Tamweel profit surges as Dubai property stabilises

Tamweel, the mortgage lender controlled by Dubai Islamic Bank, reported a fourfold increase in fourth-quarter profit as property prices in the company’s home base stabilised.

Net income climbed to AED31m ($8m) from AED8m a year earlier, the Dubai-based company said in a statement Sunday. EFG-Hermes Holding estimated a profit of AED8m for the quarter.

Dubai’s property market is stabilizing after prices had one of the world’s biggest reversals following the global credit crisis, with home prices slumping more than 60 percent from their peak in mid-2008.

Nakheel this month announced plans to start its first project on the Palm Jumeirah island since the company received a government bailout in 2009.

Al Habtoor Group plans to spend $1.33nn to build a hospitality complex in the emirate, it said on Jan 18.

Tamweel, which along with Islamic lender Amlak provided almost 90 percent of all mortgages in the UAE, halted lending in October 2008. The company resumed lending after Dubai Islamic Bank raised its stake to 58 percent in September 2010 to help support the mortgage market.

“Tamweel is firmly back in business,” Chairman Abdulla Ali Al Hamli said in the statement. “Tamweel will continue to play a key role in supporting the long-term recovery of the country’s real-estate sector.” The board recommended a dividend of 5 fils for 2011.

The mortgage company sold $300m in sukuk this month, its first offering since 2008. The yield on its 5.154 percent bonds due January 2017 has fallen 20 basis points since they began trading Jan. 17 to 5.53 percent on Jan. 27.

The shares lost 1.1 percent to close at 64 fils today before the results were announced. The stock has gained 6 percent this year compared with a 3.6 percent increase for Dubai’s benchmark DFM General Index.