Revenue Growth Outpaced by Rising Costs and Currency Impact.
The bottom line at Amlak Finance came under severe hammering. Its net profit in the third quarter of 2024 was recorded at AED 53 million, translating to $14.4 million. This was nearly six times lower than Q3 2023, wherein it had recorded AED 269 million. Its core revenue streams have seen growth, but this would not be great news for the company.
PC: Arabian Business Community (ABC), GCC
Revenue Performance
Although its net profit suffered a strong drop, revenue from its financing and investing business indicated a 14% positive growth of AED 103 million during Q3 2024. The firm’s overall revenues also achieved a gentle gain to AED 231 million, before removing an impressive one-time gain of AED 174 million in Q3 2023. This increase to AED 206 million in Q3 2023 represents a consistent operating performance of Amlak’s revenue-generating businesses.
Operating Expenses
Amlak’s operating costs increased by 6% in Q3 2024 to AED 72 million from AED 68 million recorded in the same period last year. This was as a result of additional costs incurred in connection with the sale of investment properties at a higher rate, which had partly mitigated the gains from higher revenues.
Repayment and Obligation Management
During Q3 2024, Amlak continued settling its liabilities with financiers by clearing AED 69 million. It started settling its liabilities in 2014 and has successfully cleared 84% of its Islamic deposits liabilities comprising Mudaraba instruments. Amlak is currently negotiating with other financiers to accept the exit under Common Terms Agreement, a step which it has requested to decrease the remaining liabilities.
Amortisation Costs
It reported a lower amortisation cost of AED 24 million compared to AED 31 million in the quarter ended September 2023. This difference was due to the reversal of fair value gains recognised in the initial recognition of investment deposits and varied based on the level of repayments and settlements made with the financiers during the reporting period.
Regional Challenges Impact
Amlak’s investment operations in Egypt have not been easy; the devaluation of the Egyptian Pound against the AED has negatively affected the group’s overall financial standing, adding another layer of difficulty in Amlak’s financial landscape, contributing to an overall reduction in net profit.
Amlak’s Q3 2024 results were mixed. Revenue growth was recorded, but operating expenses rose because currency movements were adverse.
