Dubai Islamic Bank
Fundamental — what it's worthbottom-up fair value
Built up from a dividend model, an FCFE cash-flow valuation, relative multiples and the value of retained capital — what is it worth?
Is it cheap or expensive right now?
Latest price vs our fair value. A comparison, not a recommendation.
What it's worth — five lenses
Five independent valuation methods, blended into one weighted central fair value.
| Valuation lens | Per share (AED) | Weight |
|---|---|---|
| Dividend discount model — primary | 10.90 | 30% |
| Residual income (multi-period build) | 11.20 | 20% |
| FCFE (equity DCF) | 10.44 | 15% |
| Relative multiples (same-day peer anchor) | 8.14 | 20% |
| Normalized through-cycle | 9.86 | 15% |
| Weighted central fair value | 10.18 | +32% vs spot |
The five lenses span AED 8.14 (the relative-multiples lens, conservative) to AED 11.20 (the residual-income build); the dividend model (AED 10.90) and the FCFE build (AED 10.44) sit above spot too. The net profit margin path, the pace of cost-of-risk normalization, and the Iran-war/Hormuz risk premium are the swing factors — see the crux, §1.8 of the study. Full detail is in the study and the open model.
Technical & price structuretrend, momentum, key levels
Trend, momentum and key levels — what is the price doing now?
What the chart says
In plain terms: Dubai Islamic Bank is the UAE’s largest Islamic bank, earning a 19%+ return on tangible equity, yet it trades at just 1.31× book — cheaper than every UAE bank peer, on one of the best returns among them. It got there in two steps: an 8.6% collapse the session after February’s results, when the dividend was cut from 45 fils to 35, and then the regional war. Five lenses put fair value between AED 8.14 and AED 11.20, weighted central AED 10.18 — and unusually, even the market-anchored relative lens sits above the price, not on it. The honest counter is capital, not valuation: CET1 of 12.6% sits close to the effective 12.5% regulatory floor, the margin is still falling, and the cost of risk has already tripled off a very low base. Squeeze both at once and the buffer thins further, and a second dividend cut becomes the live risk. What moves it near-term is the margin path, the cost of risk, and whether the Iran-war ceasefire — broken and restored more than once already — holds.
Key levels
Volatility & where the case breaks
| Typical daily moveRoughly how far the price swings in an average day (based on a measure called ATR). Bigger means choppier. | ~1.9% |
Monte Carlo — where could the price go?near-term price paths
50,000 simulated futures — near-term price paths, independent of the fundamental value.
The 5th–95th and 25th–75th percentile bands from the 50,000-path simulation. Static and pre-computed — independent of the fundamental levers above.
The exact percentiles
The 5th / 25th / middle / 75th / 95th outcomesLine up all 50,000 outcomes low to high — these are the values at the 5%, 25%, 50%, 75% and 95% marks., from 50,000 paths.
| Timeframe | Rare low (5%) | 25% | Middle | 75% | Rare high (95%) |
|---|
What drives the odds
The study's real engine is a carry-anchored, fat-tailed Monte Carlo (50,000 paths) fitted on a nine-name UAE bank panel — it failed its own calibration test on this name (skill score −0.025 across every resampling scheme; study §3.1), so no forecast is published. The interactive tool above is a separate, simplified illustrative approximation built around DIB’s five real crux drivers: the net profit margin path, the effective tax rate, the pace of cost-of-risk normalization, the Iran-war/Hormuz risk premium, and the dividend/capital signal. Details in the methodology.
Peer set & risks
Where Dubai Islamic Bank sits in its markets
Dubai Islamic Bank is the UAE’s largest Islamic bank — a D-SIB earning a ~19% return on tangible equity, yet trading at just 1.31× book, the cheapest multiple in the UAE bank set on one of the best returns. This is a competitive map, not a price table.
| Arena | DIB's position | Main rivals |
|---|---|---|
| Largest Islamic bank (UAE) | #1 | Abu Dhabi Islamic Bank |
| Return on tangible equity | ~19% (top of the pack) | vs ADIB ~25.8%, ADCB ~18.1% |
| Price to book (same-day, 03-Jul) | 1.31× (cheapest in the set) | ADCB 1.52×, ADIB ~3.5× (Feb-26, stale) |
| Cost-to-income | ~28% (guided) | sector ~26–29% |
| Net profit margin | ~2.5% (falling) | sector ~2.4–3.0% |
| Capital (CET1 ratio) | ~12.6% (near the 12.5% effective floor) | sector generally better-buffered |
The debate is not whether DIB is cheap — on book value it clearly is, even against its own market-anchored lens. The debate is whether that discount is compensation for a real risk: a margin still falling, a cost of risk that has already tripled, and a capital buffer sitting close to its effective floor. Competitive map, not advice.
About this series & how we build these
Want the full study and the spreadsheet?
Full write-up plus the editable Excel model.
Found a flaw? Attack the model
The full study (PDF) and Excel model are available on a computer.
Edition: 11 Jul 2026. Older editions stay in the Library.