Tamweel and Amlak's income soars as Fed cuts kick in

Islamic home finance companies Amlak Finance and Tamweel reported bumper net income in the first-quarter of 2008 as they tapped cheaper funds.
Tamweel and Amlak's income soars as Fed cuts kick in
By Administrator
Thu 29 May 2008 12:09 PM

Islamic home finance companies Amlak Finance and Tamweel reported bumper net income in the first-quarter of 2008 as they tapped cheaper funds.

"Obviously the cost of funding came down because of the benchmark rates declining so we got some benefit from that," says Tamweel CEO Wasim Saifi.

Tamweel's first-quarter net income more than tripled to US$47.9m while Amlak's first-quarter profit surged more than fivefold to US$34m.

Amlak is predicting that the group's full-year revenues will surge by as much 70%.

"You should understand that when there is a cut in the Fed rate it does not automatically mean you will see the effect immediately, because our cost of funds is based on deposits of facilities which are longer term," adds Amlak CEO Arif Alharmi.

Dubai's booming mortgage market is expected to be worth about US$44bn by 2012 according to EFG Hermes, Egypt's largest investment bank.

Amlak and Tamweel together account for between 50% to 65% of the market although this is likely to diminish as more mortgage players enter the UAE. There are currently about 23 firms offering mortgages in the country.

As competition increases, Amlak and Tamweel are expanding their operations overseas to tap other regional real estate growth stories.

Tamweel has already secured its mortgage finance licence from the Egyptian Mortgage Finance Authority and will start operations in the country this year.

At the same time it is also entering Saudi Arabia in a joint venture with Al Oula Development Company. By 2011, the company predicts that about 30% of total revenue will be generated from its overseas units.

Amlak is targeting Jordan, Qatar and Bahrain in addition to two new units started in Egypt and Saudi Arabia in the last quarter of 2007.

Amlak has signed a deal with Cham Holding to establish its latest overseas venture in Syria. The company has also entered Jordan in partnership with JD Capital as well as the Social Security Corporation.

In Qatar it has signed an initial agreement to establish a mortgage business with local real estate developer Barwa.

Amlak is 45%-owned by Emaar while Tamweel is 21.6%-owned by Istithmar World.

RELATED LINK:Homeowners miss out as banks hoard Fed cuts

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