Amlak posted second biggest profit ever

Dubai Islamic mortgage firm sees net income surge 98% on higher lending and reduced borrowing costs.
Amlak posted second biggest profit ever
By John Irish
Wed 03 Oct 2007 09:26 PM

Dubai-based Islamic mortgage company Amlak Finance posted its second biggest profit ever in the third quarter, doubling over last year, as it lent more and cut borrowing costs. The firm beat analysts' forecasts.

Net income in the three months to September 30 surged 98% to 67 million dirhams ($18.25 million), or an annualised 0.15 dirhams per share, the company said in a statement.

Revenue jumped 59% to 155 million dirhams, it said. Earnings per share last year were 0.10 dirhams.

"There has been strong growth in our core business," Amlak Chairman Nasser Al-Shaikh told Reuters. Dubai paced the growth in lending, Al-Shaikh said.

Forecasts for third-quarter profit ranged from 38 million dirhams to 52 million dirhams, according to a Reuters survey of analysts last month.

"We are doing things a little bit more efficiently," Al-Shaikh said. "We have lowered our borrowing costs" after renegotiating credit line agreements with banks, Al-Shaikh said, without giving details.

Still, overall costs grew as the lender expanded overseas, Al-Shaikh said, without giving details.

The company is likely to exceed its annual profit-growth target of 70%, Al-Shaikh said. "Most probably, we will exceed that," he said, declining to be more specific.

Amlak earned 130.42 million dirhams last year, according to Reuters data.

Shuaa Capital started coverage of Amlak in August with a 'sell' rating, saying its market valuation was inconsistent with its profitability relative to global housing finance peers, as well as banks in the Gulf Arab region.

Shares of Amlak have plunged 36% this year, the second-worst performing stock in the Dubai index.

Shuaa gave Amlak shares a fair value target of 2.30 dirhams each. The shares last traded at 3.26 dirhams each, declining 1.51% on Wednesday.

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