The past 30 years have matured us – MD Abbey Mortgage Bank

In this conversation with Mr. Madu Hamman, Managing Director of Abbey Mortgage Bank PlC, he spoke at length about Abbey’s 30-year history in the mortgage industry and other developments.

This is Abbey Mortgage’s 30th anniversary in the banking industry. How was the industry in its early days and why did you choose mortgage banking?

It is a great privilege for every organization to celebrate a milestone and we at Abbey are very privileged in the mortgage industry to celebrate 30and anniversary because I believe we are one of the resilient mortgage banks still operating since the first mortgage bank licenses were issued. It was tough but we are standing. 30 years later, when others in the business haven’t had the same luck.

The mortgage industry or primary mortgage bank was created by the Mortgage Institutions Act 1989 which allowed private players to enter the market. Previously, the Federal Mortgage Bank of Nigeria (FMBN) was the only institution in the mortgage banking sector. The federal government therefore found it necessary to decentralize the mortgage sector to allow private investors to come. This move led to the first batch of Primary Mortgage Banks (PMBs) being licensed in 1991.

In 1997, the Central Bank of Nigeria (CBN) became the primary regulator of the sector, ensuring adherence to clear operational guidelines and structure that allowed the sector to grow and prosper.

What was the competition like when you entered the industry? How is the competition today 30 years later?

30 years ago, the competition was quite tough due to the number of players in the market. We were in a market where there were 4 or 5 mortgage banks, but new entrants were not regular, which led to customer distrust. So when the failing banks exited the market, the competitiveness continued as the large commercial banks were and still compete with the mortgage banks on the offers of the mortgagees.

But when you’ve been in the industry for 30 years, you can tell that we’ve matured and understand the ever-changing marketplace and are capable of growing with it.

What did the regulations look like 30 years ago and what are the regulations today?

30 years ago, FMBN was the primary regulator of PMBs, but CBN took over after the first crash and they were able to nurture and guide PMBs on expectations, with policies and regulatory guidelines that stabilized the operations of the Marlet.

Since then, the Nigeria Deposit Insurance Corporation (NDIC) has stepped in to insure the deposits of the PMBs, which has given added comfort to our clients in the area of ​​security of their funds. This has improved the market tremendously. Of course, the CBN continues its interventions in the sector, one of which was the creation of the Nigerian Mortgage Finance Company (NMRC). A few additional regulations have come to support, guide and protect the industry much better over the years.

How has Abbey Mortgage Bank contributed to the industry as a whole?

Abbey’s contribution to the industry has been quite significant over the past 30 years. We were among the founding members of the Mortgage Banking Association of Nigeria Banks (MBAN).

It was primarily created to defend the interests of mortgage banks in the corporate banking sector. Thanks to this, we have been able to put in place many initiatives to work with regulators and government in areas where interventions are needed to clean up and give the sector the right to thrive.

As a financial member for 25 years. We were able to finance property developers; we have also financed our clients interested in buying properties.

A significant number of customers have taken advantage of their relationship with Abbey to secure their homes. Our corporate clients also include private schools from the early 90s who have benefited from the development and financing of their school projects.

How have Abbey clients benefited from its services?

Over the years Abbey has continued to develop its service to clients in the area of ​​excellent service delivery and prompt access to their mortgage funds and services. Our customers can attest to our reliability.

To improve our services to customers, we have invested heavily in technology over the past few years to improve access and facilitate transactions on their accounts with us. Recently, we rolled out our USSD banking channel, our Internet banking channel, and most recently, we launched our mobile banking application (Abbeymobile). All of these are channeled towards improving our customer service delivery and also increasing the level of customer satisfaction.

In terms of product development, how do you rate your products against the competition?

I said that the competition and especially what you find in the mortgage banking industry are quite similar, the differences are down to the smallest detail in terms of what you invest in and what you expect from this product. Most of the products we’ve linked to will eventually get you a property if you’re interested.

It’s not just you giving us your money, but we want to encourage people to save to own their own homes and you can only do that if you discipline yourself and are able to set aside some sum that you can possibly use

What are some of the challenges so far?

The challenges were many. Everyone knows the problems we have around our land use law and how difficult it is to acquire a transfer in mortgage practice. It is a long time and an expensive undertaking which is one of the challenges that has hindered the growth of the sector.

Lots of clamoring and lobbying the government to try and change the land use law to make it easier to deal in land properties. Where you have to get government consent for every transaction, which we find very bureaucratic and expensive. It is a waste of time for transactions and it is expensive for customers.

Other challenges include the high default rate in the market and the difficulty for banks to realize their investment as well as the marginal investment gain as these customers take the opportunity to pay their default.

Others include access to the right funding window. As I said earlier, most of the mortgage financing we have is short term. Meanwhile, mortgage banks are supposed to give 10-15 year loans to customers, but the maximum deposit you can have on your book may be 1 year.

About Miley Sawngett

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