Amlak CEO says interest-rate hike impacts borrowing costs, financing operating guaranteed

Abdullah Al Sudairy, CEO of Amlak International for Real Estate Finance Co.

Abdullah Al Sudairy, CEO of Amlak International for Real Estate Finance Co., said the interest-rate hike led to an increase in borrowing costs, as the company's sources of financing are capital, bank loans and portfolio sales.

He added that 60% of real estate loans granted by Amlak are loans with variable interest rates, while the percentage of fixed-interest loans is 40%.

The maximum maturity of such loans is 25 years, while their average maturity ranges between 10 to 12 years, Al Sudairy told Al Arabiya TV.

Interest rates increased significantly over the last period, the CEO said, adding that the new lending settlement that will make up for the differences will take time, as the firm takes into account customers' acceptance of new rates and their repayment ability.

The company is keen to manage its liquidity, and to make its sources of payment compatible with the proceeds, and therefore there is no exposure to liquidity.

The goal of raising interest rate is to reduce borrowings. Thus, it is natural to see weak borrowings over the coming period, compared to previous periods when interest rates were low.

Doubtful loans accounted for 5% of the total portfolio, which is considered an acceptable level and in line with the company's expectations, the top executive said. He added that all financing operations are secured by real estate guarantees.

Amlak reported a net profit of SAR 80.73 million for the first nine months of 2022, a decline of almost 3% compared to SAR 82.9 million in a year-earlier period, according to data compiled by Argaam.