total Income
EXPENSES
Personel expenses
General and Administrative Exp
Net impairment loss on financial assets
Depreciation of investment properties
Total Operating Expenses
Profit before depositors' share
Decrease of profit ('08-'07)
Depositor Share of profit
Percentage to total profit
Source: Dubai Islamic Bank P&L statement

2008
AED'000

2007
AED'000

3,204,840
551,101
266,208
401,034
(61,295)
872,127
180,401
31,718
98,723
5,544,857

58%
10%
5%
7%
-1%
16%
3%
1%
2%
100%

2,724,999
513,213
642,468
203,462
700,917
798,327
231,824
141,331
126,868
6,083,409

(882,497)
(517,045)
(520,830)
(20,125)
(1,940,497)

-16%
-9%
-9%
0%
-35%

(866,502)
(610,832)
(301,468)
(28,029)
(1,806,831)

3,604,360
-16%

65%

4,276,578

(1,876,205)
-52%

-34%

(2,395,074)
-56%

%
45%
8%
11%
3%
12%
13%
4%
2%
2%
100%
-14%
-10%
-5%
0%
-30%
70%

-39%

Assets And Liabilites in Local and Foreign Currency

at 31-12-2008
AED
USD
other
(AED '000)
(AED '000) (AED '000)
Financial Asset
59,756,998
15,057,170
2,569,527
% total
77%
19%
3%
Financial Liabilities
% total

64,686,573
85%

7,737,184
10%

3,538,836
5%

Total
(AED '000)
77,383,695
100%
75,962,593
100%

Source: Author, Notes to Financial Statement no.55.4.3 Concentration of currency risk

-on and off balance sheet financial instrument

at 31-12-2007

Financial Asset
% total
Financial Liabilities
% total

AED
(AED '000)
47,276,474
60%
56,101,318
76%

USD
other
(AED '000)
(AED '000)
26,602,560
4,394,332
34%
6%
12,996,914
18%

4,467,020
6%

Total
(AED '000)
78,273,366
100%
73,565,252
100%

39%

Past Due and Impaired Financing & Investing Assets

Islamic Financing & Investing Assets
2008 : AED 52.7 mln

Past Due AED 2.8mln

5%, (Rating 8)

< 30 days AED 1.4 mln

30-90days AED 2.04mln
> 90 days AED 0.76mln
Total
AED 2.8mln

Impaired AED 2.2mln

4%,(Rating 9,10,11)

Islamic Financing & Investing Assets

2007 : AED 40.5 mln

Past Due AED 1.1mln

3%, (Rating 8)

< 30 days AED 0.78mln

30-90days AED 0.87mln
> 90 days AED 0.23mln
Total
AED 1.1mln

Impaired AED 1.5mln

3%,(Rating 9,10,11)
Source:Author, summarized from FS Notes no.55.2.4 Credit Quality per class of Financial Assets

Islamic Financing & Investing

Credit Status
2008
AED '000
Low and fair risk
48,860,455
Past Due
2,816,879
Impaired
2,226,878
Allowance for impairment (1,245,201)
Total
52,659,011

%
93%
5%
4%
-2%
100%

2,007
AED '000
39,151,298
1,128,333
1,379,886
(1,124,669)
40,534,848

%
97%
3%
3%
-3%
100%

Asset, Including Contingent Liabilities and Commitments by Sector

Sector
2008
%
2007
%
AED '000
AED '000
Financial Institution
18,198,657
15%
32,083,302
31%
Government
9,914,793
8%
5,309,040
5%
Manufacturing & Services
35,460,529
29%
23,209,820
22%
Real Estate
37,052,940
30%
28,179,145
27%
Retail
7,626,802
6%
6,705,191
6%
Trade
13,238,268
11%
9,576,293
9%
Total
121,491,989
100% 105,062,791
100%
Source:DIB FS Notes no.55.2.2 Risk Concentration of the maximum exposure

Maturity Analysis of Assets and Liabilities

At 31 December 2008
Balance Sheet
<1 month
1-3 months

3 months
to 1 year
Account
(AED '000) (AED '000) (AED '000)
Asets
9,771,175 12,892,487 13,336,987
11%
15%
16%
Liabilities
10,123,502 16,249,229
270,618
12%
19%
0%
Net Maturities Gap
(352,327) (3,356,742) 13,066,369

Maturity Analysis of Assets and Liabilities

At 31 December 2007
Balance Sheet
<1 month
1-3 months

1-5
years
(AED '000)
40,893,615
48%
23,526,390
28%
17,367,225

Over 5 years
(AED '000)
8,136,849
10%
8,070,170
9%
66,679

3 months
1-5
Over 5 years
to 1 year
years
Account
(AED '000) (AED '000) (AED '000)
(AED '000)
(AED '000)
Asets
14,460,199 18,675,514 16,973,656
29,695,959
4,554,583
17%
22%
20%
35%
5%
Liabilities
5,641,221 24,915,498
4,609,555
39,726,920
9,446,717
7%
30%
5%
47%
11%
Net Maturities Gap 8,818,978
(6,239,984) 12,364,101
(10,030,961)
(4,892,134)
Source:Author, summarized from FS Notes no.52 Maturity analysis of assets and liabilities

Total
(AED '000)
85,031,113
100%
85,031,113
100%
-

Total
(AED '000)
84,359,911
100%
84,359,911
100%
-

Assets

2,008

2,007

AED'000

AED'000

Cash and balance with central bank

6,328,666

7%

4,905,657

Balance & deposit with banks & Other financial Insitution

1,840,978

2%

1,195,720

International murabahat with financial institution-short term

1,640,601

2%

16,279,701

Islamic financing and investing assets

52,659,011

62%

40,534,848

Investment in Islamic Sukuk

11,226,276

13%

8,511,759

Investment in associates

4,456,044

5%

3,741,596

Other Investment

2,107,936

2%

4,082,682

Properties (under cons,held for sale,investment)

2,431,120

3%

2,166,729

Receivable and other assets

1,671,728

2%

2,273,642

Property,plan and equipment

668,753

1%

630,667

100%

36,910
79,454,254

Good will
Total Assets
Asset increase

85,031,113
7%

Risk Weighted Assets

79,871,656

Risk Weighted Assets increase

67,099,518

19%

Source:Author, summarized from FS Notes no.55.6.1 Regulatory Capital

Basel

RWA

100 AAAA

20%

20

100 BBB

75%

75
95

Capital Ratio - Basel II

%
6%
2%
20%
51%

Tier 1 Capital
Tier 1 Capital Increase
Capital Ratio
= Tier 1 Caital / Risk Weighted Capital

2008
2007
AED'000 AED'000
8,901,814 8,423,170
6%
11.15%

12.55%

8,535,776
-3%

8797232

10.69%

13.11%

11%
5%
5%
3%
3%

Tier 1+2 Capital

Tier 1+2 Capital Decrease
Capital Ratio
= Tier 1+2 Caital / Risk Weighted Capital

1%

Source:Author, summarized from FS Notes no.55.6.1 Regulatory Capital

100%

tory Capital

Buffer Capital
at 31-12- 2008
Risk Weighted Asset
Capital Ratio Basel II
Minimum Capital Requirement
Compare to
Tier 1 Capital
Capital Ratio actual (Tier 1)

Tier 1+2 Capital

Capital Ratio actual (Tier 1+2)

AED'000
79,871,656
8%
6,389,732
8,901,814

AED'000

11.15%

Buffer of Tier 1:
2,512,082 3%

8,535,776
10.69%

Buffer of Tier 1+2:

2,146,044 3%

Source:Author, calculated from FS Notes no.55.6.1 Regulatory Capital

Buffer Capital
at 31-12- 2007
Risk Weighted Asset
Capital Ratio Basel II
Minimum Capital Requirement
Compare to
Tier 1 Capital
Capital Ratio actual (Tier 1)

Tier 1+2 Capital

Capital Ratio actual (Tier 1+2)

AED'000
67,099,518
8%
5,367,961
8,423,170

AED'000

12.55%

Buffer of Tier 1:
3,055,209 5%

8,797,232
13.11%

Buffer of Tier 1+2:

3,429,271 5%

Source:Author, calculated from FS Notes no.55.6.1 Regulatory Capital