Annual Report 2018 – Management Discussion and Analysis

Financial Performance

In 2017, Home Mortgage Bank (the Bank) executed a Memorandum of Understanding with Trinidad and Tobago Mortgage Finance Company Limited (TTMF) and embarked upon a restructuring and realignment exercise. This resulted in an exit from the primary mortgage market in 2018.

The Bank sold its equity portfolio and recorded a realized gain of $471 million. The sale was a one-off transaction and contributed to a total profit after tax of $560 million in 2018. For comparative purposes, the discussion and analysis commentary and the figures therein were adjusted to exclude this one-off gain on the equity portfolio.

The Bank recorded profit after tax of $88.9 million for the year ended December 31, 2018. This represents a year on year increase of 20% driven by strong growth in Net Interest Income and the recovery of an impairment on an asset held with CLICO Investment Bank Limited. For the year 2018 the Bank’s Total Assets declined by 3.37% as a special dividend was paid to the shareholder on the sale of the equity portfolio.

Overall, for the year 2018 the Bank showed improved profitability as both Return on Assets (ROA) and Return on Equity (ROE) increased by 24%. ROA and ROE was measured at 2.8% and 8.6% respectively.

Disposal of the equity portfolio and increased purchases of the secondary mortgages were planned actions of the Bank’s Strategic Plan.

Mortgage Portfolio

The Bank successfully completed the restructuring of its mortgage operations, that resulted in the exit from the primary mortgage market in favour of commercial mortgage lending and secondary mortgages.

Throughout the entire process, the customers’ experience was of paramount importance and every effort was made to ensure a smooth transition. The Bank upheld its commitment to all residential mortgage loan applicants in the pipeline at the point of transition. All primary mortgage applications in progress are expected to be fully disbursed in 2019.

The Bank financed two (2) land development projects that brought to the market seventy-nine (79) residential lots with all statutory approvals in place. Recently, approvals have been finalized for two (2) new projects which are expected to bring to market an additional ninety-six (96) residential lots and thirty-two (32) townhouses.

Additionally, the Bank purchased $904 million in secondary mortgages from the TTMF in 2018, which compares with $251 million in 2017.

Investments and Funding Activities

The local fixed income market showed significant depth in 2018 raising $12.9 billion via eighteen (18) issues according to the Central Bank Economic Bulletin (July 2018 & January 2019). The Bank successfully issued its 84th and 85th Bonds for a total value of $377 million. Over the year, varying structures were utilized to improve the bonds’ marketability, ranging from floating and fixed rate arrangements to bullet and amortizing principal repayments. The Bank also exercised its provisions under the HMB Act to issue Tax-Exempt Bonds to investors requiring such tax benefits. The high level of investors’ interest resulted in the bond being oversubscribed and demonstrated continued confidence in the Bank’s capital market activities.

Asset Backed Securities

Asset backed securities represent a key funding source for the Bank. As at December 31, 2018 the MPF held $530M in assets under management. The Fund offered an interest rate of 1.50% to unitholders. The development and growth of mortgage backed securities have been identified as a strategic objective for the Bank. To meet this objective the Bank will be re-introducing Collateralized Mortgage Obligations (CMOs) to the local market in 2019.

Risk Management

The Bank’s Enterprise Risk Management (ERM) Framework was fully implemented in 2018. The process commenced in 2017, with the Board’s approval of the ERM Policy, and continued in 2018 with an Enterprise Business Risk Assessment conducted by the management team.

Human Resources

With the implementation of the 2017-2020 Strategic Plan and the realignment of business units, change management initiatives were executed to prepare employees for the transition to the new model.  A skills assessment exercise was undertaken to leverage available skills, identify skill gaps and source necessary capabilities along with developmental programmes to close the gaps.

During the year, the Bank also supported the advancement of internal governance and accountability with the implementation of our Performance Management and Compensation Policies, creating a closer link between compensation and performance. The new performance management framework also allowed for a more structured approach to development initiatives and facilitated the alignment of training activities with organizational priorities for greater organizational efficiency.

Our Employee Satisfaction Survey identified several areas for creating a better workplace environment and action plans have been developed to assist in improving these areas.  In 2018 the Bank’s long service award function was held jointly with TTMF. This facilitated both companies in building closer relationships amongst employees. The aim is to create a workplace environment that nurtures employee development, satisfaction and productivity.


Looking ahead, 2019 will be another challenging year for the Bank, as we continue to implement the Strategic Plan 2017–2020. Our optimism remains high as we continually seek ways to improve our service and processes.

The Bank relocated its office to the National Insurance Board Trinidad and Tobago (NIBTT) Head Office, Second Floor, 14-19 Queen’s Park East, Port-of-Spain, effective March 11th, 2019. This will improve our efficiency and effectiveness in serving our customers and stakeholders while continuously building shareholder’s value.

Our Strategic Alliance with TTMF continues to mature as we build on developing synergies, levering our strengths and becoming a united force within the market.

In closing, I would like to thank the Board of Directors for their direction and support. Management and staff for their commitment and dedication in continuously cultivating the growth of the Bank.