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Home sweet home
UAE home mortgage provider Tamweel is keen to tap into emerging Gulf markets. CEO Wasim Saifi tells Tamara Walid why home is where the money is.
Tamweel, the UAE's biggest provider of home mortgages by market value, has had a good few years. 2008, however, promises to be even better. Or so believes the company's recently-appointed CEO, Wasim Saifi. His plush office with its leather sofas in one of Deira's landmark buildings certainly doesn't suggest failure.
Indeed, referring to growth in the first quarter of 2008, Saifi reveals: "The number of mortgages we sold [in the first quarter of 2008] was exactly the same as the number we sold in the whole year in 2006."
Releasing their first-quarter figures, the company reported a net income which more than tripled to US$47.9m, driven by a rising demand for homes in the Gulf country.
The numbers show net profit growth of 249%, compared to the first quarter of 2007; a 120% rise in Islamic financing and investing assets to US$1.8bn; and 128% increase in income from Islamic finance and investing assets to US$37.9m.
The figures look good but Saifi says it wasn't all a surprise. Rather, growth in the first quarter was "part of the strategic momentum that has been building up over the last two years" as the company has been pouring a substantial amount of cash into its distribution channels, products and services. All of which played a role in sales volumes skyrocketing.
"On one side, mortgage volumes contributed a lot to overall and profit growth," says Saifi, adding: "Obviously, the cost of funding came down because of the benchmark rates declining so we got some benefit from that. We passed on the reductions to our customers, but still the margins are looking wider than they were last year."
In 2007, Tamweel invested in several properties as "strategic investments", according to Saifi. One of the most high-profile deals that Tamweel sealed last year was its coalition with Bonyan International to buy US$525m of land in the Al Jadaf area of Dubai.
With such investments, according to Saifi, the profit for Tamweel lies in buying into properties, but not with the intention of selling them on in the same form. The strategy, he says, is to "buy it wholesale and then distribute it retail'.
"On the one side you benefit from the price differential and on the other you are also building a mortgage book," he explains. "All those factors resulted in this substantial growth in the bottom line."
Taking this growth a step further, Tamweel issued US$1.39bn worth of Sukuk last month to support its local and international expansion plans. The amount is broken down into US$300m of convertible Sukuk and US$1.09bn of non-convertible Sukuk.
After receiving its mortgage finance licence from the Egyptian Mortgage Finance Authority in February, the company's decision to launch operations in Egypt became official.
"At the moment for 2008, the priority is to get Tamweel Egypt and Tamweel Saudi Arabia up and running," says Saifi, adding that human resources for the Egypt office have been identified with operations set to start in the second quarter of this year.
As for Saudi Arabia, Tamweel has entered into a joint venture with the kingdom's Al Oula Development Company and business is expected to commence in the last quarter of this year.
In addition to Saudi and Egypt, the company is eyeing different geographic locations for expansion, including South Asia, parts of South East Asia, North Africa and the Middle East. By 2011, Tamweel predicts that international operations will contribute 30% of total revenues. Currently, however, Tamweel's expansions are closely tied to the footsteps of UAE's biggest developers.
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