‘We expect the NMRC to start impacting the market by Q1  2015’

TrustBond Mortgage Bank Plc, formerly known as  Intercontinental Homes, is one of the newly recapitalised primary mortgage banks (PMBs)operating at national level with capital base in excess of N5 billion. Recently, the bank made substantial investment in the Nigeria Mortgage Refinance Company (NMRC). ADENIYI AKINLUSI, the bank’s managing director, in this exclusive interview with ODINAKA MBONU,  speaks on the huge investment, the mortgage banking industry and other issues. Excerpt:

There is a feeling in the market that even after your bank’s recapitalization to the status of a national mortgage bank, you still seem to concentrate solely in major city centres. How true is this?

I will start by stating that as a national mortgage bank, our presence is not only felt in Lagos and Abuja but in other places where we operate branches. Currently, we are working with the Federal Mortgage Bank of Nigeria (FMBN) under the ministerial pilot scheme to create mortgages for people in Katsina State. I also believe that what is important for a mortgage bank is to be able to provide loans and sometimes your physical presence does not necessarily determine that.

However, we are partnering with so many people outside the major city centres, we are currently talking to clients in Kwara and other states as well. The whole country is our field of operations and we are poised to leverage on that.

Your bank recently invested N500 million in the Nigeria Mortgage Refinance Company (NMRC). However, most aspiring homeowners are yet to feel the impact of the company since its establishment. What could be the reason for this?

I am aware that some months back there was an advert in the Newspapers from NMRC, where people all over the country where asked to subscribe online and people did apply for mortgages from all over the country. This was shared to all the investor-mortgage banks and banks, and they are working on reviewing applications for credit acceptance for mortgages. So I will say that steps are being taken gradually.

I will say that the NMRC is getting its acts together and putting systems in place to be able to serve clients in need of mortgages.

I am sure from next year we will start seeing the impacts. This is because, there is a process flow for creating mortgages. You need to have the mortgage bank pre-qualifying applicants, do the credit assessment to be sure they can meet up with what is expected of them before the NMRC will start disbursing. I am sure by the first quarter of next year we will start seeing the impacts of the NMRC because all hands are on deck to ensure the initiative succeeds.

Nigerians are not quick in approaching mortgage banks for loans because of high interest rates charged. How is Trustbond doing it differently?

We all know that one of the major problems militating against the industry is lack of long term funds at the right rate for mortgages. This is what led to the birth of the NMRC and that is why we are depositing as much as 500 million in the company so that we can access long term funds at lower rates. We know that with the NMRC having the support of the Federal government, World Bank and International Finance Corporation (IFC), we will be able to access funds at a cheaper cost and it will dovetail into the lower market mortgage rates.

There is just no way you can use short term funds such as current account, savings or mid-term deposits to finance mortgages for a longer term because they are always priced above inflation rates.

That is why the NMRC is a major initiative and we are working strongly with them. We are also aware that the Central Bank of Nigeria (CBN), the NMRC and the Mortgage Banking Association of Nigeria (MBAN) are coming up with an underwriting standard which is being concluded. This underwriting standard makes it a lot easier for people to take loans because you will know what is required to access a mortgage and these are initiatives that are in line with best practices.

So once you are eligible under the Underwriting Standard, you can work into any mortgage bank to get loans because it is the same standard that will be in place.

For us at TrustBond, we have a lot of products such as the HomePlan Account to help intending homeowners actualise their dreams.

Some mortgage bank operators have continued to eye the pension fund as a source of long term funds. Are you in this camp?

Yes, because in other developed countries, most of the funds for mortgages come from long term assets like pension funds. I am optimistic that with the new pension reform act that has just been approved, it will now be a lot easier for organizations like NMRC to issue bonds while Pension Funds Administrators and pension companies can access and invest in such funds and those funds can be made available to the mortgage banks.

Recently, you held your first Annual General Meeting  after recapitalization; what has your experience been?

Anyone who has been an operator in the mortgage space in the last one year will know that the highlight was the recapitalization, because if you are not able to recapitalize you won’t even have a future for the business.  We also know that with the new revised guideline, Primary Mortgage Banks can no longer operate in the real estate development business where they easily make money.

So, of course, there was the need to retool, re-kit and re-strategise and that informed our decision to come up with new products. So, currently we are rebuilding the foundation for the business and the industry. That is why a lot of us are involved in the NMRC and the under-writing standard and those are things that will help the industry have a sustainable growth.

Sincerely, I think there has been some level of growth in the industry because people can now access funds, there is no gain in promising mortgages when you don’t have the long term funds and it’s also risky to use short term funds to create mortgages.