Dubai’s Tamweel Q1 Net Profit Drops 33%

Dubai-based sharia-compliant mortgage lender Tamweel posted a 33% fall in first quarter net profit, hit by litigation provisions.

Tamweel, majority owned by Dubai Islamic Bank made a net profit of 18 million dirhams ($4.9 million), after a one-time provision of 21.6 million dirhams for possible, unspecified litigation losses.

Operating profit before provisions rose 13 percent to 48.5 million dirhams.

Tamweel and its rival Amlak ran into difficulty after the collapse of Dubai’s real estate sector in 2008.

Trading in the shares of both companies were halted, with Tamweel only resuming last May after a hiatus of more than two years. Amlak’s shares remain suspended.

Total assets at the company stood at 10.5 billion dirhams at the end of the quarter, up from 10 billion dirhams at the end of last year.

DIB, the United Arab Emirates’ third-largest bank by market value, raised its stake in Tamweel to 58.25 percent in September 2010.

Tamweel returned to debt capital markets last year for the first time since its shares started trading again, printing a $300 million five-year Islamic bond, or sukuk, which was guaranteed by DIB. The company’s shares closed 1.4 percent lower down on Tuesday, Reuters reported.