The Managing Director of Infinity Trust Mortgage Bank (ITMB), Dr. Olabanjo Obaleye, has lamented the depreciation in the exchange rate and rising inflation are hurting the housing sector and mortgage banks.
Obaleye disclosed this in Abuja, during the earnings conference organized by the financial institution to relay information about the performance of ITMB to its stakeholders.
He explained that mortgage banks in Nigeria like other financial institutions were not isolated from the impact of Covid-19 pandemic, adding that the impact was peculiar because of the nature of the business – long-term lending of up to 30 years.
According to him, the pandemic negatively impacted households and their ability to stay solvent through wage decrease or losses.
Consequently, changes in repayment and defaults will have significant impacts on the bank’s profitability and liquidity, he added.
Obaleye explained that the operating environment was not friendly considering the fact that all the indicators point to downward direction.
For instance, he said, “Inflation rates in 2013 was 8.5 percent, while in 2018 it was 12.09 percent and in 2020 it was 15.75 percent. Gross Domestic Product (GDP) in 2013 was 8.5 percent, it was 1.94 percent in 2018, and 0.11 percent in 2020. Dollar Exchange rate in 2013 was N157.3, it was N305.1 in 2018, and N465 in 2020.
“The exchange rate is giving developers headache every day. Many estate developers are crying because of this.”
Obaleye, however, said the bank 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 its customers.
He said some of the bank’s achievements amidst the pandemic include a 33 percent increase in loans and advances; 25 percent growth in assets; the proposed four percent increase in dividend; 94 percent increase in deposit mobilization, and four percent increase in shareholders funds, amongst other feats.
Obaleye expressed optimism that the bank would experience further growth in profitability and financial position this year, given its financial performance for the first quarter of 2021, which surpassed its comparative preceding year performance.
