Jamaica Mortgage Bank targets $1.3b for lending

Jamaica Mortgage Bank, JMB, aims to lend $1.3 billion to developers for housing construction this fiscal year.

If the state-owned financier hits the target, it would represent a one-third increase atop the $972 million of loans written last year.

JMB mobilises loan funds for on-lending to public- and private-sector housing developers and to other lending institutions. It also provides mortgage insurance services on behalf of the Government of Jamaica. The bank is currently targeting the enrolment of more companies in its insurance programme, as well.

Its targets for financing this year are designed to deliver a combined 180 housing units across the island.

Two of those projects to which funds are already being disbursed, according to General Manager Courtney Wynter, include the Hampton's at Fairway in Kingston, a project being done by developer Devon Young, and Mayfair, a complex of apartments and townhouses being pursued by developer Kevin Malcolm near Red Hills, also in Kingston. Both projects, which are 95 per cent complete, are designed to deliver 86 housing units to the market.

Wynter told the Financial Gleaner that the bank really wants to "more than double" its loan portfolio and number of housing solutions financed by 2022. Its loan book is now valued at $2.3 billion, up from $1.65 billion in fiscal 2017.

The $972 million of new loans written in the past fiscal year ending March 2018 reflected an increase of nearly 44 per cent and financed 94 new housing units. Distributions in the period, inclusive of new and ongoing projects approved in prior periods, amounted to $1.1 billion or three per cent higher than the previous fiscal period.

Those improvements follow a three-year programme ending in 2017 to "stabilise the company and return to sustainable growth and profitability", Wynter noted, a plan that centred on growing the JMB's loan portfolio, new innovative means of funding projects, and collecting on bad debt. Wynter inherited the problems when he took over as GM in 2014.

Going forward, the bank aims to back developments largely positioned at the low-middle to middle-income market, he said.

The JMB has been doing business on behalf of the government since 1971. Since then, it has financed more than 100 residential and commercial development projects valued at more than $39 billion, which have delivered around 17,000 housing solutions, "including over 50 per cent of houses built in Portmore and Greater Portmore," the mortgage banker said.

Bad Loans

In more recent years, a series of bad loans have been weighing on the bank. But it has now collected $1.5 billion on its non-performing portfolio, and now aims to bring the NPL portfolio back to industry levels within two years. NPLs in the aggregate banking sector is currently estimated at 2.77 per cent, according to Bank of Jamaica data on the private market.

At their worst point, non-performing loans at JMB had risen above 60 per cent of the bank's portfolio. That's now been cut to 15 per cent, Wynter said.

Wynter, noting that what he could say was restricted by the fact that the JMB's financials have not yet been tabled in Parliament, said that for the year ended, the bank's balance sheet grew by an annual 8.9 per cent, primarily as a result of a 30.2 per cent growth in its loan portfolio. The bank also exceeded its budgeted pretax profit by 2,144 per cent, he said.

In fiscal 2017, JMB made pretax profit of nearly $116 million, but was only expecting to make a fraction of that, $6.5 million, in the following period ending March 2018, according to the Jamaica Public Bodies report. The report also projects pretax profit of $27 million for the bank by the end of this fiscal year at March 2019.

avia.collinder@gleanerjm.com