Key takeaways:   NIMs to widen in 2H on improved yield on assets Loan growth guidance maintained at a conservative 10-15% (YTD growth 12%) Targeting cost of risk of 70bps for 2016, in line with trend in 1H16   Overall: While management acknowledges that 2016 is a challenging year, predominantly for liquidity and asset quality, management is confident that it would deliver on its targets for the remaining of the year.   NIMs: The current liquidity squeeze has put pressure on NIMs that fell slightly on higher funding costs. Management is confident they will be able to achieve their target NIM of 3.25-3.50% in 2016 from 3.18% in 1H16. The bank would manage to pass on some of the deposit costs to the assets. Within the next 12 months, management expects that c.60% of its assets would re-price upwards (wholesale book and variable portion of retail book), while a lower proportion of deposits would reprice with a lag effect of three to four months. DIB has grown its CASA deposits by 15% YTD on higher payroll accounts and operating accounts from the government . DIB is focusing on shifting to high-yielding products to push up asset yield.   Loan growth: 12% YTD, in line with DIB’s growth strategy based on a diversified exposure to all sectors, with no focus on a specific segment. The bank’s real estate exposure has declined to c.16%, from c.22% as DIB reclassified some of the contractors’ financings that were not related to real estate, and moved them from the real estate book to the corporate book. Management reiterated its loan growth guidance for FY16 of 10-15% loan growth   Asset quality has been improving steadily over the past couple of years and converging towards management target of 4.0% NPL ratio in 2016 (4.5% as of 2Q16). On provisioning, DIB managed to decrease its cost of risk thanks to improving credit quality and few recoveries on certain loans that have been performing over last year. Regarding SMEs, DIB said that its exposure is not significant as it was a late entrant in the SME segment. DIB believes the sector as a whole has taken necessary provisions for the potential headwinds related to SMEs. Management reiterated its guidance of 70bps CoR for FY16.   Cost-to-income: DIB expects it to fall to low–mid 30% in end-2016 (34.3% in 1H16) driven by i) tighter cost management with costs down on absolute basis; ii) streamlining of some of DIB’s businesses; and iii) higher income base.   Rights issue: DIB’s AED3.2bn rights issue was three times oversubscribed and brought in 1 million new shares to the capital. Following the rights issue, ICD’s stake increased by 0.5% to 28.3%. (Company conference call, 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