By Alex C
Abbey Mortgage Bank plc, one of Nigeria’s pioneer mortgage firms, has released its first quarter (Q1) 2014 financial results, which showed a decline in Profit after tax (PAT) as it shrank by 20.24 percent year-on-year to N15.10 million in Q1 2014 as against N19.93 million as of Q1 2013.
The bank’s revenue in Q1 2014 declined by 30.84 percent year-on-year to N308.92 million from N446.70 million in the same period of the prior year (Q1 2013). Profit Before Tax (PBT) also declined by 20.23 percent year-on-year to N18.88 million in Q1 2014, compared with N23.67 million as of Q1 2013.
The company’s operating expenses almost undercut its profits as cost-to-income in the review period was as high as 91.76 percent, highlighting the need for urgent cost reduction mechanism. While deposits from customers increased by 6.27 percent to N5.218 billion, its loans-to-deposits ratio for the first three months through March 2014 stood at 140.66 percent, signifying that the bank is aggressive about lending and expanding its deposit base.
Abbey Mortgage’s total assets were up slightly by 1.82 percent year-on-year to N13.81 billion in Q1 2014, from N13.56 billion as of Q1 2013.
The unimposing results is coming at a time when the mortgage business in going through a potential growth spurt buoyed by the 17 million housing gap, and newly launched Mortgage Refinance Corporation (MRC).
The real estate sector grew by 10.35 percent in Q3 2013, according to the National Bureau of Statistics (NBS) and had achieved double-digit growth every quarter since Q1 2012. According to a recent World Bank report, over 85 million Nigerians live in cities with continued mass exoduses to the urban areas.
The bank was unrelenting in its move to provide affordable housing to its large chunk of customer last year, as it launched a new mortgage product known as Abbey Home Account, which will ensure low-income earners become homeowners.
There are enormous opportunities for the company to tap into as real estate’s contribution to the Nigerian economy shows possible growth prospect for the mortgage company. The real estate sector contributed 8.01 percent to the Nigerian economy, equivalent to N6.43 trillion ($40.9bn) of the total rebased GDP estimate of N80.22 trillion ($510bn).
With the proposed US housing refinancing model (MRC) about to be imitated by the government, all things being equal, the opportunity lurking for Abbey Mortgage are enormous.
Image Source: https://www.auhf.co.za