By Ben Flanagan
But there's still no news on the status of the mortgage provider's UAE banking licence request.
Amlak Finance, the Dubai-based Islamic mortgage provider, has won approval to start operations in Saudi Arabia as it seeks new sources of revenue overseas.
The company has joined with local partners to create a company with share capital of one billion riyals ($266.7 million) with a 99-year licence, Amlak said today in a statement posted on the Dubai Financial Market (DFM) website.
Its Saudi venture is likely to offer mortgages, rather than any other kind of financial services, a spokesperson for the company told ArabianBusiness.com. ‘It’s an extension of what they were doing before [in the UAE]’.
Amlak is expanding overseas as it seeks to reduce its reliance on its home market. Earlier this week the company announced that it has sent a delegation to Morocco to begin discussions about potential expansion plans.
The company's recent difficulties include the 35.4% plunge in its net income for the first three months of 2007, plus the relative success of its main rival Tamweel and news that a new competitor, Dubai First, is to be launched by the state-owned Dubai Holding.
Amlak – the DFM’s second-worst performing stock this year – also experienced two high-profile resignations. Mohammed Alabbar – who is also chairman of Emaar, which has a 40% stake in Amlak – stepped down from the board, while the company's founder and chief executive Mohammed al-Hashimi also resigned earlier this year.
Some have speculated that the company’s future rests on its application to the UAE Central Bank for a licence that would allow it to take bank deposits. However, as of today, the licence is still pending. Rumours earlier this month that it was about to be granted gave a temporary boost to Amlak’s share price. If the licence is not issued the company may issue an Islamic bond, or sukuk, to raise funds for further expansion.
In today’s trading Amlak closed down 1.61% at AED3.66.