Troubled Dubai Islamic mortgage lender
Tamweel
‘s returned to profit after posting losses for three consecutive quarters, but its third-quarter earnings plunged 95 percent as it took provisions.
and rival
Amlak Finance
are expected to be merged in the first quarter of 2010,
Tamweel
‘s chairman Sheikh Khaled bin Zayed al-Nahyan said on Friday.
Both stocks have been suspended since November 2008.
recorded a third-quarter net profit of AED10m ($2.72m) and took impairment provisions of AED53m in the quarter, it said in a statement on Dubai’s bourse website on Sunday.
The firm’s earnings beat an analyst forecast of a loss of AED37m in a Reuters survey in October.
“In light of the adverse market conditions, tight liquidity and falling real estate market,
Tamweel
has taken additional prudential provisions … for potential delinquencies on its asset book and to offset the decline in market value of its property investments,” it said in the statement.
Tamweel
made a net profit of AED185.7m in the third quarter last year.
It made a net loss of AED65m in the first nine months of the year, compared to a net profit of AED573m in the same period in 2008, it said.
As of September 30 total provisions against the home finance portfolio was AED195m, of which AED154m was prudential provision, it said, adding that provision against property investments was AED170m.
Islamic financing and investing assets reached AED10.4bn.
The UAE government said in November 2008 it would merge
Tamweel
and
Amlak
and a state panel led by the economy minister has been reviewing the plans. Last month, the minister said the panel is recommending merging the two lenders into a single, Islamic bank early next year.
Like many other banks and mortgage finance firms,
Tamweel
was forced to raise its provisions for bad loans and saw defaults on home payments.
Sheikh Khaled said on Friday that its default rate had retreated from a peak of 3 percent recently and “has been coming lower”.
The mortgage lender had taken around 400 million dirhams in provisions over the past 18 months, he said.
Sheikh Khaled, who is a member of the ruling family of Abu Dhabi, the largest in the seven-member UAE federation, said he expected shares in the merged company to begin trading once the tie-up was completed. (Reuters)
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