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Amlak expects profits boost
Islamic mortgage provider Amlak Finance expects profit this year to grow after agreeing with more developers to offer home loans for their projects, its chairman said on Wednesday.
Amlak, Dubai's second-worst performing stock this year, posted its second-smallest quarterly profit in two years in the first quarter as higher costs and delays in property projects hit revenues. Net profit dropped 35.4 percent.
"Our goal is, toward the end of the year, to return to profit-growth and for 2007 profit to surpass last year," Nasser al-Shaikh told Reuters in an interview in Dubai. He declined to be more specific.
Amlak, in which Emaar Properties has a 40 percent stake, made 130.42 million dirhams ($35.51 million) in 2006, 23 percent more than 2005.
Competition in providing retail mortgages has intensified since UAE emirates, including Dubai and Abu Dhabi, opened their real estate sectors to foreign investment, triggering a property boom.
In Dubai, Amlak is in the "final stages" of talks with Sama Dubai, the real estate investment arm of Dubai Holding, about providing home loans to buyers at its developments, including the 65 billion dirham waterfront Lagoons project, Shaikh said.
It also wants to provide home loans for more development projects managed by state-run Dubai Properties, he said.
In Abu Dhabi, where it provides mortgages for projects of Sorouh Real Estate, Amlak is in talks with real estate firm Manazel about providing home loans to buyers of its residences, he added.
"Our competition is getting very close. I don't think we have been aggressive recently," Shaikh said.
Amlak's main rival, Tamweel, on Tuesday posted an almost five-fold surge in first-quarter net profit to 50.47 million dirhams, more than double what Amlak made in the quarter.
Tamweel was more profitable because it focused more than Amlak on getting
revenue from home loans on properties that would be delivered in the future rather than completed projects, said Azza al-Arabi, an equity analyst at EFG-Hermes.
"Amlak needs to diversify its revenue because there is always a risk property deliveries will be delayed," Arabi said.
NEW MANAGEMENT
Changes in senior management this year would help boost the Amlak's profitability, Shaikh said.
Amlak announced this week that Arif Alharmi, who headed commercial banking
at HSBC's Islamic banking division, HSBC Amanah, would take over as chief
executive by the end of the month.
Mohammed al-Hashimi, who has headed Amlak since 2001, and Deputy Chief
Executive Shahli Akram will both step down by the end of the month, Shaikh
said.
"We have fresh blood in the company. I think things will pick up," Shaikh said.
Amlak's Egyptian unit will begin selling mortgages in June and become profitable next year, Shaikh said. It will also open in Saudi Arabia by the end of the year, and is considering expansion into Syria, Morocco, Pakistan and Turkey, he said.
Amlak, which wants to convert into a bank to take deposits if it gets regulatory approval, is talking to Emirates National Securitisation Co. and banks about raising money through Islamic bonds or asset-backed securitisations, he said, declining to be more specific.
Shares of Amlak surged 14.84% on Wednesday.
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