Despite the surge in interest income of Osun-based Omoluabi Mortgage Bank (OMB) Plc, the firm saw its net income shed nearly by half owing to its inability to keep cost in check.
Interest income climbed 244 percent to N170 million in full year 2018, compared with N70 billion in the preceding year, driven by huge increase in mortgage loans and advances to customers.
However, post-tax profit shed 45 percent to N79.5 million on elevated operational expenses, which consequently affected the company’s ability to harness assets to generate earnings.
Total operational expenses of the bank accelerated in triple-digits at 112 percent from N346 million in the previous year to N389 million in the review year. Consequently, cost-to-income ratio up 11 percentage points to 91.30 percent.
Other operating income, which comprises proceeds on investment securities, which should have bolstered bottom-line shrank substantially as the housing financing provider was unable to realize proceeds from profits on assets disposal, rental income and cut in income from government treasury bills.
OMB did not declare any dividend shareholders in 2018, unlike the previous year when it excited shareholders with N50 million returns, the first since the bank’s inception.
Adebayo Jimoh, Chairman, Board of Directors, said in the statement that the current economic challenges of the country open new areas of opportunities, the bank can explore for growth and expansion.
“The mortgage sector has attracted renewed Federal Government attention based on untapped investment potentials and the enormous unmet demand for housing from the populace.
”We intend to play even a more prominent role in 2019 with the new Federal Government drive to deliver homes to Nigerians in using affordable and mass housing schemes and accessible mortgage finance.”
The double-digit contraction in other operating income to N244 million in 2018 from N422 in the prior year, adversely affected gross revenue, which plunged 88 percent, despite big increase in interest income and non-interest income.
Total assets of OMB appreciated by N6 million to N4.2 billion last year, triggered by increased mortgage loans and advances to customers and income from financial investments at fair value.
OMB gave out loans worth N1.56 billion to customers in 2018, indicating 179 percent uptick from N861 million provided in 2017. The bank gave N1.4 billion for mortgage, with 60 percent going for residential purpose.
Mortgage loans for National Housing Fund, Commercial and Estate development got N320 million, N3 million and N218 million respectively.
OMB is a primary mortgage institution that is regulated by the Other Financial Institutions Department of the Central Bank of Nigeria.
The core business model of the bank involves residential and commercial mortgage financing as well as construction finance among other services.
OMB is the first-listed firm on the Alternative Securities Market of the Lagos Exchange, with Morgan Capital Securities Limited and Osun State & Local Governments as major investors with 83 percent shareholding.
Israel Odubola
