Infinity Trust Mortgage Bank Plc (ITMB), the company that specializes in mortgage lending and credit said net income declined 27.60 percent in half year after the tough operating environment stunted growth prospect.
Profit was N104 million in half year through June 2015, compared with N143.66 million the previous year, the Lagos-based company said in an e-mailed statement on the exchange.
Turnover increased 10.12 percent to N333.70 million as the company continues to pursue aggressive expansion with a view to increasing its share of the market.
The slow growth was as result of the uncertainty and the political climate in the first quarter of this election year, according to Olabanjo Obaleye, Managing Director/Chief Executive Officer of the company in an emailed note to BusinessDay.
“This is not peculiar to us has it affected all other business across the economy,” said Obaleye.
Investments in the real estate and Mortgage were stalled as investors held back money on speculations of outcome of the last presidential elections that witnessed President Muhammadu Buhari of the All Progressive Party (APC) defeating the former president Goodluck Ebele Jonathan of the Peoples Democratic Party (PDP).
Some industry analysts say mortgage lending is weak because of the lack of clear property rights, high costs of property transactions, inefficient land management systems and delay in getting the required approval for land transaction.
There is urgent need for the incoming government to review and amend the land use act of 1978 which is outdated and archaic.
“The challenges are mainly lack of adequate legal framework and legislation required to attracting the amount of long term funds needed in the sector,” said Obaleye.
The recent devaluation of the naira against the dollar had placed upward pressure on lending rates, making it more difficult for local developers to access funding for projects.
The naira has lost more than 13 percent of its value against the dollar in the past six months, and was trading 0.2 percent stronger at 199 a dollar by 3:47 p.m. in Lagos.
While the recent economic crises are hindering the growth of real estate business in Africa largest economy, the huge housing deficits and the country’s growing economy with a young population that crave for accommodation will be a major driver of growth in the mortgage and real estate business.
Infinity Mortgage Trust interest and similar charges increased by 21.72 percent to N225.94 million in 2015 compared with N185.94 percent the previous year. Interest income and similar expenses were up by 30.53 percent to N23.77 million.
Total operating expenses were up by 4.41 percent to N193.07 million in the first half of the year as against N184.86 million last year. Total assets moved by 9.79 percent to N7.85 billion in 2015 from N7.15 billion as at June 2014.
“This sector is instrumental in economic and social development of any country. It has the ability to create employment (both skill and unskilled) and to have a happy citizenry. If housing needs are met there will be a motivated work force. Also people can use their house to as an access to finance in addition to the shelter it provides for them,” said Obaleye.
Infinity Mortgage Trust share price closed at N1.42 while market capitalization was N5.92 billion.