Nairametrics| During a facts behind the figures session at the Nigerian Stock Exchange (NSE), chairman of Omoluabi Mortgage Bank MrAbubakar Jimoh stated the intentions of the bank to raise capital and apply for a national license. Going national has several advantages for the bank.
- Working across several states will lessen the possibilities of a slow down in one state having adverse effect on the operations of the bank. Osun state, its primary market is one of several with a large population of civil servants.
- The drop in crude oil price, led to a fall in faac allocation which saw the state struggle to pay salaries. This led to a huge loan default by the borrowers.
- Having a national spread also gives the bank access to cheaper finance from multi lateral organizations. These bodies tend to give single digit loans to microfinance institutions for onward lending to members of the public.
- The expansion in operations will also enable the bank source a large volume of deposits. The larger the volume of deposits, the cheaper the cost of funds and subsequently the lower the interest rate it will charge on loans.
- Shareholders of the bank will also make more money in terms of dividends as the increase in the scale of operations will lead to more revenue and profit for the firm.The move to increase capital may also be to prempt a change by regulators on capitlaization requirements for mortgage banks.
Omoluabi Mortgage bank was licenced for operations in 1999 and became a public limited liability company in January 2014. First quarter results for the period ended March 2017 saw turnover increase from N71 million in 2016 to N80 million in 2017.
Profit before tax however declined to N17 million in 2017 from N29 million in 2016. Shares of the company are currently trading at 90 kobo, up 2.27% year to date. Trailing behind the All Share Index (ASI) which is up 4.90% year to date.
