Mortgage funding NPLs remain weak at 0.2%

According to the Bank of Tanzania (BoT) Annual Banking Supervision Report for 2021, NPL mortgage financing was 0.2% last year, which was within the tolerable rate of no more than 5%.

This came after the report showed that the audited after-tax profit of mortgage finance institutions increased to 1,823.7 million/- last year from 1,538.3 million/- recorded the previous year.

The increase in profitability was attributed to the increase in interest income by 2.1% to 21,775.3 million/- compared to 21,338.1 million/- recorded in 2020.

“The performance of the mortgage finance institutions business continued to improve on the back of increases in capital, total assets, loan book and profitability,” the BoT report said.

The total capital of mortgage finance institutions also increased by 5.9% to reach 51,345.0 million/- compared to 48,476.9 million/- recorded in 2020, due to the increase in profitability.

The report states that the mortgage finance institutions have therefore met the capital adequacy requirements as required by the respective regulations.

The total assets of mortgage finance institutions increased by 5.6% to reach 219,400.8 million/- compared to 207,800.7 million/- recorded in 2020.

The increase was attributed to the increase in investments in government securities by 22.4% to 64,146.3 million/- from 52,420.9 million/- and the growth of the mortgage portfolio by 4.2 % at 147,760.5 million/- versus 141,865.1 million/-.

The main sources of funding for mortgage finance institutions were debt (59.4%), corporate bonds (16.0%) and equity (23.4%).

The loan portfolio of mortgage finance institutions increased by 3.8% to reach 148,066.6 million/- compared to 142,695.2 million/- recorded the previous year.

The increase was mainly caused by business recovery from the negative effects of the COVID-19 pandemic.

During this year, the BoT reports that the mortgage market saw a 7.5% annual growth in the value of loans, in the year ending June 2022, compared to June 2021; the market update report released by the Bank of Tanzania (BoT) showed this.

Outstanding mortgage debt in the year ending June this year rose to 509.99 billion/- equivalent to $220.23 million from 474.45 billion/- equivalent to 205.36 million recorded in June 2021.

Quarterly average mortgage debt size increased to 82.56 million/- equivalent to $35,654 from 76.74 million/- equivalent to $33,213 recorded in June last year and 81.49 million/- equivalent to $35,276 in March 2022.

However, the ratio of outstanding mortgage debt to gross domestic product (GDP) decreased to 0.29% in June, from 0.35% recorded in June 2021.

The update notes that there has been a newcomer to the mortgage market during the year, with the number of banks reporting having mortgage portfolios rising to 33 from 32 in June last year.

Mortgage debt advanced by the Top 5 Mortgage Lenders (PMLs) accounted for 65% of total mortgage debt outstanding, while typical interest rates offered by mortgage lenders ranged on average from 15 to 19%, says the update.

CRDB Bank Plc is the market leader with 38.02% mortgage market share, followed by Stanbic Bank (8.11%), Azania Bank (7.13%), NMB Bank Plc. (6.82%) and NCBA Bank (4.63%).

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