Abu Dhabi // Tamweel, the second-largest home finance provider in the UAE, saw its rate of profit growth slow in the third quarter, compared with the previous two quarters. While profits for the first nine months of the year surged to Dh573 million (US$155.9m), a 135 per cent increase on the same period last year, the earnings growth rate appeared to be slowing as the economy entered more difficult territory and credit became more scarce.
In the first and second quarters, Tamweel net profit shot up by 249.4 per cent and 266 per cent, respectively, compared with the corresponding quarters of the year before. In the third quarter, however, profit grew by only 37 per cent to Dh185.7m, Tamweel reported today. "The third quarter witnessed the commencement of tight liquidity conditions and increased funding costs influenced by deteriorating conditions across global financial markets," said Wasim Saifi, the chief executive of Tamweel. "The continuation of these conditions is likely to impact the performance of the real estate and financial services sector over the next few months. With the timely intervention of the Central Bank of the UAE and the Ministry of Finance, however, we are optimistic that adverse local market conditions will generally improve."
On Oct 4, Tamweel and Amlak Finance announced in a joint statement that they had entered preliminary merger talks in a move that analysts said was the first of a wave of consolidations in the market that would be orchestrated to help get through the world financial crisis. Such a merger would create the region's largest home-finance provider with a combined balance sheet of more than Dh27 billion. They plan to finalise a deal by the end of the first quarter of next year.
Tamweel's share price has also taken a beating this year, losing about 68 per cent of its value. today, its shares shed Dh0.16 to closing at Dh2.19. The company has been under the spotlight since its former chief executive, Adel al Shirawi, was detained by Dubai prosecutors on allegations of financial improprieties. Officials have given no update on that case since it was announced this summer.
Tamweel predicted a maturing market would help improve its profitability. The company also said it expected the share of mortgage-financed property transactions in the UAE to rise to 40 per cent by 2011, compared with the current level of 25 per cent. Buyers are more likely to use mortgage financing when they plan to live in homes, rather than sell them for speculative profit. "The growth opportunities for mortgages are expected to remain buoyant in the next three years," the company said.
Tamweel also reported deriving an increasing percentage of its income from Islamic financing and investing assets. It reported income of Dh565m, an increase of 139 per cent from the Dh236m in the same period last year. @Email:firstname.lastname@example.org