Amlak Finance says new funds not available at acceptable cost
DUBAI: Amlak Finance said a number of factors including unavailability of new funds at 'acceptable cost', restrictions on finance to non-UAE residents and entities and unregulated developers' payment plan competition are adversely affecting the mortgage firm and finance companies.
"Unavailability of new funding at acceptable (being restructured company), results in high product pricing, adversely impact the competitiveness in the retail finance business. Forced exit of profitable investments in Egypt and KSA subsidiaries in a time-bound framework to comply with Central Bank Finance Companies Regulations 2018, impacts company's overall profitability and also restricts its ability to diversify the risk across different markets," the company said in a note posted on Dubai Financial Market, where it is listed.
Amlak is in talks with creditors to restructure its debt as property developers and mortgage firms struggle due to persistent decline in local real estate market. Bloomberg earlier said that it is asking creditors to reschedule repayments on $1.2 billion of loans over the originally agreed that ends in 2026.
Amlak hopes that it will reach a deal with creditors by the end of this year. "The company made significant progress with the financiers renegotiating the funding terms and expects to conclude these renegotiations and sign a new agreement before the end of this year," the company said in the note posted on Dubai's bourse.
It posted net loss of Dh266 million in 2018 attributable to parents' shareholders as compared to Dh43 million profit in the previous year. Its total assets also fell from Dh6.57 billion to Dh5.88 billion during the comparative period. Its thirdquarter 2019 loss widened to Dh40.5 million as compared to Dh62.8 million for the same period last year.
The mortgage firm aims to return to profitability in 2020 but sees losses in 2021 and 2022. It also seen rental income to decline from Dh82 million 2020 to Dh78 million in 2021 and Dh57 million in 2022.