Pres. Ali’s intervention causes NBS to lose half a billion in profits - Chairman

Pres. Ali’s intervention causes NBS to lose half a billion in profits – Chairman

Apr 11, 2024 News

President Irfaan Ali (centre) The New Building Society, Georgetown headquarters and Chairman of NBS, Dr. Nanda Gopaul

…non-performing loans now a problem, will extend to other financial operators

Kaieteur News – The New Building Society (NBS) last year despite, disbursing in excess of $19B, its highest ever, to more than 2,300 borrowers, the company’s profits continue to slide downwards.

This much can be gleaned from the company’s most recent financial annual report, which documents NBS’s profit margin for last year at $680M.

In 2022, the previous year, the company managed to rake in $932M and $916M in 2021. For 2020 the company earned just over $1B, similarly in 2019. According to NBS Chairman, Dr. Nanda Gopaul, among the reasons for the decline in profits, came in 2022 when Head of State, President Irfaan Ali, in discussions with the NBS executives caused the company to drop its interest rate to the lowest ever in its history, “bringing our lending rates as low as 3.5 percent. The intervention by the President, according to Dr. Gopaul in his report, also led to an interest rebate amounting to some $800M in 2022, and $850M for last year.

It should be noted that despite the continued slide in the company’s profits, its interest income for last year was $3.1B compared to $2.9B the previous year. Additionally total assets for the company grew by 12 percent to some $91.3B last year compared with 2022, which saw its asset base being pegged at $81B.

Similarly, the society’s saving portfolio also saw an increase compared with the previous year. At the end of last year, NBS boasted some $70.8Bin its saving portfolio compared with $62B for the previous year. According to Gopaul, in 2023 the company saw a ‘magnificent’ increase in the number of mortgagers which stood at some 11,059 compared to 10,002 for the previous years.

Another cause for concern flagged by the NBS Chairman pertained to repayments to the company. Dr. Gopaul in his Annual report said, “with continuous repayment deferrals and the granting of moratoria the society continued to assist mortgagors whose earnings were negatively impacted by the COVID-19 Pandemic. In parallel the board monitored and managed our risks related to non-performing loans, which have increase over the past few years and are now a problem.”

To this end, the NBS Chairman warned that “this is not just the New Building Society, but other financial sector operators have to deal with.” He did note however that, “our mortgage business increased in 2023 as a result of the government’s accelerated housing program and the housing market’s recovery from the COVID-19 Pandemic.”

The Chairman’s sentiments were also echoed by the Chief Executive Officer (CEO), Anil Kishun, who in his report noted that the reduced profits recorded by the society was mainly due to the reduction of the mortgage rate in order to support the government’s housing drive. According to the CEO, mortgage revenue for 2023 stood at $2.9B or 92 percent of it total revenue, compared to 2022 which saw the figure at $2.6B representing 89 percent. As such, despite an increased asset base, and income from mortgage, the company’s overall profit margin continues to slide. Reporting on its investments, it was noted that this only netted $259M for the company when compared to $312M earned the previous year. Despite the anomalies, the directors reported satisfaction that NBS still has adequate resources to continue in business for the foreseeable future.

Chairman of NBS, Dr. Nanda Gopaul, Georgetown, headquarters, President Irfaan Ali, The New Building Society

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