Amlak Finance posted another quarterly loss yesterday while Tamweel, a rival Islamic home lender, chalked up its fourth consecutive quarterly profit.
Both lenders, which account for about half of the Dubai mortgage market, reported large write-downs on loans and lower income from financing activities.
The two Islamic mortgage companies have been in Government-led talks over a merger since November 2008 when they ceased making new loans and had their shares suspended by the Dubai Financial Market, where both companies are listed.
Numerous proposals have since been advanced, including a merger with an injection of capital from the Federal Government, a merger with a pair of state-owned lenders and the creation of a federal body to buy their mortgages.
Those deals fell through because of the high cost of rescuing the companies, which ran aground because of their overexposure to the Dubai property market at a time when prices fell by as much as half in some parts of the emirate.
In the aftermath of the financial crisis, banks grew reluctant to lend to property projects and property-linked companies such as Amlak and Tamweel, jeopardising their ability to continue funding mortgage portfolios worth about Dh20 billion (US$5.44bn) combined.
Amlak reported a loss of Dh597,000 for the second quarter, its sixth loss in a row but better than the Dh65.6 million it lost in the same quarter of last year. Tamweel, meanwhile, posted a Dh5.4m profit in the second quarter, up from a Dh35m loss in the same period last year.
Both companies have been in what executives and analysts call a frustrating state of limbo since the end of 2008. As a steering committee formed by the Ministry of Finance contemplates the companies' futures, they are focusing on managing existing home loans and trying to maintain the stability of their financing.
"While market conditions remain adverse, the company has managed to report profits for the past four consecutive quarters and has continued to manage its existing asset book, pending finalisation of the restructuring plans," Tamweel said in a statement.
Tamweel took about Dh40m in provisions for the quarter in anticipation of a rise in bad loans and to account for the lower value of its property investments.
The company's financial statements also showed for the first time that a Saudi subsidiary it set up near the height of Dubai's property boom in 2007 was now under liquidation.
Amlak took Dh31m of provisions in the quarter, down from Dh67m in the same period last year.
"It's incredibly frustrating because there's no communication with the market in terms of what the plan is," said Robert McKinnon, the chief investment officer at ASAS Capital in Dubai.
"There are public announcements that the merger will happen and they'll start trading again, and then nothing seems to happen. In terms of earnings, nobody cares."
Tamweel was doing slightly better than Amlak because it was not as heavily involved in direct property investments and was able to exit some of them early on, according to an analyst in Dubai who asked not to be named.
"Tamweel had sold down their positions beforehand to a sustainable level and Amlak was building them up, so they were greater in proportion and came at the peak of the market," the analyst said.
A bigger issue for both companies might be the perception that investing in local markets is an exercise fraught with uncertainty.
The steering committee has not said what the current plan for the companies is, although it is understood Tamweel is selling off some of its mortgages and may be looking to offload assets on Dubai Islamic Bank, which helped found the company in 2006.
"It damages the rest of the market, which is the broader issue," Mr McKinnon said. "The idea that you could invest in Dubai and something goes wrong with the company and its shares stop trading changes the character of the asset class.
"It's not about the price. Its about having access to the assets."
With the reports from Amlak and Tamweel, all of the UAE's listed companies have posted second-quarter results.
Their cumulative profits declined by 19 per cent to Dh6bn compared with Dh7.5bn in the second quarter last year.
afitch@thenational.ae
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Leaderboard
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The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
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THE BIO: Martin Van Almsick
Hometown: Cologne, Germany
Family: Wife Hanan Ahmed and their three children, Marrah (23), Tibijan (19), Amon (13)
Favourite dessert: Umm Ali with dark camel milk chocolate flakes
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Next time when procastinating online remember that you can save thousands on paying for a personal trainer and a gym membership simply by watching YouTube videos and keeping up with the latest health tips and trends.
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THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
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