Saturday, August 15, 2009

Tamweel reports third consecutive quarterly loss

Tamweel, the Islamic mortgage lender reported second-quarter loss of Dh.35million, as it boosted provisions against potential mortgage defaults.

Tamweel and its competitor Amlak Finance, whose shares have been suspended since November, are being restructured by the government. They may be merged as they suffer from steep decline in real estate prices owing to Dubai’s property market slowdown.

Compared to a profit of Dh.211m during the prior-year period, Tamweel reported a net loss of Dh.35million during the second quarter.

This was Tamweel's third consecutive quarterly loss, and is short of the Dh.4m profit, which was forecast by an analyst in a Reuters survey in July.

Tamweel said that it booked Dh.89m provisions against potential defaults on its books to offset the decline in property investment values.

The additional impairment provision on the home financing portfolio has been taken on a prudential basis and the company has not faced any considerable provision requirement, Tamweel said.

The total provisions against its mortgage portfolio stood at Dh.168m at the end of June, with Dh.140m taken as prudential provisions. Provisions against property investments were Dh.120m.

Tamweel revealed that income from properties for sale dropped almost 100 percent, touching Dh.1.7m during the second quarter, from Dh.134m last year. Income from Islamic financing and investing assets dropped by 12.6 percent to Dh.184m from Dh.211m in 2008.

During the first half of the year, the lender had lost Dh.75.8m, compared to a profit of Dh.387.3m during the same period last year. Islamic financing assets constitute 89 percent of the total assets of the firm at the end of six-month period, while investment in real estate was six percent.

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