Tamweel springs back in the black

Dubai: Troubled mortgage lender Tamweel's returned to profit after posting losses for three consecutive quarters, but its third-quarter earnings plunged 95 per cent as it took provisions.

Tamweel and rival Amlak Finance are expected to be merged in the first quarter of 2010, Tamweel's chairman Shaikh Khalid Bin Zayed Al Nahyan said on Friday. Both stocks have been suspended since Nov-ember 2008.

Tamweel recorded a third-quarter net profit of Dh10 million and took impairment provisions of Dh53 million in the quarter, it said in a statement on Dubai's bourse website yesterday.

The firm's earnings beat an analyst forecast of a loss of Dh37 million 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 Dh185.7 million in the third quarter last year.

It made a net loss of Dh65 million in the first nine months of the year, compared to a net profit of Dh573 million in the same period in 2008, it said.

As of September 30 total provisions against the home finance portfolio were Dh195 million, of which Dh154 million was prudential provision, it said, adding that provision against property investments was Dh170 million.

Islamic financing and investing assets reached Dh10.4 billion.

Merger

The UAE government said in November 2008 it would merge Tamweel and Amlak and a 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.