- Bank Loans to Real Estate Industry Drop by N162bn
The challenges confronting the real estate industry have increased as credit allocation by banks maintains a downward trend, MAUREEN IHUA-MADUENYI reports
Credit allocation by banks to the real estate industry has maintained a downward trend in the last year.
Data obtained from the National Bureau of Statistics showed that the industry got about N622bn out of the N15.13tn credit to the private sector in the last quarter of 2018.
The amount, which accounted for 4.12 per cent of the total credit to the private sector, was about 12.39 per cent lower than the N710bn recorded in the third quarter of 2018.
In the first and second quarters of 2018, N784bn and N744bn, respectively, were given out by banks to the industry.
The first quarter of 2018 saw growth in credit allocation to the industry when the amount rose to N784bn, up from the N753bn recorded in the last quarter of 2017.
However, the comparison between the first and last quarters of 2018 showed a drop of about N162bn.
Stakeholders in the industry said it had become increasingly difficult to access commercial banks’ loans for investment in real estate.
Investigations revealed that in the last two years, it had been difficult for many developers to break even due to the glut in the property market, which had led to the high rate of default on loans.
It was gathered that commercial banks were no longer interested in financing real estate projects, and had not been putting their money in the industry for a while.
The Deputy President, Real Estate Developers Association of Nigeria, Mr Akintoye Adeoye, said, “If you go to any bank today and tell them you want to finance real estate development, they will not talk to you because they have had their fingers burnt.”
Adeoye stated that from the glut in the property market due to low purchasing power, interest rate, which he said was around 25 to 35 per cent, had also been a major clog in the wheel of real estate funding.
“Housing is long-term, so it is a mismatch to use a short-term fund to finance a long-term project. Now, banks are not places to go to except on some special projects where the off-takers are members of a cooperative society and they already know how to wrap up the transaction but it will also be expensive for the buyers because the cost of funds will be transferred to them,” he said.
The Chairman, Nigerian Institution of Estate Surveyors and Valuers, Lagos Branch, Mr Rogba Orimalade, stated that from the period the economy went into recession till now, commercial banks had been saddled with the burden of disposing of huge real estate assets acquired through bad loans.
Orimalade said this had made many of the banks wary of investing their money in real estate projects.
He added, “From the period of the recession and even before, we came from an era where the banks had lots of assets, at a particular time the Asset Management Corporation of Nigeria was said to be the biggest custodian of real estate assets in the country and it was mainly because of the bad loans that emanated from the banks they took over. Most of the assets were taken away from the people who gave them out as collateral.
“So, naturally, only very few of them are out giving loans. It is only common sense for a lot of those banks and other financial institutions to look at the amount that they give out. To a lot of them, the industry is not attractive anymore.
He, however, stated that the question should not be about the reduced credit allocation to the industry but rather it should be about what should be done to grow the country’s economy through housing .
“Government says all the time that it wants to grow the economy but the economy cannot really grow without a thriving housing sector; that is the reality. Just as the government is giving priority to agriculture and the Central Bank of Nigeria and other banks are being compelled to give certain loans to agric and SMEs, it is important that the government recognises that housing is key to growing the economy,” he said.
According to him, once housing is taken care of, about 70 per cent of the issues in the economy will be addressed with the potential of the industry to have a multiplier effect on other industries.
Orimalade said, “Until the government recognises and puts a premium on houses, the economy may not really grow as much as it should. There are all kinds of commercial institutions with initiatives for agric. As far as I am concerned, the same should be done to real estate with housing as a critical part of the economy; in other climes, the economy is determined by how buoyant the real estate industry is.
“I agree that people have got their hands burnt and now prefer to go into other ventures rather than real estate but are the banks giving these credits in a way to help the real estate industry give the economy the bounce that is required? They are not doing that and if not, the question should be put to the government what it intends to do for the industry.”
He said the government should encourage banks to invest more in real estate.
The Central Bank of Nigeria’s Head, Project Administration Team of the National Housing Finance Programme, Mr Adedeji Adesemoye, noted that for the housing issues in the country to be addressed, access to mortgage must be put into consideration.
According to him, one way for the government, especially at the state level to address the challenge, is to sign the Mortgage Model and Foreclosure Act into law.
“The law would help to correct some of the shortcomings of the Land Use Act, which limits access to land and housing,” he said.
He stated that for people to be able to have better access to funding for investment in housing, mortgage culture must be encouraged to grow in the country.
Ecobank To Pay Customers N5 For Every Dollar Received
Ecobank To Pay Customers N5 For Every Dollar Received
Ecobank has implemented the CBN scheme which offers N5 for every Dollar received into domiciliary accounts or as cash over the counter. Korede Demola-Adeniyi; Head, of Consumer Banking, Ecobank Nigeria, who announced this in Lagos stated that the decision is in line with the CBN directive and fully aligns with efforts to encourage the inflow of diaspora remittances into the country.
She noted that the “CBN Naira 4 dollar scheme” is an unprecedented incentive for senders and recipients of international money transfers.
Korede Demola-Adeniyi said that the scheme takes effect from 8th March and will run till 8th May 2021. “Ecobank will pay N5 on every Dollar so beneficiaries will not only get the foreign currency sent from their family and friends abroad, but they will also get extra Naira”, she stated.
Only recently, Ecobank had a first-of-its-kind virtual Diaspora Summit to discuss opportunities for Nigerians living abroad and the various platforms available to assist them with their investment decisions and remittance needs. The event had major players in the remittance space, diaspora audience, government officials and notable stakeholders in attendance.
Further, the Managing Director, Ecobank Nigeria, Patrick Akinwuntan has disclosed that apart from consistent engagement with Nigerians in the diaspora, Ecobank is leveraging its digital technology to make remittances to Nigeria and Africa easy, convenient and affordable.
Mr. Akinwuntan stated that growing evidence has shown a positive relationship between diaspora remittances and economic growth.
“Ecobank will continue to pursue its mandate of helping to enhance the economic development and integration of Africa, through the 33 countries where the bank operates on the continent. Ecobank’s Rapidtransfer and mobile app (Ecobank Mobile) enable Africans, wherever they are, to easily and instantly send money to bank accounts, mobile wallets and agent locations across 33 African countries”, he stated.
Ecobank Nigeria, a member of the Pan African Banking Group is committed to supporting Africans in the diaspora by providing advisory services, remittance solutions, investment options and financial planning schemes. The bank also offers mortgages, treasury bills, capital market instruments, among others.
Peter Obaseki Retires as Chief Operating Officer of FCMB Group Plc
The Board of Directors of FCMB Group Plc has announced the retirement of Mr. Peter Obaseki, the Chief Operating Officer of the financial institution, with effect from March 1, 2021. He was also an Executive Director of the Group.
His retirement was approved at a meeting of the Board of the Group on February 26, 2021. This has also been announced in a statement to the Nigerian Stock Exchange (NSE) by the financial institution.
The Chairman of FCMB Group Plc’s Board of Directors, Mr Oladipupo Jadesimi, thanked Mr. Obaseki for his valuable service and excellent support to the Board for many years.
FCMB Group Plc is a holding company divided along three business Groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited); as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).
The Group and its subsidiaries are leaders in their respective segments with strong fundamentals.
For more information about FCMB Group Plc, please visit www.fcmbgroup.com.
COVID-19: CBN Extends Loan Repayment by Another One Year
Central Bank Extends One-Year Moratorium by 12 Months
The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.
The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.
In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.
The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.
“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.
“Following the expiration of the above timelines, the CBN hereby approves as follows:
“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.
“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”
It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.
To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.
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