Infinity Trust Mortgage Bank (ITMB) Plc surmounted a slow economy caused by a slump in oil price and a weak currency as the Nigerian housing giant has been consistently recording profit in the past ten years.
The impressive results by Infinity Mortgage Trust make its shares attractive to investors that crave for firms that maximize share holders’ wealth.
The Nigerian housing giant is planning on increasing its market share by commencing on the second phase of its branch expansion.
For the year ended December 2015, Infinity Mortgage Trust operating income increased by 1.74 percent to N711.48 million as against N693.14 million as at December 2014.
Gross earnings or turnover moved by 2.64 percent to N755.92 million as the Bank’s interest, commission and investment income were major drivers of top lines.
Infinity Mortgage Trust is intensifying all available resources that will pave the way for it to tap into the country’s huge population and rising middle class that crave for accommodation
Nigeria, Africa largest economy has a housing deficit of 17 million and the cost of bridging the gawk is estimated at N59.2 trillion, according to a recent report by the World Bank .
Analysts say the N1.8 trillion earmarked for capital projects in the record 2016 budget of $6.08 trillion ($30 billion) will trickle down to the bottom lines of operators in the housing and real estate sector.
The major thrust of the 2016 budget is to stimulate and diversify the economy, according to the Chairman’s statement, on page 17 of the company’s 2015 audited financial statement.
“I believe that our current economic challenges have thrown up fresh opportunities that our Bank will explore for growth, said the chairman’s statement,” said the chairman’s statement.
While Infinity Mortgage Trust’s upward trajectory has been unprecedented given its solid assets base and robust shareholder’s fund, the company’s bottom line took a hit due to rising impairment of charge.
Net income was down by a single digit 5.14 percent to N232.14 million in December 2015 compared with N244.73 million as at December 2014. However net interest and similar charges were up by 28.70 percent to N531.50 million in the period under review.
Further analysis of infinity Mortgage Trust financial statement showed loans and advances to customers increased by 34.64 percent to N1.67 billion in December 2015 from N1.24 billion. Deposit from customers increased by 33.01 percent to N1.41 billion in the period under review as against N1.06 billion as at December 2014.
The loan growth is due to the bank’s increased tenacity and passionate attachment to delivering houses to Nigerians.
Despite the mounting business challenges, the bank remained focused in meeting its regulatory capital and building the wealth of stakeholders as evidenced by the 33.0 percent rise in shareholders fund to N1.41 billion in the period under review.
Infinity Trust Mortgage said it has continued to increase the wealth of its share holders by consistently paying dividends. The bank has maintained its dividend payout for nine years.
The Bank, as the company is otherwise known, has proposed dividend of 3 kobo per share which is payable on May 16. This translates to a dividend yield of 2.11 percent, according to Bloomberg data.
Infinity Trust Mortgage financial stability was occasioned by its ability to meet all regulatory imposed prudential ratios and internally stressed ratios.
With a Capital Adequacy Ratio of 124 percent and liquidity Ratio of 191 percent, the Bank is well poised to meet all its maturing obligations.
The Bank maintained its short term rating of A3 with a long term Rating of BB+ (NG); positive outlook by Global Credit Ratings (GCR) for the 2nd successive time (2012 and 2013; A3 with stable outlook), according to Olabanjo Obaleye Managing Director and Chief Executive Officer of the Bank.
“It important to note that this rating exercise was voluntary and it is part of the management objectives to having an independent third party opinion on the operations on the Bank”, said Obaleye.
“The Bank was also awarded Distinctive Competency Award by Institute of Information and Strategy Management for its role in promoting mortgage financing while entrenching sound business and corporate governance practices, Obaleye added.
Despite the untapped opportunities in the economy; the sector has to contend with the harsh operating conditions and unpredictable macroeconomic environment.
With inflation rising to 11.40 percent for the month of February compared with 9.60 percent the previous month, consumer wallets will be hard hit as the demand for housing may ebb on the back of dampened consumption.
Also, the economic doldrums caused by more than 60 percent fall in the price of oil to $40 and the foreign exchange restrictions imposed by the Central Bank in order to stabilize the economy is hard hitting business that are hindered from accessing the required dollars to import raw materials.
The urban index rose by 12.3 per cent (year-on-year) from 9.7 per cent in the month earlier, and the rural index increased by 10.7 per cent in February from 9.5 per cent in January, according to the National Bureau of Statistics (NBS).
Analysts say the aforementioned monetary policies and uncertainties have resulted in firms closing shops and some cutting staff strength. They added the job loss may hinder people from buying mortgage or houses. Even houses that are for sale may see fewer buyers.
An industry expert identified the challenges holding back the growth of the mortgage and housing business in Africa’s most populous nation as lack of adequate legal framework and legislation required to attract the amount of long term funds needed in the sector
The industry analyst who craved anonymity said there is an urgent need to repeal the Land use Act of 1979 which to him is outdated and should be replaced with laws that will place the sector in an upward trajectory.
Infinity Trust Mortgage cost to income ratio increased to 61.06 percent in December 2015 from 56.70 percent as at December 2014 on the back of harsh operating conditions. Return on average assets fell to 3.07 percent in December 2015 as against 3.41 percent in December 2014. Return on shareholder’s fund reduced to 4.13 percent in December 2015 compared with 4.40 percent 4 percent at December 2014.
“Nigeria still represents potentially huge market for housing development and mortgage lending as there still exists a deficit housing gap of over 17 million.
A key constraint to the development of the mortgage market, which the NMRC should catalyze, is the ability to foreclose in the event of mortgage default. The Bank is positioned to tap into opportunities that will arise in the sector with NMRC in full operations now. We intend to increase our branches in selected major cities to tap the huge potential in the mortgage sector in locations where we do not have presence.
To achieve this plan, the Bank might seek to raise additional capital from external sources in order to meet its financial requirement for expansion and drive our business, which requires significant amount of long term funding. We believe that we will remain the mortgage bank of choice for Nigerians.I am fully confident that there will be significant improvements in all areas of our business, which will ultimately result in better earnings and viable returns on investment for all stakeholders,” said Obaleye.
ITMB’s share price closed at N1.42 on the floor of the exchange while market capitalization was N5.92 billion.
BALA AUGIE
