DUBAI — The Dubai Financial Market (DFM) General Index fell 0.35 per cent yesterday to 3,714.20 with Amlak Finance, the UAE's biggest home-finance provider, losing 8.28 per cent to Dh2.88. The shares have slid more than 40 per cent so far this year.
The slump in Amlak's share price follows the rejection of its application for a banking licence by the UAE Central Bank. A licence was sought to enable the mortgage lender, which is 45 per cent owned by the giant property company, Emaar, to drive down its capital costs. A bank licence would have enabled Amlak to collect deposits, reducing the cost of capital and letting the company offer cheaper mortgages.
According to Reuters' news agency, Amlak's deputy chief executive, Shahli Akram, declined to say why the application had been rejected.
Instead the company is turning to Islamic bonds, or sukuks, to raise funds. The Reuters' report said that Amlak had planned a $300 million sale of asset-backed securities, to take place in the third quarter. He said Standard Chartered Bank had been hired for the sale and that no other details of the offering were available.
Like parent company Emaar, Amlak is also expanding overseas, thereby diversifying its portfolio and diluting the risk associated with possible market saturation in the UAE. Akram also confirmed to the news agency that Amlak plans to apply for licences to sell mortgages in Syria and Pakistan after moving into Egypt and Saudi Arabia this year.
At the firm's annual general meeting held last week, it announced that Emaar's chairman, Mohameed Alabbar was stepping down from Amlak's board.
Tamweel, the second biggest mortgage lender in the UAE saw its shares drop 2.9 per cent to Dh3.29. It said its application for a banking licence was still being processed. During Saturday's annual general meeting shareholders approved a cash dividend of 20 fils per share, amounting to a payout of Dh200 million. The company's full-year profit rose more than 20-fold to Dh851.8 million, from Dh42.2 million in 2005. Core business profit rose to Dh153 million, a growth rate of 315 per cent. Tamweel's chief executive, Adel Al Shirawi, has predicted that the mortgage market will grow by 20 per cent to Dh20 billion this year. 
Commercial Bank of Dubai fell 4.3 per cent to Dh6.60 and the Dubai Financial Market Company, the only publicly traded stock exchange in the GCC, closed 1.4 per cent lower at Dh2.09.
Emirates Bank International (EBI) and National Bank of Dubai (NBD) the two banks currently in the process of merging, both finished higher. EBI increased 2.8 per cent to Dh9.25, and NBD rose 1.13 per cent to Dh8.90. Mashreq bank also closed up, rising 5 per cent to Dh194.50.
Shuua Capital, the country's largest investment bank, dropped 0.9 per cent to Dh4.21. The firm has agreed to sell its 35 per cent stake in Oman National Investment Company to Dubai Financial LLC for Dh315 million, according to a company statement to the Dubai stock exchange.
The Abu Dhabi Securities Market (ADSM) Index lost 0,5 per cent to 2,869.14, bringing the seven-day drop to 4.8 per cent.
The Abu Dhabi Commercial Bank (ADCB), the UAE's third largest lender, fell 1.9 per cent to Dh5.31.
According to a statement of March 31, the bank borrowed $1.5 billion for a group of lenders for "general funding purposes." The stock has lost 13.9 per cent since March 19.
RAK Properties fell 0.8 per cent to Dh1.3. On March 29, shareholders approved the payment of a cash dividend of 7.5 fils.