• Thursday, March 28, 2024
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Abbey Mortgage Bank’s losses hits 3-year high on interest income dip, credit loss

Abbey Mortgage Bank

The woes of Abbey Mortgage Bank compounded in 2018 as the Lagos-based provider of housing products, ended last year in red, just like it did two years back, but at worsened state.

The Bank recorded its biggest losses since 2016, driven by decline in interest income and provision for credit loss.

The Bank’s interest income, which comprises interest on loans & advances, cash & short-term funds and financial investments, slumped by 8.7 percent to N1.15 billion in full year 2018, compared with N1.26 billion realized in the preceding year.

This tangibly weighed on net interest income as the decline in interest income (-8.7%) outpaced the 1.02 percent drop recorded in interest expenses. Net interest income dip 13 percent to N664.9 million in 2018 compared with N764.9 million in the previous year, and total operating income fell marginally by 1.7 percent to N903.6 million in 2018.

The Bank made N566.7 million provision for credit losses in the review period in line with International Financial Reporting Standard 9.

Break-down of the charges on expected credit losses on financial instruments revealed that the Bank provisioned N72.8 million at stage 1 (where credit risk has not risen significantly since initial recognition); N18.7 million at stage 2 (where credit risk has increased significantly since initial recognition), and N476.7 million at stage 3(credit impairment).

As a result, net operating income decelerated significantly to N336.84 million in full year 2018, masking a whopping 55.4 percent decline over N751.3 million posted in the previous year, consequently leading to sharp depreciation in losses before and after taxation.

Losses before taxation of the Lagos-based mortgage bank fell some N459 million in the review period to N636 million, and after-tax losses plunged more than 200 percent to N665 million.

Earnings per share, which represents the profit (losses) allocated to each unit of common stock, worsened by N10.85 from N5.06 in 2017 to N15.85 in 2018.

The Bank’s total assets lost 2.46 percent in value in the review period, total liabilities up 8 percent to N6.5 billion on the back of increased due to customers. Demand, savings and term deposits made by customers grew 51 percent, 18 percent and 3 percent respectively, and shareholders’ fund shed 12 percent to N5.4 billion.

Abbey Mortgage Bank Plc provides housing and mortgage products, and also offers banking services such as personal savings & investments, electronic banking, certificate of deposit, fund management and real estate financing.

 

ISRAEL ODUBOLA