Dubai Islamic Bank PJSC (DIB) headed for the biggest advance in more than two years amid speculation the Shariah-compliant bank will obtain approval to acquire the stake it doesn’t already own in mortgage lender Tamweel PJSC. (TAMWEEL)
Shares of the lender known as DIB surged 4.3 percent, poised for the biggest jump since October 2010, to 2.17 dirhams at 12:58 p.m. in Dubai. Around 16 million shares were traded, the second most on the DFM General Index (DFMGI), which gained 1.5 percent. Dubai-based Tamweel fell 1.9 percent to 1.06 dirhams after soaring 9.1 percent yesterday.
DIB, which owns 58 percent of Tamweel, in January offered the mortgage lender’s shareholders 10 DIB shares for every 18 they hold for the remaining stake. The bid, which received approval from United Arab Emirates regulatory authorities and DIB shareholders, is awaiting a nod from Tamweel’s minority shareholders. Fitch Ratings placed Tamweel on credit watch positive on April 2 and affirmed DIB at A, its sixth-highest investment grade. Nobody was available from DIB to comment.
The bank’s advance is a combination of Fitch maintaining its credit rating and “expectations” that Tamweel shareholders will approve the bid, said Tariq Qaqish, deputy head of asset management at Dubai-based Al Mal Capital PSC. “In addition, the stock lagged the U.A.E. stock market’s recent rally with no justification. The stock is trading at very attractive multiples compared to Islamic banks regionally.”
DIB shares trade at 7.6 times estimated earnings compared with 10.8 times for Qatar Islamic Bank (QIBK), according to data compiled by Bloomberg. The shares have gained 8.5 percent this year, underperforming the Dubai measure’s 16 percent surge.
DIB is on ratings watch for a possible cut at Moody’s Investors Service.
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