Amlak Finance on Monday reported a nearly 500 per cent year-on-year growth in its first half 2016 net profit, but it suffered a net loss of Dh35.5 million in the second quarter on rising provisions.

Amlak reported a net group profit of Dh87.4 million in the first half of 2016, compared to Dh14.6 million for the same period last year. The strong growth in the results were supported by strong revenue growth in the first quarter generated from one-off sale of land plots.

But the results were impacted by increased provisioning in Q2 caused by a number of customer accounts becoming delinquent and a general fall in real estate prices against mortgage assets, giving rise to a net loss of Dh35.5 million.

Amlak's total revenue reached Dh465 million in H1 2016 compared to Dh214 million in H1 last year.

The strong revenue performance was driven by income generated from the real estate investment business, as the company registered Dh134 million from the partial sale of land projects in Q1 and Dh19.6 million in the second quarter, totalling Dh153.7 million in the first half of 2016.

Revenue from financing business activity fell 29 per cent in H1 2016 to Dh104.6 million from Dh147.4 million for the same period last year due to further decreasing of the real estate financing portfolio. Rental and other income and share of results from associates improved by five per cent to Dh49 million compared to the same period last year.

Operating costs remained the same as last year at Dh68 million, and distribution to financiers improved by 12 per cent, falling to Dh64.7 million, as a result of further repayments of the financers' facilities during the period.

The company recorded a total impairment charge of Dh29.7 million recognised from non-performing accounts in H1 2016. The second quarter charge amounted to Dh24 million adding to the first quarter charge of Dh5 million.

In comparison, the company recorded a net reversal of provisions in the first half year of 2015 to Dh34 million.

Quarterly amortisation of an initial fair value gain recognised earlier fell to Dh57.6 million in H1 2016 from Dh79.9 million for the same period last year as the financers' facilities continue to be repaid.

Total assets stood at just under Dh6.8 billion in H1 2016, representing a two per cent decrease from the same period last year. On the back of net retained profits, shareholders equity improved to Dh1.63 billion from Dh1.58 billion at the end of December 2015.

Arif Alharmi, managing director of Amlak, said: "Our overall H1 profitability remains strong. We reported strong results in Q1, however the second quarter's operating performance was impacted by the higher-than-anticipated provisioning in Q2. We follow and strictly abide with a prudent provisioning policy to reduce balance sheet risk and enhance financial reporting transparency to the highest levels."

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