Assessment of Financial Performance of Mortgage Banks in Nigeria’s Real Estate Sector

Mortgage banking is critical to financing Nigeria's housing deficit, estimated at over 20 million units, yet the financial performance of licensed mortgage banks in the country has not been systematically evaluated in recent literature. This study assesses the financial performance of primary mortgage banks in Nigeria for the period 2017 to 2022. Secondary data were sourced from the annual reports of ten licensed primary mortgage banks and the Central Bank of Nigeria primary mortgage bank supervisory returns. Financial performance indicators included return on assets, return on equity, non-performing mortgage loan ratio, and net interest margin. Descriptive statistics, trend analysis, and panel data regression were employed. Results showed that the sector average return on assets declined from 2.1% in 2017 to 0.8% in 2020 before recovering to 1.4% in 2022, reflecting the adverse impact of the COVID-19 pandemic on mortgage repayment capacity. Non-performing mortgage loan ratios remained elevated, averaging 18.7% over the study period, well above the Central Bank of Nigeria's regulatory threshold of 5%. Net interest margin was consistently above 8%, reflecting the high cost of mortgage credit. The study concludes that primary mortgage banks in Nigeria face significant asset quality challenges that constrain financial performance, and recommends a government-backed mortgage guarantee scheme to reduce default risk and improve the sector's viability as a long-term institutional investor in the real estate market.

Keywords: mortgage banks, financial performance, non-performing loans, real estate, Nigeria