Home mortgages take off at New Building Society
-Profit of $316M in 2002
Stabroek News
April 16, 2003
The New Building Society (NBS) issued $2.3B in new mortgages last year, a 38% increase on the previous year’s new issues.
The balances of 56% of the mortgages in force at the end of 2002 were for amounts under $2M, while 30% were currently for sums between $2-$4M. Total mortgages in force stood at $9.8B at the end of 2002, as against $8.3B the previous year, an increase of 18%. The total mortgages in force numbered 4,506.
NBS held its 63rd Annual Meeting on Monday at Le Meridien Pegasus Hotel and announced the highest profit level since its establishment in 1940 of $316M. Profit as a percentage of average total assets was 1.55% and NBS Director/Secretary Maurice Arjoon in his report says this ratio compared favourably with other local financial institutions.
NBS operates on a policy of profit sufficiency and not profit maximisation, allowing profit to grow at a rate that would strengthen and maintain its gross capital base.
The society’s savings at the end of 2002 were $18.9B or 88% of the asset base of $21.4B. The advances portfolio was 52% of savings. Assets grew by 18%. Liquid assets held by the society totalled $10.6B and represented 56% of total savings.
Arjoon said NBS’ achievements were made against the backdrop of the economic uncertainty in a more competitive market environment.
“The financial sector within which we operate has been very volatile and under threat from the weight of intensifying competition, reduced investment opportunities and the impact of narrowing margins resulting from an environment of excess liquidity with limited money market instruments available to investors,” Arjoon said in his report.
However, he said the society continued to put its members first resulting in interest rates going down much slower than base rates as the Society did not believe that the rate reduction should be borne by its members alone. The report said that the society during 2002 paid interest rates two percentage points higher than other institutions and its lending rates were over four percentage points lower.
Arjoon said prudent interest rate management had significantly mitigated the negative impact of falling yields on the society’s growing portfolio of government treasury bills (from $7.5B in 2001 to $8.1B in 2002). The society’s provision for loan losses was $56M against $51M at the end of 2001.
Noting the formidable challenges which confronted the financial sector including limited investment opportunities, the shortcomings in the legal environment and the unstable and vulnerable economic environment, Arjoon said the Society would strive to develop maximum value to members via keener pricing, fewer fees and charges and exceptional customer service. He said the society’s aim was to lead the way in delivering value and to acquire a dominant position in the marketplace.
At the end of 2002, the Society had a total of 4,506 mortgages in force, representing 46% of its assets. The number of loans and advances on which payments were 12 months or more in arrears totalled eight with a total outstanding balance, gross of provisions, being $28M as against $42M the previous year. Total arrears at the end of the year were $46M as against $78M in 2001 and represented half of a per cent of the total loans and advances to members.
