Tamweel set to resume trading on Dubai Financial Market

Shares in Tamweel are to resume trading on Tuesday after a two and a half year suspension, the company said, as it reported bumper profits for the quarter.

Tamweel, one of the UAE's biggest Islamic mortgage lenders, is due to resume trading on the Dubai Financial Market next week.

The decision came after Tamweel made more money during the first three months of this year than in the whole of last year.

Net profit at the Islamic lender increased 430 per cent in the first quarter to Dh27.2 million (US$7.4m) compared with the same period last year, the company said in a statement, announcing shares would resume trading on Tuesday.

Shares in Tamweel were suspended in November 2008 when a liquidity crunch at the onset of the financial crisis forced it to cease trading. Amlak, its closest competitor, also had its shares suspended at the same time amid speculation the pair would be later merged. Amlak has not yet resumed trading.

Abdulla Ali al Hamli, the chairman of Tamweel, thanked shareholders for their patience during the two-and-a-half-year period when their investment in the company was effectively frozen.

"Tamweel is well positioned to capitalise on improved economic conditions and will continue to serve the needs of the UAE home finance market," he said.

The lender's operating income decreased by 15.9 per cent to Dh151m in the first quarter over the same period last year, but net profit was boosted by a 68.4 per cent drop in provisions to Dh16m.

The resumption of trading in Tamweel shares follows an increase in the stake held by Dubai Islamic Bank to 58.25 per cent, which the company said would provide "significant liquidity and support".

The stock could be pulled in opposite directions upon the resumption of trading next week, according to Jaap Meijer, a financial analyst at Alembic HC Securities. "On the one hand you might see some selling pressure since it was suspended since 2008. On the other hand, the last traded price [99 fils] was about 45 per cent of book value."

Most other UAE lenders trade at about twice that, he said.

The results showed some remaining pressure on margins, which was likely to have been as a result of more banks entering the home lending market and the "resumption of a normal mortgage market" following the boom and bust seen in 2007 and beyond, Mr Meijer said.