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COVID-19: Mortgage sector seeks financial bail out as cash crunch bites

The managing director of the Infinity Trust Mortgage Bank Plc, Olabanjo Obaleye has said that the Federal Government must come to the aid of the mortgage industry over the cash crunch experienced by some of the banks caused by the impact of the COVID-19 pandemic.

Obaleye said that government did not provide financial relief and other structural assistance to mortgage banks and the housing sector despite the challenges posed to the real estate sector by the COVID-19 pandemic.

The bank’s chief executive officer who made this known on Thursday, during an Earnings Conference Call said Mortgage Banks in Nigeria, like other financial institutions, were not isolated from the impact of the COVID –pandemic.

Obaleye noted that the government was only interested in raising taxes for increased revenue generation but not providing any form of help to cushion the impact of coronavirus on businesses in the country.

According to him, many companies affected by the pandemic had folded up, adding that housing subscribers were finding it difficult to service their mortgage payment.

He cited two companies which, he said, had just collapsed due to the failure of their owners to get foreign exchange for importation of raw materials.

‘’On the level of government support on COVID-19, there is nothing visible we have seen. We have read so many pronouncements on that from the government but we haven’t got any palliative in that respect. We have made proposals to the government through our relevant authority but there is a need for certain funds to be set aside for this.

‘’It is difficult for people to even muster 20 per cent equity and the COVID-19 affected so many people; many people lost their jobs while many people equally got a downward review in their pay and these people are paying their mortgages. This means that what is going to be left would not be enough to take care of their family needs. There is a need for the government to set aside funds for this but as I speak, we have not got any form of palliative from the government.

“The impact of COVID-19 on Mortgage banks is peculiar. This is because of the nature of the –long term lending of up to 30 years. The pandemic has a serious negative impact on households’ finances and their ability to stay solvent through wage decreases or wage losses.

“Consequently, changes in repayment and defaults will have significant impacts on the Bank’s profitability and liquidity. ITMB Plc 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 our customers,” he said.

Obaleye listed some of the factors which made the mortgage banking operating environment challenging, including insurgency and terrorist activities, insecurity, government policies, regulation and rising cost of goods.

Several industries in the country such as the Aviation, manufacturing, and pharmaceutical industries among others, were bailed out of the harsh impact of the pandemic by the federal government which made huge financial releases to them.

The ITMB boss said the bank has recorded notable growth in various aspects of its operations in spite of the COVID-19 constraints on businesses, adding that the bank was not only profit-oriented but often works towards delighting its customers and investors.

Some of the bank’s achievements amidst the pandemic, he said, include, 33 per cent increase in loans and advances, 25 per cent growth in assets, proposed four per cent increase in dividend, 94 percent increase in deposit mobilization, and four per cent increase in shareholders’ funds, amongst others.

Obaleye while fielding questions from newsmen expressed confidence that the bank will experience further growth in profit and financial position in 2021 ‘’given its financial performance for the first quarter which surpassed its comparative preceding year performance.”

He disclosed that the bank opened a liaison office in Kaduna recently and plans to expand its operations to other states in the country in order to provide effective financing for desiring homeowners and consolidates its position as a leading national Primary Mortgage Bank.

Obaleye assured that the earnings Call was a strategic way for the bank to relay information about the recently released audited financial statements for the year ended December 31, 2020; share future projections to all interested parties, specifically the buy and sell-side analysts, existing and potential investors as well as the general public.

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