Dubai : Troubled Dubai Islamic mortgage lender Tamweel reported a Dh35 million ($9.53 million) second-quarter loss on Thursday, as it boosted provisions against potential mortgage defaults.
Tamweel and rival lender Amlak Finance PJSC, whose shares have both been suspended since November, are being restructured by the government and may be merged as they suffer from a sharp downturn in real estate prices in Dubai's property slump.
Tamweel's net loss of Dh35 million in the quarter compared to profit of Dh211 million in the prior-year period.
It was Tamweel's third consecutive quarterly loss, and fell short of one analyst's forecast for profit of Dh4 million, according to a Reuters survey in July.
Tamweel said it booked Dh89 million in provisions against potential defaults on its books and to offset the decline in value of its property investments.
“The additional impairment provision on the home financing portfolio has been taken purely on a prudential basis, and the company has so far not faced any significant specific provision requirement,'' Tamweel said in a statement.
It said total provisions against its mortgage portfolio stood at Dh168 million at the end of June, with Dh140 million taken as prudential provisions.
Provisions against property investments were Dh120 million.
Earlier this month, ratings agency Moody's downgraded Tamweel's issuer rating, citing factors including its falling asset quality, higher funding costs and a slow state support process.
Tamweel said income from properties held for sale plunged almost 100 per cent to Dh1.7 million in the second quarter, from Dh134 million last year.
Income from Islamic financing and investing assets fell 12.6 per cent to Dh184 million from Dh211 million in 2008.
In the first half of the year, the lender had a loss of Dh75.8 million, compared with profit of Dh387.3 million in the same period last year.
Islamic financing assets made up 89 per cent of the firm's total assets at the end of the six-month period while investment in real estate was six per cent, it said.
