13 April 2014

Zimbabwe: Metbank Secures Mortgage Licence

THE Reserve Bank of Zimbabwe (RBZ) has granted Metbank Limited a mortgage licence, the bank's board chairman Wilson Manase has confirmed.

The approval was granted earlier this year and the mortgage business will operate as a division of the bank, within the consumer banking portfolio.

A number of banks are turning to mortgage banking which has become popular business because of tax benefits. Building societies have been exempted from taxation.

The new business is expected to enable Metbank to promote increased access to housing finance by the low-to-middle income households in Zimbabwe by extending housing loan facilities primarily to the under-served and unbanked.

This comes at a time the bank has been encountering liquidity challenges with depositors struggling to get their money.

The bank contends that the tight liquidity in the market and limited interest of foreign investors in local assets converting the investment properties into cash remains a challenge.

The licence extends the bank's product offering and the new division has the advantage of riding on the already existing Metbank branch network.

Manase said as a result of the expanded product offering, the bank will soon be able to originate mortgage loans for the benefit of its customers.

"The bank is at an advanced stage of sourcing funds with an appropriate tenor and pricing to support this new line of business," he said.

It is understood that loans for housing are capital intensive, comprising relatively big amounts, with a long tenure, therefore one of the bank's priorities is to secure long term finance, discussions around which are already at an advanced stage.

However, that has not stopped the bank from commencing operations and activities have started with projects that involve the bank as a partner.

The unit comes into being just as the RBZ Monetary Policy has emphasised the need for mortgage finance and securitisation for banks.

"In response to this and in line with the national programme, ZimAsset, Metbank's focus is to ensure that affordable housing is delivered to all Zimbabweans," Manase said.

On this issue of capitalisation, the bank welcomed the extension of the recapitalisation deadline to the December 31 2020, for commercial banks to comply with the increased minimum capital threshold of US$100 million for commercial banks.

With core capital currently standing at US$33 million at the time of reporting, Metbank is in full compliance with minimum regulatory capital threshold of US$25 million.

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