Islamic mortgage lender Tamweel said on Sunday that it had managed a return to profit in the third quarter of 2009, despite taking impairment charges, after three consecutive
quarters of losses.
Tamweel posted a third-quarter net profit of Dh10.3 million, after prudential impairment provisions of Dh53.6 million in the quarter, the company said in a statement on the Dubai Financial Market Website. Operational profit for the quarter, before the provisions, amounted to Dh63 million. Total assets of the company, tipped to be merged with rival Amlak Finance, reached Dh11.6 billion including Islamic financing and investing assets of Dh10.4 billion.
"In light of the adverse market conditions, tight liquidity and falling real estate market, Tamweel has taken additional prudential provisions of Dh53 million for potential delinquencies on its asset book and to offset the decline in market value of its property investments,” it said in the statement. "The additional provision on the home financing portfolio has been taken purely on a prudential basis, and the company has so far not faced any significant specific provision requirement.”
Tamweel's profit was down by about 95 per cent from Dh185.72 million it had made in the third quarter of 2008 and the cumulative loss for the first nine months came to Dh65.5 million, against a net profit of Dh573 million last year.
Tamweel's Chairman Sheikh Khaled bin Zayed Al Nahyan had said last Friday that default rate of borrowers had retreated from a peak of three per cent recently and ‘has been coming lower'. Tamweel's statement showed that impairment provisions for the first nine months of 2009 had reached Dh193.8 million.
Al Nahyan had said that a proposed merger with Amlak was likely in the first quarter of 2010. The merger proposal announced in November 2008 is under review by a federal government panel headed by the Economy Minister, Sultan bin Saeed Al Mansouri, and trading in both Tamweel and Amlak stocks have been suspended since then. – Khaleej Times
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