Troubled mortgage lender Amlak Finance posted a net loss of Dh135.1 million (US$36.78 million) in the first half of the year.
Amlak tumbles into red as writedowns weigh
Amlak Finance, the home finance company in merger talks with its rival Tamweel, lost Dh67 million (US$18.2m) in the second quarter as it took provisions on mortgages made on incomplete properties. The sharia-compliant finance firm based in Dubai had reported a net profit of Dh145m for the same period a year earlier, it said. "The loss in the second quarter was inevitable, as Amlak had to make higher general provisions for the financing portfolio," Ali Ibrahim Mohammed, the vice chairman of the firm, said in the statement. Amlak and Tamweel suspended operations last November when the Government said the lenders would be part of a four-way merger to create the Emirates Development Bank. The Emirates Real Estate Bank (EREB) and Emirates Industrial Bank (EIB) are the other two entities to be folded into the new company. Amlak and Tamweel have both suffered from tumbling property prices and severely reduced demand for mortgage finance since Dubai's six-year property boom came to an abrupt end last autumn. Property prices in Dubai have fallen as much as 50 per cent from their peak and could fall further this year, according to a Deutsche Bank report in June. Amlak said its headline revenue from retail mortgage activity had been steady in the first half of this year, showing modest growth to Dh385m from Dh376m, on the back of 16 per cent growth in the property financing book for the same period. "The numbers are better than our expectations," said Ali Khan, the managing director at Arqaam Capital in Dubai. "The loss figure was expected to be in excess of Dh100m." Amlak did not generate any income from its property investments in the second quarter, compared with Dh104m a year earlier. "The numbers from Amlak's core operations are important, but more important is the state of their investment portfolio," Mr Khan said. "There will be further write-downs and that is what investors and analysts alike are waiting for." Arif Alharmi, the Amlak chief executive, said the firm was confident about the long-term outlook of its mortgage business and revealed that it had been divesting from its international portfolio, without giving further details. "Our main endeavour in the second quarter was to reduce and restructure our real estate investment obligations, as well as divest from international portfolio investments," Mr Alharmi said in the statement. Amlak said yesterday it was still awaiting a decision from the Government on the future of the company and its proposed merger with Tamweel. "We anticipate the Federal Government to announce their decision on the restructuring of the company, which will then add further stimulus to our business operations," Mr Mohammed said. Shares of both Amlak and Tamweel were suspended from trading on the Dubai Financial Market last November, when the Government announced they were to be restructured. firstname.lastname@example.org