PMBs’ total assets, liabilities drop 14.5% to N413bn in 2014

The value of  the total assets and liabilities of primary mortgage banks (PMBs) in Nigeria dropped by as much as 14.5 percent to N413.70 billion in 2014, down from N484.00 billion at the end of December 2013.

The drop was as a result of the delisting of 16 of the PMBs which failed the Central Bank of Nigeria’s  (CBN’s) recapitalisation test for the sub-sector, which ended last year june.

The CBN’s new operational guidelines for the  banks  require them to raise their capital base from the statutory N100 million to N2.5 billion and N5 billion for state and national operations respectively.

The Central Bank of Nigeria (CBN) 2014 half year report which gave this hint explains that the drop was as a result of the delisting of 16 PMBs which applied for conversion to other categories of ‘other financial institutions’ (OFIs) following their inability to meet the new capital base requirement to operate as PMBs.

The CBN’s new guidelines for the operations of the PMBs require them to raise their capital base from the statutory N100 million to N2.5 billion and N5 billion for state and national operations respectively.

The recapitalisation exercise, which is still “on-going”, saw mergers and acquisitions, dragging the number of PMBs from 86 to 32 with 16 others opting out for micro-finance banking and OFIs.

Furthermore, as a result of this development, the paid-up capital, deposit liabilities and loans/advances of the PMBs decreased by 14.1, 11.2 and 12.5 per cent to N129.00 billion, N146.30 billion and N137.80 billion respectively at the end of June 2014.

Aggregate reserves, however, improved from negative N5.70 billion at the end of December 2013 to N26.80 billion at the end of June 2014 while shareholders’ funds also increased by 7.7 per cent to N155.80 billion at the end of the first half of 2014.

Investible funds available to the sub-sector during the review period amounted to N102.70 billion sourced, mainly, from the respective reduction of N43.50 billion and N19.60 billion in investments and loans/advances, and the N32.40 billion increase in aggregate reserves.

These funds were according to the report, utilised primarily to reduce other liabilities totaling N51.8 billion; paid-up capital, N21.30 billion, and deposit liabilities, N18.40 billion.

Meanwhile, the CBN and the Mortgage Banking Association of Nigeria (MBAN) have faulted a report making the round, that the apex bank has licensed only 32 PMBs comprising ten and 22 for national and state operations respectively.

Ibrahim Muazu, Director, Corporate Communications Department at the CBN, told BusinessDay that people should disregard the report, insisting that licensing the PMBs was still on-going.

“If there are ten conditions required, the PMBs will struggle to meet all. If we are closing window, we would issue a statement”, he said, adding, “there could be new applicants because there are always late arrivals”.

Femi Johnson, the president of MBAN, also told BusinessDay that the figure as reported was “speculative”, pointing out that there were other reports talking about 36, 34 or even 40.

“It all depends on which of the insiders you are speaking to, but I can tell you authoritatively that the CBN has not released an official list of those that have been licensed, even though they know themselves. A few days ago, I requested for that list from the CBN but was told that it was not ready”, he said.

The MBAN president also dismissed insinuations that his association was lobbying the apex bank to soft pedal on the announcement of PMBs adjudged to have successfully completed the recapitalisation requirements in order to limit crisis of confidence in the sector.

The continued delay in releasing the list is however, not without its negative impact, as it is already creating crisis of confidence in account holders with the PMBs who are anxious and jittery over possible fate of their banks

CHUKA UROKO &  HOPE ASHIKE-MOSES