StanChart set to expand home mortgage business

Standard Chartered Bank (SCB) aims to expand its home mortgage scheme as the business grew 900 percent last year, a top official of the bank said.
“We will go headlong with our home mortgage banking portfolio this year. We are ready to introduce the second phase of our home mortgage-- refinancing of existing properties,” Vikram Issar, the outgoing head of consumer banking of SCB, said yesterday.
Disbursements of SCB's home mortgage loan in 2007 grew 900 percent to Tk 350 crore. SCB got into mortgage business in Bangladesh in late 2005, getting momentum in the business in November 2006.
Mortgage is a legal document that pledges the property to the lender as security for payment of the debt, thus protecting the lender's interests in one's property.
Bangladeshi banks generally do not provide home mortgage loans, while some housing financiers do. In this fiscal, the central bank allocated Tk 300 crore to refinance banks' and non-banking financial institutions' low-cost home loans.
“Banks are not our competitors in home mortgage business, our competitors in this regard are the housing loan financiers,” Issar said.
The SCB official, who is leaving Bangladesh for Thailand this month to perform the same duty at his new working place, also said mortgage is a bit complex business and its management requires skill.
“Mortgage products and documentation are complex issues. But once you overcome the limitations, it is an excellent business,” said Issar, an Indian national.
Interest rate on SCB home mortgage loan is 15 percent, while interest on credit card, which is the most popular consumer product, is over 25 percent.
“I am surprised at seeing that banks here are not involved in mortgage business,” he said, adding that only a few home loan-financing institutes do it in Bangladesh.
The head of consumer banking of SCB also said home mortgage loan is one of the bank's latest consumer products that hit the market. The other major consumer products the bank offers are: credit card, personal loan, auto loan, business instalment loan and so on.
Although SCB started consumer banking in Bangladesh about 10 years ago, other banks entered this business area several years back.
“Business of consumer banking started to get momentum in the last two years. Banks are now coming up with more and more consumer products,” Issar said, adding that the business is still at its nascent stage.
According to him, credit card is the most popular consumer-banking product in Bangladesh. SCB alone has around 200,000 credit card holders, which the SCB official claimed to account for about 80 percent of the total market share.
The SCB has 26 branches and 40 automated teller machines (ATMs). The bank's current deposit portfolio is about Tk 4,000 crore with asset worth Tk 2,600 crore, according to Issar.
He claimed that during his two-year-tenure in Bangladesh the bank's revenue grew by 25 percent year-on-year basis and the trading profit increased by 31 percent.
“Assets grew by 45 percent in 2007 due to increase in lending and mortgage business,” he said. “Growth has been managed without any impact on the quality of underwriting.”
Net bad debts of the bank, as a percentage of net receivables, are below one percent.
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