Jan. 22 (Bloomberg) -- Tamweel PJSC, the mortgage provider that Dubai Islamic Bank PJSC plans to take over, said 2012 profit dropped 29 percent as it made provisions for litigations.
Net income for the year fell to 72.5 million dirhams ($20 million), or 7 fils a share, compared with 102 million dirhams, or 10 fils a share, in 2011, the company said in a statement to the Dubai bourse today. Total operating profit climbed to 603.3 million dirhams from 601 million dirhams in 2011, it said.
Profit declined because of “exceptional provisions relating to certain ongoing litigations for which the company made full provision while continuing to fight its rights,” Tamweel said, without elaborating.
The company suffered after the 2008 property market crash when house prices in Dubai plunged more than 65 percent. Real estate prices started to rally in some areas in 2012 as tourism and retail industries rebounded. The average sale price of a mid-range villa soared 31 percent in the year to December, data from property broker Cluttons LLC show.
Average home prices in the United Arab Emirates should increase between 10 percent and 15 percent over an 18-month period, Tamweel Acting Chief Executive Officer Varun Sood said in the statement. Dubai Islamic Bank on Jan. 3 offered to take over Tamweel through a share swap, four days after the U.A.E. central bank issued guidelines restricting home loans.
Last year, Tamweel’s income from Islamic financing assets and investing assets dropped 1.1 percent to 552 million dirhams, the company said.
To contact the reporter on this story: Zainab Fattah in Dubai at firstname.lastname@example.org
To contact the editor responsible for this story: Andrew Blackman at email@example.com