Infinity Mortgage Plc said net income declined 38.34 percent as a slump in oil prices, weak consumer spending and uncertainties surrounding elections slowed demand for housing in its home market Nigeria.
Profit was N36.21 million in the first quarter of 2015, compared with N58.73 million the previous year, the Abuja based company said on the website of the NSE.
Sales increased by 5.13 percent to N146.24 million.
The slow growth emanated from uncertainty and the political climate in the first quarter of this election year, according to Olabanjo Obaleye, Managing Director/Chief executive director of the company in an emailed note to BusinessDay.
“This is not peculiar to us has it affected all other business across the economy,” said Obaleye.
Mortgage business in Africa largest economy slowed as investors held back money over the unpredictability of the last presidential election that saw General Muhammad Buhari of the All Progressive Congress (ACP) defect former President Goodluck Ebele Jonathan of the People Democratic Party.
Analysts say the devaluation of the naira against the dollar had placed upward pressure on lending rates, making it more difficult for local developers to access funding for projects.
The CBN increased the Monetary Policy Rate (MPR) to 13 percent, from 12 percent previously held as property developers bemoan the monetary policy.
Nigeria central bank scrapped its bi-weekly currency auctions on in February 2015 and the market body said it would sell dollars only at 198 naira, a move that amounts to a de facto devaluation of Nigeria’s currency.
The naira has lost more than 13 percent of its value against the dollar in the past six months, and was trading 0.2 percent stronger at 198.01 a dollar by 3:47 p.m. in Lagos.
Lack of proper regulations and legal frame work required to attract the amount of long term funds needed in the sector prevents real estate and mortgage business from tapping into the Nigeria burgeoning middle class that crave for accommodation.
“We urge the incoming Government to focus on improving legislation pertaining to the sector, especially the need to modify the Land Use Act,” said Obaleye.
Infinity Mortgage interest and similar income increased by 20.21 percent to N103.75 million while interest and similar expense moved by 45.51 percent to N13.48 million.
Total operating expenses were up by 12.45 percent to N90.13 million in the period under review while operating income rose by 8.38 to N132.73 million.
Infinity Mortgage is less aggressive about lending as loans to deposits fell to 94.09 percent in 2015 from 1.16 percent in 2014. Loans and advances to customers were up by 5.69 percent to N1.30 billion in 2015 as against N1.23 billion.
Deposit from customers increased by 29 percent to N1.37 billion compared with N1.06 billion the previous year.
The company share price closed at N1.42 on the floor of the exchange while market capitalization was N5.99 billion.
“This sector is vital to economic and social development of any country. It has the ability to create employment (both skill and unskilled) and to have a happy citizenry,” said Obaleye.
BALA AUGIE
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