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NIESV partners CIBN to strengthen mortgage facilities

Maduka Nweke

Apparently not satisfied with the rising profile of non-performing loans granted to the real estate sector, the Nigerian Institution of Estate Surveyors and Valuers (NIESV) and  Chartered Institute of Bankers of Nigeria (CIBN) have met to brainstorm on ways to correct perceived imbalances.

To give impetus to these imbalances, experts, professionals and other stakeholders converged on Lagos recently to fashion out ways of resolving the issues around the prevailing rate of non-performing collaterised risk assets in the books of banks, especially as it affects the mortgage sector. 

The meeting, held under the aegis of CIBN, in partnership with NIESV had “Panacea to Collaterised Non-Performing Assets: Bankers and Valuers Perspectives” as its theme.

The advent of banks’ total risks, which stood at 5 per cent as at 2015 has risen to 15 per cent as at October 2017.

Although the lenders have their shortcomings, they blamed the scenario on inconsistent valuation reports used in granting credit facility to developers. It was therefore instructive given that the impact of valuation reports and way out of the predicament were the centre of discussion by both bankers and valuers, which aimed at finding a means of putting a stop to the numerous cases of non-performing assets. 

According to the guest speaker, Mr. Akin Olawore, an estate surveyor and valuer, valuation is a risk management tool, which, if properly deployed, is useful in helping banks to assess risks. It also provides banks with useful guide for fallback position on loan in case of default. Hence, valuation by certified surveyors is needed as guide against banks’ non-performing collateral risk assets.

“Valuations has different concepts and for many purposes. This is why it is expedient for bankers to disclose purposes they require valuation reports for. It is not just enough to approach a valuer and say, give me valuation. Banks should respect the view of the valuers in achieving common objective. Valuers are to protect bankers against risk collateral assets,” Olawore said.

According to him, overcoming this challenge requires continuous and close dialogue between all stakeholders especially between valuers and bankers who, he said, need to have a better understanding of themselves. Olawore itemised insufficient legal and or due diligence; inaccurate data; collusion and fraudulent practices; swap of valued properties and wide disparity of figures by valuers as some of the reasons for the conflict between bankers and valuers.

A lot more professionals who spoke on the issue believed that poor documentation and proper valuing of portfolios result in the challenges that are inherent in the exercise. 

Mr. Lanre Bolu, a valuer, noted that timeliness of valuation is among the issues, adding that valuation carried out two years ago cannot stand the test of the present time, hence, the need for re-evaluation. 

Other speakers at the forum presided over by the President, Mortgage Bankers Association of Nigeria (MBAN), Mr. Adeniyi Akinlusi, also noted issues like improper documentation, over invoicing, inconsistent valuation, among others, as some of the challenges of collaterised risk assets.

The President, CIBN, Prof. Segun Ajibola, expressed worries over the rising risk assets of banks. He said banks relied on real estate profession to protect their portfolio, aid profitability and to efficiently discharge their duties.

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