GetBucks cautious on mortgage loans

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GetBucks Microfinance Bank CE Terrence Mudangwe says the financial institution is treading cautiously in the issuance of mortgage loans, given the nature of its assets on the market, but is leveraging on equity loans, the Zimbabwe Independent has learnt.

Melody Chikono

An equity loan describes additional borrowing, normally secured as a subsequent charge, as a top-up to the amount a home owner/purchaser can borrow from a main mortgage provider.

Last year, GetBucks said it was looking at doubling its mortgage loan book from US$3 million on the back of the new political developments.

GetBucks introduced mortgages to low-income earners in 2016, with the loan attracting 18% interest per annum payable in 10 years with 0% deposit.

Mortgage loans are some of the products that have seen the bank increasing its interest income by 18,5% year-on-year to US$52,1 million in the quarter to September 2017 due to growth in loans and advances that also increased 14% coupled with other products such as asset and finance equity.

Mudangwe said on Tuesday on the sidelines of the bank’s annual general meeting that although mortgages were still on offer, the bank was no longer driving them.

“The mortgage book is growing, but as you see because of the classes of our assets and because of the long-term nature we are taking a cautious approach. We still do them, but it’s not something we are driving.

“Remember we are on a yield basis so if you lock yourself for 20 years compared to you lending to your customer for about 24 months, it would be better to deploy your money into short-term because of the ability to roll over the money.

“Nevertheless, we are driving equity loans over a period of five years. You have seen a number banks on equity loans. We are still doing mortgages, but leveraging on the assets which are in the market.

“Zimbabwe is encumbered, if you look at the number of houses people have, some have five or six so it’s just a matter of sitting down and saying where do I get the money?” he said.

“The launch of mortgage loans by GetBucks and People’s Own Savings Bank (POSB) was expected to help ease the ballooning national housing backlog, estimated at 1,2 million units. A total 500 000 units are for the capital city.

Meanwhile, in Q1 to September 30 2018 the bank saw positive results and Mudangwe says the bank continued on a growth trajectory despite the tough environment.

The bank revised loan interest rates during the last quarter of the year and, consequently, loan disbursements have increased by 77% year-on-year.

Profit increased to US$1,3 million during Q1, up 18% from prior year.

“The quality of the book continues to be good and has been sustained from prior year even with the growth of SME loans. As a fintech (financial technology business), GetBucks continues to utilise technology to ensure that our turnaround time for individual and business loans is still the fastest in the market, our convenience levels continue to improve, and our cost structures remain lean,” Mudangwe said.

The bank recently ventured into secured lending for high net worth individuals to ensure that the convenience of quick and simple loans is enjoyed by all.

He said the institution was adequately capitalised, and during the quarter equity grew by 29% from prior year.

Mudangwe said local funding lines are being explored with multilateral institutions and various banks.

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