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Mon 14 May 2007 01:04 PM

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Amlak hopeful after profit plunge

Mortgage provider expects profit to grow despite declining profits and board resignations.

Islamic mortgage provider Amlak Finance, Dubai's second-worst performing stock this year, expects profit to grow in the second quarter, the company's chairman said.

"There will be growth in our profit and we will recover from the deficit," Nasser al-Shaikh told reporters in Dubai on Monday. He did not explain why net income would rise.

It is the
second time in a week

that the chairman has made such a statement.

The company posted its second-smallest profit in the first quarter in two years on higher costs. Net income in the three months to March 31 plunged 35.4%.

Last Wednesday, shares in Amlak Finance surged by almost 15% in one day's trading, which - along with several other companies -
prompted an investigation into suspicious trading

by the UAE stock market regulator. At the time al-Shaikh said that he could not explain the rise.

Amlak faces increasing competition from its main rival Tamweel, which recently posted an almost five-fold surge in first-quarter net profit, and from
Dubai Holding's Dubai First

, a new operation that will initially offer credit cards, and then home mortgages and other financial services.

Some have speculated that Amlak's future hinges on its application to the UAE Central Bank to become a bank and be able to take deposits, which - as of last Thursday - is still pending.

Alaa El Din Moustafa, chief dealer at EFG-Hermes, said that last week's surge in Amlak profits could have been down to rumours in the market it is about to be granted a licence to become an Islamic bank.

Earlier this month Amlak founder Mohammed al-Hashimi announced he would
step down as chief executive

and board member of the company. In March, Mohammed Alabbar - who is chairman of Emaar, which has a 40% stake in Amlak - stepped down from Amlak's board.

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