Business
Aso Savings and Loans braces for tougher times
By OKEY ONYENWEAKU
A glimmer of hope may be becoming the way of the troubled Aso Savings & Loans Plc. Insider sources told Business Hallmark at the weekend that the mortgage firm has embarked on far-reaching plans to launch back to full business and once again make its stakeholders happy.
‘’ASO Savings is currently restructuring to reposition the company and return it to its feet’’, said the source.
In the same vein, one of its Executive Directors who would not want his name in print also told Business Hallmark that the firm had concluded its plans for the possible acquisition of Union Homes Savings & Loans Plc and is set for a rebound soon. Though no official statement has been made by the company on the new plans, stakeholders are expectant that some good may return in the business.
But this still seems far -fetched as many shareholders say they are not fully in the know of the prevailing circumstances in the company. Others say they are confused and hope that some more light could be thrown on the future plans of the company.
It will be recalled that in 2014, the Central Bank of Nigeria (CBN) had cleared Aso Savings and Loans Plc to proceed with its acquisition of Union Homes Savings and Loans Plc (UHSL).
This was to enable the two quoted companies to conclude the shares purchase and transfer side of the transaction.
Union Homes Nigeria Limited, UHNL was the special purpose vehicle through which Aso Savings would acquire the UBN divestment shares and recapitalise UHSL.
But according to reports, the company found it a little difficult to consummate the combination for lack of funds to completely execute the acquisition. Depositors and shareholders of Union Homes Savings & Loans could not be paid off at the agreed time. This prompted depositors of Union Homes Savings and Loans to petition the House of Representatives seeking help for the refund of their trapped funds in the mortgage bank.
The petitioners had said they had neither heard from Union Homes nor Aso Savings and Loans which had reportedly bought the former since 2013.
Besides, the company was bogged down with other challenges which range from an inability to meet the post listing requirement of the Nigerian Stock Exchange (NSE), and failings in the corporate governance arena, which earned it sanctions to the tune of N429.5 million for offenses committed.
A very bad image had also followed the company given that some funds belonging to the National Health Insurance Scheme (NHIS) were and remain trapped in Aso Savings and Loans Plc.
In October 2018, investigations by the Independent Corrupt Practices and other Related Offences Commission (ICPC) revealed that Aso Savings and Loans Plc had failed to remit N9.8 billion to the Federal Government, following the sales of properties belonging to the Government. It was alleged that Aso Savings was also bogged down by other debts that it could not resolve as at the time.
On this note, the Nigerian lawmakers had threatened in October last year to arrest the company’s Managing Director after it was discovered that some Government funds (outside of the Treasury Single Account) were allegedly hidden in an Aso Savings and Loans account.
Earlier in 2018, a now-former Executive Director of the company, Maimuna Aliyu, was prosecuted for an alleged N57 million fraud. Although she was not found guilty, the case further damaged the company’s already shattered public image.
However, there are unconfirmed rumours that the company is now ready to refocus and revive its business, but there has not been any official statement from the firm to its stakeholders in this regards.
Aso Savings and Loans was established as a financial services institution in Nigeria providing mortgage banking products and services. The firm also claims to offer a range of transactional accounts, fixed deposits, and financial loans as well as e-banking solutions such as mobile and desktop banking.
Real estate investment banking products and services offered by ASO Savings and Loans include residential and commercial real estate finance, loan syndication and structuring, financial advisory, and integrated financing. The company offers services related to deal underwriting, lease documents analysis, and business plan modeling. ASO Savings and Loans has delivered social mortgages to beneficiaries under the National Housing Fund Scheme and directly developed five housing estates around Abuja. The company’s head office is in Abuja, Nigeria.
Among other things, Aso Savings, some analysts explained, came on stream to help civil servants who had difficulties in raising funds at the commercial rates to buy properties. It was a role that it tried to fill for a short period before it encountered turbulent headwinds.
Under the circumstances then, Aso Savings & Loans has been struggling for survival. The company has not been able to release any results, both quarterly and annual in the last three years after the first-quarter performance of 2017. The result showed huge promise revealed a profit after tax of N10.4 million from a loss after tax of N12.4 million in the corresponding period of 2016.
Unpalatably, however, the company’s unaudited interim result in the same period showed that interest income declined by 23.9% to N992 million, compared to N1.3 billion in Q1 2016.
But more worrisome is the fact that the bank has not been able in the last 7 years to release any full-year result since 2013. In fact, stakeholders are very uncomfortable with this situation in the firm.
This performance has far-reaching implications on the expectations of stakeholders in the firm as well as the broader nation that needs it and other players to do even more.
Recently, the Federal Mortgage Bank of Nigeria estimated that the country now has a deficit of 22 million housing units. This figure is still rising by the day as the urban population numbers continue to increase at an alarming rate. In the same vein, in Lagos, Nigeria’s largest urban area, about 70% of the total population lives in informal housing with the housing deficit put at 2.5 million units, the state government had noted. The report shows that in major centers such as Lagos, Abuja, Ibadan, and Kano, housing demand is growing by about 20% each year.
The sorry scenario painted above must be the reason other Mortgage firms, including Aso Savings & Loans, were established. But with many industry experts not in agreement that the likes of Aso Savings & Loans can tackle the housing challenge in the country, the company’s fate is already hanging in a balance.
Of the twenty primary mortgage institutions in Nigeria, only Aso Savings and Loans Plc and Infinity Trust Mortgage Bank Plc are listed on the NSE. However, some other popular ones include Abbey Building Society Ltd, CENTAGE Savings & Loans Ltd, and Imperial Homes Mortgage Bank Ltd.
In the circumstance, the advertised vision of Aso Savings and Loans Plc ‘to be the Mortgage Bank of Choice’, appears to be slipping away from its fingers, more so if it does not brace up to the challenge and urgently refocus. This is based on the plain fact that the firm which had raised the hopes of many especially that of civil servants is now groping in the dark.
But this indeed was not how things were primed to be. As one shareholder who does not want to be mentioned in print told BH, they had been very excited in 2008 when the company’s shares were listed on the Nigerian Stock Exchange, NSE:
‘’We had picked the company’s shares with high hopes. But we do not know what our fate is now’’, he rued.
Unfortunately, these are indeed very trying times not only for ASO Savings & Loans Plc but also for businesses generally given the ravaging effect of Coronavirus and the crash of crude oil which have further dampened an already weak economy. And despite the promise conveyed by the rumours of Aso Savings and Loans Plc’s imminent comeback, many analysts fear that the challenges ahead may be very tough for the firm. But then, let us take them one step at a time.
