x Abu Dhabi, UAESaturday 20 January 2018

Stock rises to speed up Tamweel of fortune

Investors bought up shares of Tamweel after the Dubai mortgage provider received approval for its first ever dividend to shareholders since the property crisis in 2008.

Tamweel's stock surged more than 10 per cent yesterday after the Sharia-compliant mortgage provider approved a 5 per cent cash dividend, its first since the global financial crisis in 2008.

The US$50 million payout to shareholders comes after the company in January reported a nearly fourfold rise in annual profits to $102m.

"Tamweel's positive financial performance last year confirms that the company is firmly back in business," said Abdulla Al Hamli, Tamweel's chairman, in a statement posted on the Dubai bourse website yesterday. "Tamweel is now well positioned to move forward as a business, while continuing to play a full and active role in supporting the long-term recovery of the country's real-estate sector."

Tamweel ceased trading at the onset of the global financial crisis after its liquidity abruptly dried up, and an aborted merger with Amlak Finance left the company's shares frozen for almost three years.

That all changed after Dubai Islamic Bank paid Dh374.7m to raise its ownership in the mortgage company to 58.3 per cent, from 21 per cent. Tamweel resumed trading last May but the fate of Amlak remains unclear.

Tamweel's stock rocketed 10.6 per cent yesterday before closing up 6.56 per cent at Dh1.30 a share.

"The payout is massive news for Tamweel and a catalyst to re-rate the stock," said Fadi Al Said, a senior fund manager at ING Investment Management in Dubai. "It gives a signal from the company that it is comfortable with its balance sheet and liquidity position and another signal from the Central Bank, the regulatory body, that it is comfortable with a payout in the economic environment."

Tamweel's shares have risen 115 per cent since January amid investor expectations of strong dividend payouts after financial markets tumbled last year.

Dubai Islamic Bank, Tamweel's controlling shareholder, said this month it would pay a 10 per cent cash dividend payout to investors.