MORTGAGE DIGEST. MD/CEO s Welcome Address. NMRC AGM and Financial results for the year. In this Issue. Vol. 5 No. 5 October 2017

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1 1 MORTGAGE DIGEST Vol. 5 No. 5 October 2017 MD/CEO s Welcome Address Welcome to the 5 th edition of Mortgage Digest, NMRC s Newsletter. NMRC AGM and Financial results for the year. The 2 nd Annual General Meeting of the company held on August 2nd 2017 at the Civic Centre, Victoria Island, Lagos. It gives the Management and Staff great pleasure to inform our esteemed readers that despite the very challenging recession of the country s economy, NMRC, grew its balance sheet to N40.8 billion as at December 31, The company also achieved a profitbefore-tax of N1.2 billion for the period ended December 2016, reflecting the company s growing reputation as one of Nigeria s most innovative financial institutions. Stakeholder engagement is critical to our success as a leading housing sector operator, and a frontline activity for the company. We have executed numerous Memoranda of Association with entities cutting across the public and private sectors, at local and international levels. These engagements and partnerships are intended to attract investors and investments to Nigeria s housing market. They will also help to increase liquidity, depth and resilience of the capital market. Collaboration and partnership remain key values to our corporate existence and success in promoting affordability in home ownership for Nigerians. We call on all stakeholders to harness the opportunities and efficiencies that our Mortgage Market System presents. NMRC remains committed to forging strategic partnerships with organisations that will facilitate the provision of affordable housing in Nigeria. It is the future, it is our legacy. Thank you. We look for to your comments and feedback. Photo: NMRC Board of Directors at the AGM At its recently concluded 3rd Annual General Meeting (AGM) held in Lagos on August 2nd, 2017 the Nigeria Mortgage Refinance Company (NMRC) announced an improvement in its earnings. The company recorded a 164% growth in PBT for 2016, up N1.28 billion from N487 million in NMRC also recorded an impressive growth in its mortgage refinance portfolio which hit a peak of N8.2billion in 2016, up from N1.8billion in Net Interest Income increased from N2.03 billion recorded in 2015 to N3.02 billion, while total assets stood at N40.8billion, an increase of N1.74billion over a balance of N39.06 billion earlier recorded in In this Issue Main News (pp. 2 and 3) Refinancing Updates (p. 3 and 4) Market Updates (pp. 4 and 5) Partnership Updates (pp. 6, 7 and 8) Upcoming Events (page 9) 1

2 These impressive results were recorded despite the harsh operating environment and challenges in the Nigerian economy. Mortgage Refinance Beneficiaries include Stanbic IBTC, Imperial, Sterling, SunTrust, Homebase, Trustbond, Infinity and Abbey banks. Speaking at the AGM, Chairman of the Board of Directors of NMRC, Dr. Charles Okeahalam, explained that the company was quite proactive in its mortgage refinancing function during the year under review. He said he remains optimistic about a turn-around in the economy because the measures being implemented by the government will enhance the company s performance in the immediate future. Dr Okeahalam reiterated that NMRC s commitment to its long-term strategy of putting structures in place that will make affordable homeownership a reality for Nigerians: We re entering a period of falling inflation and interest rates and should these projections come to pass, our industry and indeed our company stand to benefit immensely. Also speaking at the AGM, NMRC s Managing Director/ Chief Executive Officer, Prof. Charles Inyangete attributed the company s performance to a sustained investment in skilled human resources, strategic stakeholder engagement and deployment of innovative technological infrastructure in driving the implementation of a robust operations strategy. L to R: Musa Bello, Company Secretary, Board Chairman, Dr Charles Okeahalam and MD/CEO, Prof Charles Inyangete He further disclosed that the company has entered into discussions with multilateral agencies willing to provide credit enhancement products to support bond issuances for mortgage lending to the informal sector, which will create more market opportunities for financial inclusion, and capital market deepening. Professor Inyangete also noted that NMRC is collaborating with the Central Bank of Nigeria, the Mortgage Banking Association of Nigeria (MBAN) and other key housing market stakeholders to develop a uniform underwriting standard for the huge and untapped informal sector The initiative aims to extend affordable home ownership opportunities to the informal sector, in line with our entrenched commitment to promoting affordable home ownership,. Noting that while the prevailing high interest and inflation rates continue to pose an affordability challenge for home acquisition through mortgages for most borrowers, the company plans to broaden its financial inclusion strategy by issuing the first mortgage-backed Sukuk bond to attract non-interest based mortgages, to further drive down the interest rate burden on mortgage beneficiaries Again, consistent with its mandate to help develop the mortgage and housing markets in Nigeria, NMRC deployed its award-winning Mortgage Market System (MMS) technology platform which streamlines and integrates systems and processes along the major components of the housing value chain. The MMS aims to enhance efficiency and cost reduction, from land and titling, construction, mortgage origination to refinancing and ultimately to securitization when the market becomes ready for such. NMRC Member banks are already leveraging the MMS for their off-taker profiling and mortgage origination and administration functions. The MMS is also pivotal to the ongoing profiling of Federal Civil Servants for prequalification under the Federal Integrated Staff Housing Programme (FISH) being spearheaded by the Office of the Head of the Civil Service of the Federation. 2

3 3 NMRC Abuja Wins Housing Show Award Receiving the award on behalf of the company, MD/CEO, Professor Charles Inyangete noted that he was honoured and proud to receive this award on behalf of the management and staff of NMRC. Professor Inyangete further stated that at NMRC we are focused on ensuring that we work to make affordable home ownership a reality for Nigeria. l appreciate the organizers of the Nigeria Housing Awards for recognizing the role that NMRC is playing in the development of the housing and mortgage market. REFINANCING PORTFOLIO REPORT ANALYSIS NMRC staff at the Award ceremony The Nigeria Mortgage Refinance Company (NMRC) received industry recognition for Housing and Mortgage Market Innovation. The award was presented to NMRC at the 11 th edition of Abuja Housing Show Awards dinner which held at the International Conference Center, on the 19 th July The organizers of the award stated that NMRC s leading role in the development of transparent standards and systems is helping to boost investor confidence in the housing sector and laying the foundation for a vibrant mortgage market. Some of the initiatives they outlined included the introduction of an industry wide uniform underwriting standards for processing mortgage loans, institutionalization of the model mortgage and foreclosure mechanisms to facilitate mortgage loan recovery and the mortgage market system which consolidates the key aspects, systems and processes in the housing value chain together for greater cost and operational efficiency. NMRC refinancing portfolio stood at N8.18bn with 434 loans as at January and February The portfolio growth of 3.34% to N8.46bn in March 2017, was on the back of refinance activities of N203.62million and N69.36 million by Homebase and Trustbond Mortgage Banks respectively moving the portfolio to N8.46bn from 450 loans in April and May While NMRC s refinancing rate continues to hold steady at 15.5% or 150 basis points above Central Banks monetary policy rate, the total value of its refinance portfolio is N8.502 Billion Naira and 452 mortgages as at September 2017 as noted in the chart below. Source: NMRC Analytics and Reports 3

4 REFINANCING PORTFOLIO REPORT ANALSIS FINANCIAL MARKET BRIEF INTEREST RATES Current OBB and overnight rates closed at 10% and 12% respectively. The money market has remained rather stable in recent times as liquidity levels have significantly reduced volatility. Treasury Bill discounts moved south during the period especially on the long end compared to June 2017 levels. Stop rates for the latest Treasury Bills auction (September 14, 2017) were: 91days 182days 364days 13.25% % 17.75% Source: NMRC Analytics and Reports The Central Bank continued its OMO interventions to mop up excess liquidity at an aggressive pace, with daily auctions in a bid to rein in exchange pressures. This is despite the negative effects of the restrictive posture on growth. It is important to note a considerable reduction in the tenor of the auctions. We do not expect major changes at the next MPC meeting, with the Committee expected to hold key rates at current levels. This view is supported by the stickiness of inflation and the potential for currency pressures that may arise from any accommodative stance. INFLATION Inflation remained on a downward trajectory for the seventh month running. August 2017 headline CPI declined marginally by about 4 basis points to close at 16.01% compared to 16.05% as at July Month on month numbers decelerated from 1.21% in July 2017 to 0.97% in August In terms of sub components, food inflation witnessed an increase of 20.25% compared to 20.28% for the month of July, while core inflation rose to 12.30% from 12.20%. We expect that base effects from elevated prices in 2016 will continue to diminish the pace 4

5 FINANCIAL MARKET BRIEF cont d FX MARKET The introduction of an Investors and Exporters FX window has boosted the fortunes of the local currency. It has sparked renewed interest in the local currency with improved FX inflows witnessed since its commencement. The window seeks to provide access to FX at competitive prices to market players. The apex bank has now sold over $3.6billion since the review of its FX strategy aimed at providing liquidity to the market. The intensity of supply by the CBN over the period has continued to maintain relative stability of the naira at most segments of the market including the parallel market. Rates as at September 19, 2017 stood at $/ The exchange rate however remained stable at the CBN interbank market trading around a band of $/N305 -$/315. At the recently introduced Investors and Exporters FX window bids ranged between $/355- $/360. OTHER MACRO INDICATORS Q GDP increased by 0.55%, he first time in five quarters compared to the previous quarter s growth of -0.52%. This technically signals Nigeria s exit from recession. Key growth area was Oil which witnessed growth of 1.64% from % as at Q After expanding for four consecutive quarters the Manufacturing Purchasing Managers' Index (PMI) issued by the CBN stood at 53.6 index points in August 2017 compared to 54.1 for July 2017, 11 of the 16 sub-sectors covered by the index reported growth for the month of August Foreign reserves continue to witness accretion, standing at $31.88bn as at September 14, 2017, the reserves have largely been boosted by increasing local production volumes and relatively stable oil prices. OIL PRICES Tensions over the possibility of conflict between the US and North Korea have kept oil prices over the $50 mark, with Brent crude prices at $55.48 as at September 18, However, concerns over building US inventories as a fall out of Hurricane Harvey s havoc on gulf refiners remains might drag down prices. 5

6 6 PARTNERSHIP UPDATES: OPIC NMRC MoU NMRC MD/CEO, Professor Charles Inyangete said he was delighted at the consolidation of the partnership because of the positive impact it will have on housing development in the area. Managing Director, OPIC, Mr. Babajide Odusolu said the partnership holds great promise for the achievement of the corporation s plans to achieve the target of being the dominant provider of quality and affordable housing in Ogun state. NMRC Management Team, OPIC MD and MBAN. The Nigeria Mortgage Refinance Company (NMRC) recently signed a landmark partnership agreement with Ogun State Property Investment Corporation (OPIC) and Imperial Homes, TrustBond and Homebase mortgage banks. The partnership is an NMRC-led market development initiative designed to boost OPIC s affordable housing project in Ogun State. This is to provide liquidity and empower the three primary mortgage banks to give more long-term mortgage loans to potential house owners in Ogun State and Lagos State. Under the terms of the agreement, the mortgages banks are to provide mortgage loans to prequalify offtakers for housing units that conform to the NMRC Uniform Underwriting Standards. Each of the three primary mortgage banks have committed N1.5billion to the project. NMRC will refinance mortgages loans created by the mortgages banks. NMRC and OPIC joint press interview. This partnership gives a big boost to the plans of OPIC to build and offer quality houses under a mortgage system that is affordable and convenient for aspiring home owners. We commend NMRC for facilitating the consolidation of this partnership and the Imperial Homes, TrustBond and Homebase mortgages banks for the willingness to be our partners on this project. OPIC MD, Babajide Odusolu, NMRC MD, Professor Charles Inyangete and Homebase MD, Dr Femi Johnson. 6

7 7 Alphamead NMRC MoU Echostone NMRC MoU NMRC Management Team and AMDC Team NMRC also recently signed a Memorandum of Understanding (MoU) with Alpha Mead Development Company (AMDC) a developer, company known for its innovative and technologydriven approach to increase affordable housing stock in the country. MD, Alpha Mead DC, Femi Akintunde, said the partnership is a serious demonstration of NMRC s commitment to reducing the nation s increasing housing deficit; and encouraging recognition of Alpha Mead s innovative approach to delivering quality and affordable housing to Nigerians. It is increasingly becoming obvious that the conventional building methods cannot bridge Nigerian housing gap, especially in the face of the myriad of challenges that face the affordable housing value chain. Also what we bring to the market are the possibilities of addressing the challenges of affordability and quality; which are two critical issues that are inhibiting the nation s affordable housing market. Professor Charles Inyangete and MD of Sammye Company The Nigeria Mortgage Refinance Company (NMRC) recently signed a Memorandum of Understanding with EchoStone to work towards the provision of housing finance, project advisory and structuring to increase affordable housing stock to drive mortgage creation in Nigeria. The agreement is also expected to promote knowledge, technological transfer and support between Echostone and NMRC in relation to the residential Real Estate market. MD/CEO, Professor Charles Inyangete stated that, the company has invested substantial sums in providing and improving policy requirements and Information systems infrastructure that have ultimately led to the decision of international players like EchoStone choosing to invest in Nigeria s housing market as symbolised by the executed MoU. EchoStone s representative Mr Sammy Adigun, CEO of Sammya construction noted that the EchoStone Housing System is an innovative and more efficient approach to housing design and construction. The managing Director MIDC, Mr Emmanuel Obire also representing EchoStone noted that the MoU and engagement is predicated on EchoStone s proposed model to deliver 750,000 housing units within a 10-year period across key states in Nigeria. This will be kickstarted with its planned development of 2,400 units in the Ikorodu axis of Lagos, in partnership with Ibile holding and Lagos State Government. NMRC Management Team and AMDC Team 7

8 NMRC SIGNS MoU with FCCNAPL Properties Limited NMRC Executive Management Team and FCCNAPL Team The Nigeria Mortgage Refinance Company (NMRC) and FCCNAPL properties Limited signed a Memorandum of Understanding to collaborate for the purpose of pursuing the initiative of improving access to affordable homes and deepening the mortgage market in Nigeria. FCCNAPL is a special purpose entity set up in partnership with Nigeria Army Properties Limited to drive the development of Asokoro Hills in Abuja. The Off-takers of the affordable homes built by FCCNAPL properties Limited will be from the file and rank of the Nigerian Army and members of the public. In view of this MoU, subscribers will have their mortgage applications handled by NMRC primary Mortgage Lenders to facilitate refinancing through NMRC. 8

9 9 UPCOMING EVENTS AUHF Conference This year s African Union for Housing Finance Conference under the theme, Engaging housing value chain for growth, brings together key players in Africa s housing and housing finance industry to chart a way for the betterment of housing across the continent. Focusing on the key links in the chain, the conference will bring together financiers, developers, professionals and policy makers to deliberate on the challenges and explore opportunities. Contact Us Head Office 18, Mississippi Street, Off Alvan Ikoku Way Maitama Abuja, Nigeria. Lagos Office 17 Sanusi Fafunwa Victoria Island, Lagos, Nigeria info@nmrc.com.ng Facebook Twitter Production Team: Managing Editor: Dr Chii Akporji Editor: Abel Owotemu Production: Chiamaka Udeh 9