BCR mortgage financing on ice

“The current value of mortgages is over Rwf4 billion yet we had a ceiling of Rwf2 billion. This means that we financed them (mortgages) at the expense of other portfolios,” Anand explained. The Commercial Bank of Rwanda (BCR) has temporarily suspended mortgage financing, a top official has revealed.
Gacuriro Maisonettes: Owning a house of this type under the BCR mortgage financing is currently ‘on ice’.
Gacuriro Maisonettes: Owning a house of this type under the BCR mortgage financing is currently ‘on ice’.

“The current value of mortgages is over Rwf4 billion yet we had a ceiling of Rwf2 billion. This means that we financed them (mortgages) at the expense of other portfolios,” Anand explained.

The Commercial Bank of Rwanda (BCR) has temporarily suspended mortgage financing, a top official has revealed.

The bank’s Managing Director, Sanjeev Anand said that the product has been paused owing to the internal portfolio gap.

“We financed mortgage beyond our portfolio ceiling by 50 percent,” he said.

“The current value of mortgages is over Rwf4 billion yet we had a ceiling of Rwf2 billion. This means that we financed them (mortgages) at the expense of other portfolios,” Anand explained.

“We are not a mortgage financing institution but a commercial bank! And we can’t finance one product at the expense of the other. There is need to create some kind of balance,” he continued.

the suspension of mortgage financing comes at a time when infomation from The MInistry of Infrastructure shows that Rwanda is short of houses by 25,000 units annually.

Anand however revealed that the Actis owned bank will continue financing mortgages subject to its overall portfolio.

According to Gilbert Lagaillarde, the BCR Head of Banking, the mortgage value covers about 150 clients. These clients are believed to include all income groups.

The two bank officials during the interview said that the company regarded as the pioneer of mortgages in 2008 considers the product a success with satisfactory Non Performing Loans (NPLs).

The product finances the construction, buying or extension of houses over a maximum period of 20 years. 

The explanations come after  the media reports read that product was suspended owing to the global financial crisis, which is forcing financial institutions to freeze. This has forced most banks to suspend financing long-term projects since the future is unpredictable.

The move has scared off real estate dealers since most of their sales are through mortgages.

The Chief Executive Officer (CEO) of DN International, Nathan Loyd said that this will definitely have an impact on the market.

“There is no doubt that their will be few house purchases,” he explained. Information from the American-Kenyan owned real estate developer shows that about 30 percent of the company’s clients are under BCR mortgage financing.

However, the 20 percent government owned bank registered a 50 percent fall in pre-tax profits last year.

According to the BCR’s financial report, the bank’s net profits fall from Rwf3.1 billion in the previous year to Rwf897 million in 2008.

The bank’s Board Chairman, Nkosana Moyo however attributed the fall to the inadequacies in risk, credit and portfolio management competencies.

Ends

 

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