The Islamic mortgage lender Tamweel said profit doubled in the third quarter as income from Islamic financing grew and bad-loan provisions fell.
Tamweel, whose shares resumed trading in May after being suspended for more than two years, posted a net profit of Dh15.6 million, compared with Dh7.34m in the same period last year, the company said in a filing to the Dubai bourse yesterday.
Income from Islamic financing and investing assets rose to Dh136.5m, compared with Dh128.9m, while impairment provisions narrowed to Dh13.5m, compared with Dh46.6m.
Tamweel and Amlak Finance were the two largest home finance providers in the UAE, especially to property developers such as Nakheel and Emaar Properties, which have recently faced challenges selling apartments and villas in a depressed property market.
Tamweel jump-started lending last November after Dubai Islamic Bank raised its stake in the company to 57 per cent from 21 per cent to help support the mortgage market. Analysts say they see deep value in Tamweel's shares after the stake increase, and margins could improve if the lender can access the strong cash position of its largest shareholder.
"The mortgage lender has fixed its liquidity position and has a strong balance sheet," said Jaap Meijer, a banking analyst at AlembicHC. Mr Meijer has a "buy" rating on Tamweel, with a target price of Dh1.42, offering an upside of 108 per cent. "We believe the market continues to ignore Tamweel's strong fundamentals while factoring in a long real estate recovery and higher impairment charges," he said.
Last month, the company said it planned to raise US$300m to $500m selling Sharia-compliant debt in the fourth quarter, its first debt sale since 2008. The issue, likely to be priced in dollars or Malaysian ringgit, is required to be a self-sustaining business, said Varun Sood, the company's acting chief executive.
Tamweel has appointed three banks for the Islamic offering.
The shares declined 0.9 per cent to 69.1 fils before the results were announced, giving the company a market value of Dh691m.