Amlak Finance, the largest mortgage lender in the Middle East by market value, said yesterday it lost Dh69 million (US$18.8m) in the first quarter of this year as it set aside funds to cover future potential losses on its property lending book. The results were better than in the previous quarter, when the Dubai-based firm lost Dh204m. But they were worse than in the first quarter of last year, when the company reported Dh127m in net profit.
Most of the Dh69m in losses were attributable to an effort to set aside money in preparation for future loan defaults, the company said. Like many financial companies in the region, Amlak fell into difficulties late last year as the credit markets it relied upon to extend financing to customers seeking home loans dried up. With property prices in the UAE dropping sharply last year, Amlak has also been beset by a rise in loan defaults.
But the company said its property financing book still grew by almost Dh3 billion compared to the same quarter last year. It is also continuing to rake in revenues from existing mortgages - Dh208m in the first quarter, up 45 per cent compared to Dh143m last year. Amlak's total assets stood at Dh14.9bn at the end of the first quarter. "This was one of the most challenging periods the mortgage industry at large has faced since Amlak's inception in 2000," Nasser al Shaikh, the chairman, said in a statement. "While we have registered a growth in revenues from our mortgage portfolio as compared to the first quarter of last year, the net loss was primarily due to the prudent additional general provisioning that was made to cover any future portfolio losses."
Amlak is in merger negotiations with Tamweel, another mortgage lender based in Dubai. Both company's shares were suspended last November as the Government moved to restructure them. Amlak could also be folded into the Emirates Development Bank, a new entity owned by the Federal Government. afitch@thenational.ae