Dubai Islamic mortgage lender made US$7.5m, blaming decline on provisions
Tamweel, the Dubai-based Islamic mortgage lender, posted a 11.3 percent drop in fourth-quarter net profit on Tuesday, Reuters calculations show, with the company blaming a full-year decline in earnings on provisions.
Tamweel, currently the focus of a full takeover offer from majority shareholder Dubai Islamic Bank, made AED27.5m (US$7.5m) in the final three months of 2012, versus a AED31m profit in the corresponding period of 2011.
Reuters calculated the profit figure based on previous financial statements.
Despite the decline, the quarterly earnings beat the estimates of brokers Arqaam Capital and EFG Hermes, who forecast AED23m and AED19m respectively.
For the full year, Tamweel made a net profit of AED72.5m in 2012, according to a bourse filing, a 28.9 percent drop compared with AED101.9m in the previous year.
"Net profit was lower in the current year due to exceptional provisions relating to certain ongoing litigations for which the company made full provision while continuing to fight its rights," Tamweel said in a separate statement.
It did not elaborate further on the litigations.
Dubai Islamic Bank said on January 3 its board had approved plans to fully acquire Tamweel, in which it already holds a majority stake of 58.2 percent.
Each Tamweel shareholder will be offered 10 DIB shares for every 18 Tamweel shares they hold in a tender offer, which has yet to be scheduled. Once this has been completed, DIB will delist Tamweel from the Dubai Financial Market.
Shares in Tamweel, a favourite of retail investors, have dropped 1.8 percent in 2013, having jumped around 89 percent in 2012.