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NHT racks up losses after selling joint finance mortgage portfolio

THE STATE residential home builder, National Housing Trust, NHT, reported nearly $15 billion in losses on the sale of some of its joint finance mortgage portfolio.

Under the Joint Finance Mortgage Programme contributors could get a joint loan through a participating institution and receive the NHT’s portion of the loan.

Mortgage payments were made directly to the participating institution, which would in turn service the NHT portion. There were 10 participating private lenders.

A 34.4 per cent drop in company expenditure for the fiscal year ended March 2022 was largely due to a decline in loss on its partial disposal of the portfolio.

Losses related to the partial sale of the portfolio amounted to $2.5 billion in fiscal year 2021-22 compared to $12.4 billion in the year prior, 2020-21, with less sales executed during the latter year.

In the current reporting year, the company also received $4.7 billion owed on the sale of this portfolio. Total income for 2021-22 was $35. 46 billion, compared to $29.11 billion in the year before. Net profit for the last reporting year was $20.55 billion, up from $6.91 billion the year prior.

The NHT, meanwhile, ramped up expenditure under its Guaranteed Purchase Programme (GPP).

The Trust entered into guaranteed purchase agreements with developers for the purchase of housing units for sale to its beneficiaries. At the end of the financial year, there were agreements for the purchase of 2,033 units (2021: 1,636 units), of which 568 units (2021: 350 units) were received.

Mobilisation costs

Project mobilisation costs under the GPP in 2022 were $4.09 billion, compared to $2.92 billion paid out in fiscal year ended March 2021. The NHT indicates that its Guaranteed Purchase Programme accounted for 56.6 per cent of receivables and prepayments for 2021-22.

In total, more houses were completed for 2021-22, 2,667, than the previous year, 2,444. NHT projects delivered 897 solutions; 33.6 per cent of the total number of housing solutions completed throughout the year.

The Trust ended fiscal year April 2021 to March 2022 with higher assets of $328.32 billion, up from $310.53 billion at fiscal year end 2021.

Its loan receivables were $256.7 billion, compared to $238.5 billion the year before.

Agency asset levels grew 5.7 per cent over 2020-21. The loans receivable accounted for 78.2 per cent of total assets.

The asset class recorded an increase of 7.6 per cent over the previous year, mainly bolstered by an 8.8 per cent increase in loans to beneficiaries selected by the Trust, moving from $232.9 billion in 2021 to $253.5 billion at the end of March 2022.

Alongside higher investment in housing, inventories increased to $38 billion, up from $34.4 billion at the end of the 2020-21 financial year.

Housing under construction, which accounts for 76 per cent of inventories, was valued at $28.7 billion, or $3.9 billion more than the last financial year.

At the end of the 2021-22 financial year, 90 per cent of the Trust’s total assets were invested in housing, consistent with plans to ramp up the number of new housing solutions.

Investment securities

Investment securities increased by 4.0 per cent in 2021-22 that amounted to $4.5 billion, up from $4.3 billion in 2020-21, while short-term deposits and resale agreements registered a decline of 28.0 per cent, ending the year at $2.06 billion.

During the year being reported on, non-refundable employers’ contributions was 70.4 per cent of the total income and increased by 22.7 per cent, mainly due to the receipt of Government of Jamaica arrears totalling $3.1 billion.

Interest revenue, which accounted for 26 per cent of total income, increased by $1.1 billion, amounting to $9.1 billion.

The NHT outlined that the major contributor to this growth in interest income was the growth in loan receivables, which totalled $8.6 billion, compared to $8.3 billion in the prior year.

Interest on investments rose by 22.1 per cent to $0.55 billion due to a slight increase in investment securities. Approximately $1.2 billion was earned from gains on foreign exchange; fair value gains on investment securities; gains on projects; and miscellaneous income, comprising penalty income, debt management fees, and peril and life insurance administrative fees.

The Trust says it saw a significant reduction in its expenditure for the year, which amounted to $14.8 billion, down from $22.6 billion in 2020-21.

The largest were operating expenses, totalling $9.8 billion, or nine per cent less than the previous year.

Employee costs accounted for approximately 76 per cent of operating expenses.

For the year under review, employee costs moved from $8.5 billion in 2020-21 to $7.5 billion, a 13 per cent decline.

The NHT says that this contraction was mainly due to a reduction in pension and health expenses, resulting from the valuations of related plans.

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