Tamweel Plunges 10% on First Trading Day Since November 2008

Tamweel PJSC (TAMWEEL), the home finance company majority owned by Dubai Islamic Bank PJSC (DIB), tumbled 10 percent as it resumed trading more than two years after being suspended pending its reorganization.

The shares dropped the maximum permissible percentage decline in a day to 89.1 fils at the 2:00 p.m. close in Dubai. Tamweel closed at 99 fils when it last traded on Nov. 20, 2008. Dubai’s benchmark DFM General Index (DFMGI) gained 1.2 percent today. The measure has tumbled 21 percent since the company’s stock was halted.

Tamweel has “been suspended for a while, so there might be selling pressure initially,” Jaap Meijer, head of the bank team at Alembic HC Securities, said in a phone interview today. “People who do want to get rid of it, they finally can.”

Shares of Tamweel and Amlak Finance PJSC, another Dubai- based Islamic mortgage provider, were suspended after the government announced plans to merge the two companies and inject money to help them cope with the global financial crisis. The companies stopped lending as the crisis froze credit markets and blocked their access to funding. The merger plan was abandoned in September last year after Dubai Islamic Bank increased its stake in Tamweel.

‘Ready to Expand’

Dubai Islamic Bank paid 374.7 million dirhams ($102 million), or 1 dirham a share, in cash and stock to raise its ownership to 58.3 percent from 21 percent. The move was part of a plan to boost mortgage financing in Dubai.

“We want to tell the market that we are ready to expand,” Chairman Abdullah Ali Al Hamli told Al Arabiya television in an interview today. Earnings this year “will be encouraging,” he said.

The yield on Tamweel’s 4.31 percent Islamic bond due January 2013 rose 32 basis points, or 0.32 percentage point, to 7.5 percent at 2:59 p.m. in Dubai, data compiled by Bloomberg show. The rate tumbled 61 basis points last week. It reached a record 38 percent in November 2008.

Tamweel said May 5 first-quarter net income surged fourfold to 27.2 million dirhams as impairment provisions declined.

Some investors may see “deep value” in the stock at the current price, Meijer said. Tamweel trades at 0.4 times its net asset value, compared with an average of 1 for U.A.E. banks, he said.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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