High Inflation Hurting Mortgage Banks’

April 24, 2021

The Managing Director of Infinity Trust Mortgage Bank (ITMB), Dr. Olabanjo Obaleye, has lamented the depreciation in the exchange rate and rising inflation are hurting the housing sector and mortgage banks.

Obaleye disclosed this in Abuja, during the earnings conference organised by the financial institution to relay information about the performance of ITMB to its stakeholders.

He explained that mortgage banks in Nigeria like other financial institutions were not isolated from the impact of Covid-19 pandemic, adding that the impact was peculiar because of the nature of the business – long term lending of up to 30 years.
According to him, the pandemic negatively impacted households and their ability to stay solvent through wage decrease or losses.

Consequently changes in repayment and defaults will have significant impacts on the bank’s profitability and liquidity, he added.
Obaleye explained that the operating environment for was not friendly considering the fact that all the indicators point to downward direction.

For instance, he said, “Inflation rates in 2013 was 8.5 per cent, while in 2018 it was 12.09 per cent and in 2020 it was 15.75 per cent. Gross Domestic Product (GDP) in 2013 was 8.5 per cent, it was 1.94 per cent in 2018 and 0.11 percent in 2020. Dollar Exchange rate in 2013 was N157.3, it was N305.1 in 2018 and N465 in 2020.
“The exchange rate is giving developers headache every day. Many estates developers are crying because of this.”

Obaleye, however, said the bank had shifted focus from the existing business models to respond to the impact of Covid-19 by taking into consideration the best possible alternatives for its customers.

He said some of the bank’s achievements amidst the pandemic include a 33 per cent increase in loans and advances; 25 per cent growth in assets; the proposed four per cent increase in dividend; 94 per cent increase in deposit mobilisation, and four per cent increase in shareholders’ funds, amongst other feats.

Obaleye expressed optimism that the bank would experience further growth in profitability and financial position this year, given its financial performance for the first quarter of 2021, which surpassed its comparative preceding year performance.



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