Amlak Finance registers net loss of Dhs69m in Q1 2009

At the end of 31 March 2009, Amlak's First Quarter (Q1) net loss stood at Dhs69m. The Quarter's loss was mainly due to prudent general provisioning on the under-construction mortgage portfolio, where property values have seen hardest decline in this period.

Revenue from retail mortgage activity has been steady over Q1 2009 although marked a growth of 45% at Dhs208m compared to Dhs143m for the same period last year, on the back of a growing mortgage and property financing book by almost Dhs3bn. There was no income from Real Estate investments activity compared to Dhs106m in the first quarter of 2008.

Amlak's total assets as at the end of March 2009 stood at Dhs14.9bn, thus growing by 23% compared to Dhs12.1bn in Q1 2008. Meanwhile, the company's financing portfolio grew by 42% to Dhs9.8bn, compared to only Dhs6.9bn in the same period last year.

H.E. Nasser Bin Hassan Al-Shaikh, Chairman, Amlak Finance PJSC, said:

"This was one of the most challenging periods the mortgage industry at large have faced since Amlak's inception in 2000. While we have registered a growth in revenues from our retail 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 potential future portfolio losses. This provisioning was made due to the current challenging market conditions prevailing in the real estate market. However, the overall condition of the retail mortgage portfolio remains robust."

In anticipation of the final decision to be taken by the Federal Government pertaining to the restructuring of Amlak Finance, Al-Shaikh emphasized that Amlak's board of directors and management have taken all the necessary steps to ensure the continuity of the company's business.

On his part, Arif Alharmi, Chief Executive Officer, Amlak Finance PJSC, said, "While our results for Q1 2009 showed a decline in comparison to our bullish performance during the same period in 2008; however, we have exerted more efforts in these turbulent and trying times to ensure that our business fundamentals remain strong and on the right track. As such, we have successfully decreased our real estate investment obligations by renegotiating a number of deals that will ensure better operational performance in the long term."