Tamweel, one of the country's two major Islamic mortgage companies, yesterday reported a steep decline in profits as home finance income dipped.
Net income for the third quarter fell 28.6 per cent compared with the same period last year to Dh7.3 million (US$1.9m)and income from Islamic financing and investments dropped from Dh178m to Dh129m.
Dubai Islamic Bank's (DIB) purchase of a controlling 57.3 per cent stake in Tamweel in September, followed by the resumption of mortgage lending this month, has put the financier in the spotlight after a two-year withdrawal from the market.
Tamweel stopped financing property purchases in November 2008 as a government panel in Dubai contemplated a merger with Amlak Finance, the UAE's other big Islamic mortgage provider.
The financial crisis exposed critical flaws in both the Tamweel and Amlak funding models but the merger was ultimately called off after numerous proposals to combine their businesses fell apart.
Now DIB plans to transfer most of its mortgage activities to Tamweel, effectively making it the bank's home financing arm, according to Sheikh Khaled bin Zayed Al Nehayan, the outgoing Tamweel chairman.
He said DIB was already injecting Dh100m a month into Tamweel so it could restart lending. The company is offering to finance up to 80 per cent of the purchase price of property at rates of around 7.4 per cent.
Tamweel shares have not traded since talks about the Amlak merger began in 2008. It is unclear when they will begin trading again. Sheikh Khaled said that would be a decision for the company's new board to make.
Tamweel shareholders are scheduled to meet today to discuss the appointment of a new board and the approval of financial statements for 2008 and last year.
Sheikh Khaled, who sits on numerous company boards in the UAE, is planning to leave his position as chairman to make room for DIB executives who will integrate its mortgage business with the bank's.
"You need people who are going to be working on how to streamline the business with DIB," he said.