THE FUTURE IS IN MORTGAGE - OLAYINKA
The Nigerian mortgage sector has remained stunted despite its importance to the economic development of the country. Abimbola Olayinka, the Managing Director and Chief Executive of Resort Savings and Loans Plc, who also doubles as the President of the Mortgage Bankers Association of Nigeria (MBAN) speaks on the challenges and efforts aimed at growing the sector during an interview session with journalists in Lagos. BUKOLA IDOWU was there.
How would you describe Nigeria's mortgage sector?
The mortgage sector is the future whether we like it or not. It's just that we have a lopsided policy in place. Out there, the mortgage banks are the biggest banks, but here the reverse is the case because everybody needs a roof over their head and mortgages are the in-thing there.
The mortgage sector is a place to invest in. It is a long term investment but I can guarantee you that there is a steady, stable stream of income coming from the mortgage sector because nothing can get wrong in brick and mortar. Once the houses are there, even if you are not living in it, you can rent it out. There will be stream of income. In respect of the FMBN, they are doing a good job and we are collaborating with them at the highest level. We do expect much from them and strongly believe we are on the right track. With the present administration on board, the sky will be the limit for the mortgage sector.
Why is MBAN focused on dealing with the liquidity problem in the sector?
The mortgage sector has some peculiar problems. These include long term funds, liquidity, interest rate, foreclosure laws, Land Use Act, so many, but we in the mortgage sector decided that we will take one and deal with it. One of the major problems is liquidity. If I have N5 billion and I book mortgages of N5 million, if I give out 1000 mortgages, the N5 billion is gone, and when I spend everything on mortgage, what happens after that?
We needed to create a vehicle which after creating a primary mortgage, we can now float those mortgages onto that vehicle and the vehicle will create liquidity and inject funds back, either by buying or taking the mortgages off me and then they can pull the mortgages back together in terms of mortgage backed security or mortgage bonds and offer it to the capital market so investors can invest in it. That is the primary aim of what MBAN seeks to achieve, to create liquidity. We have collaborated with IFC, World Bank the ministry of finance, the CBN and God willing that vehicle should become operational by the third quarter of this year.
What efforts are being made by MBAN to ensure enough houses for people who would rather buy than build?
There is a niche of the market which members of REDAN have already taken care of in the sense that they are to focus on providing the houses, we are to provide the funding for the houses in terms of estate development loans and then also for the retail mortgages.
But it is a two-way thing. They are supposed to provide the houses for the generality of the people. And for us to have good and affordable houses we need to have affordable lands and then proper titling is in place. So when people have proper titling of their property, they can borrow money, they can create wealth which ultimately can be used to create wealth for the generality of the people. We and REDAN are collaborating at the highest level with all the regulatory authorities, in particular Federal Ministry of Housing in putting up policies to ensure we have availability of houses, inclusive of social housing. Social housing is supposed to be for those whom government need to subsidise one way or the other in providing decent accommodation for them, because everybody needs to be housed.
How prepared is Resort Savings and Loans for the April 31 deadline given by the Central Bank of Nigeria (CBN) for the recapitalisation of mortgage banks in the country?
We have come a long way, by God's grace by the end of this year we will be rolling out the drums, we will be 20.
We strongly believe that Resort has come to stay and has provided a niche for itself and for our customers within this period of our existence despite the turbulent period which the mortgage sector has gone through.
We have also been able to grow our deposit base to N2 billion, and God willing that is going to grow heavily this year. In the last year audited third quarter result which we sent to the NSE, we made an excess of N100 million.
Our bank is positioned to go places and achieve good results for the shareholders and our customers. Good customer service is one thing we hold ourselves to and are very proud of.
By next month, subject to the approval of the regulatory authorities we would be coming out with an offer. We are going to raise about N3.5 billion in form of both rights issue and public offer, although this is subject to regulatory approval. When they give the green light we will go ahead because it is regulatory authority induced based on the new CBN guideline that for you to be a national mortgage bank, you must have a capital base of N5 billion. For the mortgage sector as a whole and in particular Resort, we strongly believe that the fate of the mortgage sector will definitely change from this year. We believe the market will know who the key players are and we intend to be among the first five mortgage banks in this country.
Would MBAN seek an extension of the deadline and how many mortgage banks are likely to remain after the exercise?
We've been on this for the past two to three years, they have given the mortgage sector enough time for us to know what to do and a lot of my colleagues are either going through mergers right now to meet up with the requirement while some have scaled through. Some will like to stay as state mortgage banks which would have N2.5 billion capital base. I strongly believe that between March and April we would have these sorted out. We will not talk about extension. It's a done deal and we need to be well capitalised to move the sector forward.
All things being equal, at the end of the day we'll probably just have maybe about 25 mortgage banks from the current number of excess of 70. We will have about 25 banks that will be well capitalised.
Considering that you will be raising N3.5 billion from the capital market, how buoyant do you think the market is right now?
Right now I believe confidence has been restored in the capital market. We all lost money three years ago, everybody has moved on. There has been capital appreciation in the market on the average now we would be having an excess of 20 per cent and it is growing and I don't see it coming down again because now the stocks are properly priced. The worst case is over for the market. It is just for us to see the boom. We had our AGM in November and our shareholders gave us the go ahead. We already have over of 12,000 shareholders who have given us the nod and we are going ahead and people are already prepared to fund the rights issue and the public offer.
How much has been disbursed so far under the NHF scheme?
Total disbursement from FMBN by Resort Savings is in excess of N800 million as at the last count. And when you talk of total number of people that have benefited from the scheme through us I would say it is going to be in excess of 400 people so far, but in terms of processing, we have an excess of 3000 that we are processing with the Federal Mortgage Bank.