Dubai Islamic Bank (DIB) announced that it has settled all bilateral liabilities of mortgage provider Tamweel amounting to around Dhs4 billion, two years ahead of scheduled maturity.
The outstanding liabilities were part of a five-year moratorium agreed to with Tamweel creditors in late 2010 and were to mature in October 2015.
The bank cited “robust capitalisation and ample liquidity” as the reasons for early repayment.
DIB, which increased its stake in Tamweel to 58 per cent in November 2010, announced a tender offer to acquire outstanding shares of the mortgage provider in March 2013.
Following the closure of the tender, DIB now owns close to 90 per cent of the entity and has already initiated the process to delist the company from Dubai Financial Market.
With the process of delisting initiated, Tamweel operations have now been completely merged with Dubai Islamic Bank. All of the mortgage business is now funded by DIB’s balance sheet.
“This move is a key milestone in bringing us closer towards the culmination of our strategy for Tamweel,” said Adnan Chilwan, CEO, DIB.
“Right from the onset, we had a very clear vision with respect to the franchise which effectively revolved around three core areas – stability of operations, rationalisation of costs and return to profitability.
“Given our significant liquidity and low cost of funds, the early repayment is perfectly aligned towards progressively building an even more effective and efficient business.”
DIB, 30 per cent owned by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum’s Investment Corp of Dubai, recently reported a 31 per cent rise in second quarter net profit to reach Dhs437 million.