Amlak Finance, the largest real estate financier in the Middle East by market value and total assets, has registered a Dh69 million ($18.7 million) net loss in the first quarter of 2009.

Announcing the financial results at the end of March 31, 2009,  Amlak Finance chairman Nasser Bin Hassan Al-Shaikh, said the quarterly  loss was mainly due to prudent general provisioning on the under-construction mortgage portfolio, where property values have seen hardest decline in this period.

“This was one of the most challenging periods the mortgage industry at large have faced since Amlak’s inception in 2000,” Al-Shaikh stated.

Revenue from retail mortgage activity has been steady over the first quarter of 2009 growing at 45 per cent to hit Dh208 million compared to Dh143 million for the same period last year, on the back of a growing mortgage and property financing book by almost Dh3 billion.

He pointed out that there was no income from Real Estate investments activity compared to Dh106 million in the first quarter of 2008.

'Amlak’s total assets as at the end of March 2009 stood at Dh14.9 billion up 23 per cent when compared to Dh12.1 billion in the first quarter of 2008. Meanwhile, the company’s financing portfolio grew by 42 per cent to Dh9.8 billion, compared to only Dh6.9 billion in the same period last year,' Al Shaikh commented.

'While we have registered a growth in revenues from our retail mortgage portfolio as compared to the first quarter of last year, the net loss was primarily due to the prudent additional general provisioning that was made to cover any potential future portfolio losses,' he noted.

'This provisioning was made due to the current challenging market conditions prevailing in the real estate market. However, the overall condition of the retail mortgage portfolio remains robust,' Al Shaikh stated.

In anticipation of the final decision to be taken by the Federal Government pertaining to the restructuring of Amlak Finance, Al-Shaikh emphasised that Amlak’s board of directors and management have taken all the necessary steps to ensure the continuity of the company’s business.

Arif Alharmi, chief executive officer, Amlak Finance, said, “Our results for the first quarter of 2009 showed a decline in comparison to our bullish performance during the same period in 2008. However, we have exerted more efforts in these turbulent and trying times to ensure that our business fundamentals remain strong and on the right track.'

'As such, we have successfully decreased our real estate investment obligations by renegotiating a number of deals that will ensure better operational performance in the long term,' he added.-TradeArabia News Service