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LivingTrust Mortgage Bank Plc reported a sharp decline in profitability for the first half of 2026, with profit before tax plunging 76% year-on-year, even as the lender recorded robust growth in customer deposits and expanded its balance sheet.
The mortgage bank’s unaudited financial results show that weaker interest income, rising funding costs and higher operating expenses significantly weighed on earnings during the six-month period, highlighting the challenges facing lenders amid Nigeria’s high-interest-rate environment.
Profit Takes a Major Hit
LivingTrust posted a 76% decline in profit before tax compared with the corresponding period of 2025, reflecting pressure on its core lending business.
The lender’s profitability was undermined by a deterioration in net interest margins as borrowing costs rose faster than interest income, reducing returns from its traditional mortgage and lending operations.
Interest Margin Turns Negative
One of the biggest setbacks for the bank during the reporting period was the reversal in its net interest position.
Interest income declined by 25% to N1.54 billion, down from N2.05 billion a year earlier, while interest expenses increased 19% to N1.88 billion from N1.58 billion.
As a result, the bank recorded a net interest loss of N346.24 million, compared with a net interest income of N463.62 million in the first half of 2025—a significant shift that eroded earnings from its core banking activities.
Non-Interest Income Provides Some Relief
Despite the weakness in lending income, LivingTrust managed to cushion part of the earnings pressure through stronger non-interest revenue.
Other operating income surged to N1.33 billion, up from N542.98 million in the corresponding period last year. The improvement was driven largely by higher income from placements with banks, which rose to N1.11 billion, compared with N237.19 million a year earlier.
The stronger non-core income helped soften the impact of weaker lending performance but was insufficient to offset the broader decline in profitability.
Operating Costs Continue to Rise
The bank also faced increased operating expenses during the period.
Personnel costs climbed 40% to N467.23 million, while depreciation charges more than doubled to N91.85 million.
Although other operating expenses fell to N360.21 million from N475.20 million, total operating expenses still increased by 13% to N983.45 million, placing additional pressure on the bank’s bottom line.
Deposits and Balance Sheet Show Resilience
Despite the weaker earnings performance, LivingTrust recorded encouraging growth in customer deposits, suggesting continued confidence from customers.
Customer deposits increased to N28.20 billion, up from N22.74 billion at the end of the 2025 financial year, driven by stronger demand and time deposits.
The growth in deposits strengthens the bank’s funding base and liquidity position, even as profitability remains under pressure.
High Interest Rates Challenge Mortgage Lenders
The latest results reflect the broader challenges confronting Nigeria’s mortgage banking sector.
Elevated interest rates have increased funding costs for financial institutions while making mortgage lending less attractive for borrowers. At the same time, banks are competing aggressively for deposits, pushing financing costs even higher.
For mortgage-focused institutions such as LivingTrust, sustaining profitability has become increasingly difficult as margins narrow and operating costs continue to rise.
Focus Shifts to Second-Half Recovery
While the bank’s expanding deposit base provides a positive signal for future growth, investors will be looking for improvements in lending income, tighter cost management and stronger net interest margins during the second half of the year.
Analysts believe restoring profitability will depend on LivingTrust’s ability to optimise its funding mix, improve earnings from core mortgage operations and sustain growth in non-interest income without allowing operating costs to outpace revenue.
The bank’s performance in the coming months is expected to determine whether the first-half earnings decline represents a temporary setback or a more prolonged profitability challenge.
