Moody's assigns first-time ratings to Dubai Islamic Bank

All ratings carry stable outlooks.

DIB's foreign currency issuer ratings are set at A1/Prime-1 based on the bank's adequate intrinsic safety and soundness, and on a strong
likelihood of external support from the UAE authorities and DIB's main shareholders in case of need. Although on a stand-alone basis DIB's
foreign currency issuer rating would be rated much lower given the bank's D+ FSR, these ratings are lifted to A1/Prime-1, reflecting DIB's strong relationship with the Dubai government and its systemic importance as the
largest Islamic bank in the UAE.

The D+ financial strength rating assigned to DIB reflects its strong franchise as a leading Islamic financial institution and its satisfactory financial fundamentals. DIB is the largest Islamic bank in the UAE and one of the leading Islamic financial institutions in the region. Established in 1975 as the world's first Islamic bank, DIB is the UAE's fifth-largest bank overall in terms of assets (with a market share of 7%) and third-largest in terms of deposits (with a market share of 8%). With
the support of its controlling shareholder, the Dubai government, DIB has undergone a major organisational transformation during recent years, while the arrival of a broad and well experienced management team has placed it at the forefront of Islamic banking in the UAE and in the region. Leveraging its relationship with the Dubai government, DIB's franchise is enhanced by access to the government and to government-related business. Nevertheless, this relationship results in credit concentrations and high related-party exposure, elevating DIB's
overall risk profile.

Benefiting from wider profit margins and higher fee and commission income, DIB has been enjoying increasing earning power and profitability, though its main profitability indicators remain lower than those of peers. Credit quality is satisfactory with a very low level of problematic exposures. However, robust credit growth and high real estate exposure
raises DIB's credit risk profile. The FSR also takes into account the developing nature of the Islamic banking industry and the challenging operating environment in the bank's domicile, where any severe price correction in the overheating property and real estate market and further possible share price reduction in the equity market could affect the profitability and asset quality of the UAE banking sector.

All ratings assigned to DIB carry stable outlooks. Going forward, the bank's FSR could benefit from (a) significant expansion and further diversification of the franchise in an increasingly competitive operating environment, within an acceptable risk profile, (b) a material reduction in its exposure to the real estate sector and related party lending, and
(c) a stronger financial performance. On the other hand, the FSR could be lowered in the case of (a) severe deterioration in earning power and
profitability, (b) a sharp increase in non-performing loans, (c) a significant increase in the bank's leverage, and (d) a severe
deterioration in the operating environment. DIB's issuer ratings could be affected by any FSR changes or any changes in the bank's relationship with the Dubai government.

Dubai Islamic Bank is headquartered in Dubai, United Arab Emirates, and reported total assets of AED53.3 billion (USD14.5 billion) at
end-September 2006.