Dubai’s Amlak Finance Posts 2014 Profit Rise On Debt Restructuring

Dubai-based Islamic mortgage lender Amlak Finance posted a 22 per cent rise in attributable net profit for 2014 on Wednesday as gains from its debt restructuring offset write-downs in its property portfolio.

Amlak’s net profit attributable to equity holders rose to Dhs58.9 million ($16 million) in 2014 from Dhs48.2 million a year earlier, according to its financial report announced on Dubai’s bourse.

The company signed a $2.7 billion debt and financing restructuring deal with creditors last November after protracted negotiations since its shares were suspended in November 2008 in the wake of the global financial crisis and a local real estate crash.

Amlak’s auditors noted in the statement that the firm had not adjusted the value of its property portfolio between 2009 and 2014. This was a period where property prices initially slumped significantly in the emirate before rebounding in the last two years.

When addressed as of Dec. 31, 2014, Amlak was forced into booking a Dhs2.1 billion fair value loss on the portfolio, the financial statement said.

However, Amlak also reported Dhs1.9 billion in gains from fair value adjustments on a mudaraba instrument linked to its restructuring deal, investment deposits and other Islamic financing.

Under a mudaraba structure, assets are managed by a bank on behalf of clients, with income and expenses shared under a pre-agreed ratio.