Islamic mortgage company Amlak Finance yesterday said it has renewed its application to the UAE Central Bank to allow it to convert itself into a bank. It had first made the application two years ago.
Amlak did not give details of the fresh application in its statement to the Dubai Financial Market. Becoming a bank would allow Amlak to tap public deposits, a source of funds that is cheaper than raising money from the debt markets. The UAE's other pure-play mortgage provider, Tamweel, also had a banking licence application pending with the Central Bank. A Tamweel spokesperson yesterday refused to comment on the status of the application.
The housing finance sector had been funded principally by equity, although debt has also played a significant role. Tamweel has done its first securitisation issue and Amlak has offered a corporate sukuk.
Investment bank EFG-Hermes has forecast the UAE home loan sector has the potential to grow to Dh18 billion this year. However, funding constraints for Amlak and Tamweel, due to an inability to tap low-cost retail deposits, are a concern, it said.
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