Net profit up 6% Q-o-Q, meets estimate. DIB reported a net profit of AED929mn for 2Q16, +6% Q-o-Q and +3% Y-o-Y. The bank’s earnings were in line with our estimate of AED914mn (consensus AED917mn).     Our view of the results: DIB’s results were a mixed bag. Earnings came in line with our expectation as lower provisioning compensated for pressure on spreads. The bank’s cost of risk fell to 26bps from 100bps in 1Q16, aided by recoveries in the legacy portfolio. We suspect that recoveries from Dubai GRE Limitless enabled the bank to bring provisioning down this quarter. DIB’s NPL ratio eased to 4.5% from 4.7% in 1Q16, while NPL coverage improved to 100% from 97% in 1Q16. Spreads were the key weak area as they contracted 18bps Q-o-Q to 2.75% due to a combination of higher cost of funds and softer yield on assets. DIB’s spreads have continued to weaken since 3Q15 as liquidity in the system tightened. Loan growth however continues to be solid at 5.8% Q-o-Q and 25.0% Y-o-Y. DIB’s capitalisation improved -  Tier 1 ratio rose to 17.8% from 15.6% in 1Q16 - following the completion of the AED3.2bn rights issue in 2Q16. (Earnings release, Shabbir Malik, Murad Ansari)   Dubai Islamic Bank: AED5.38 as of 27 July 2016, Rating: Neutral, FV: AED5.80 per share, MCap: USD7,245mn, DIB UH / DISB.DU