1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON HOUSING
Wednesday, May 14, 2008

2. Contents Mandate Strategic Objectives Financial Performance
Business Performance
5. Business Plan
6. Retail
7. Strategic Partnerships 1

3. 1. Mandate
The National Department of Housing established the National Housing Finance Corporation Limited (NHFC) as a Development Finance Institution in 1996 with the principal mandate of broadening and deepening access to affordable housing finance for the low to middle income households
The Corporation achieves that mandate by :
Making housing finance accessible and affordable for the low to middle income households
Supporting the Breaking New Ground (BNG) Strategy by facilitating the development of sustainable human settlements
Facilitating the development of a viable and sustainable low to middle income housing finance market 2

4. 1. Mandate (cont.) Mission
Providing innovative and affordable housing finance solutions to the low to middle income market.
Vision
To be the leader in the development finance of the low to middle income housing market. 3

5. 2. Strategic Objectives
2.1 Effective delivery of housing finance to support the Government’s strategy in reducing the housing backlog through:
Financing an amount of R726 million for the provision of low income housing for both rental and ownership;
Attaining an impact of 25,025 housing opportunities (Retail included); and
Facilitating and providing technical assistance to various tiers of government in the drive to deliver affordable housing at the required scale. 4

6. 2.Strategic objectives (cont.)
2.2 Implementing the Retail Home Loan Business by:
Providing loans directly to target market;
Facilitating housing delivery through provision of financial products and services;
Developing appropriate products and educational material to address the needs of the target market; and
Developing appropriate credit scoring system to support roll-out of new products. 5

7. 2.Strategic objectives (cont.)
2.3 Intensify delivery through strategic partnerships evidenced by:
Entering into risk sharing agreements with Banks and other financiers active in the low to middle income housing market to leverage the Corporation’s resources to deliver homes at a greater scale;
Entering into joint ventures with private sector players such as PACH to develop innovative products for the housing market;
Partnering with other public sector entities in achieving impact in the housing market; and
Sourcing and mobilising funding to support the needs of the low to middle income housing sector institutions. 6

8. 3. Financial Performance 2008 to Budget Summary Income Statement7

9. 3.Financial Performance 2007/2008 to Budget
Operating Expenses
Delay in cost mainly related to new retail business (marketing, advertising and consultancy costs)
(23% below)
Key expense items
Employee cost R45m
Outsourced services R7m
Professional fees R4m
Financial Performance
Profit after tax
(23% above)
Net Lending Income
Lower disbursements
Lag between approvals and disbursement
Increased impairments
High interest rate environment
NCA
(41% below) 8

10. 4. Business Performance 2008 - Housing Impact
ACTUAL:
BUDGET: 9

11. 4. Business Performance 2008 Provincial Spread10

12. 4. Business Performance 2008 Quarterly Approvals11 12

13. 5. Business Plan 2009-2011 Overview
Housing Opportunities
Disbursements
Funding Requirements
R1billion
R1,237m
R1,191m
R726m
R500 million
39,097
31,562
25,025
nil
2009
2010
2011
2009
2010
2011
2009
2010
2011 12

14. Commercial (Loans/Units) 7,576 11,967 8,482 10,362 Retail (Units)
5. Business Plan
Impact 2008 and Plan years
2008
2009
2010
2011
Projects (Units)
6,545
7,649
13,417
11,390
Commercial (Loans/Units)
7,576
11,967
8,482
10,362
Retail (Units)
5,409
9,663
17,345
TOTAL IMPACT
14,121
25,025
31,562
39,097
Disbursements (R million)
369
726
1,191
1,237 13 14

15. 5. Business Plan Income & Expenditure Projections14

16. 5. Business Plan Key Income and Expense items15

17. 5. Business Plan - Balance Sheet16

18. 5. Business Plan - Funding
Capital requirements are as follows:
The Corporation has established a funding committee to deal with the funding programme.
Discussions are underway with multi-lateral institutions
European Investment Bank (EIB)
French Development Agency (AFD)
The credit rating of the Corporation was confirmed by Global Credit Rating Company in November 2007 as AA- and A1+ for long and short term respectively. 17

19. 6. Retail Pilot MOU signed with SAPO.
Pilot offering mortgage loans commenced on 23 May 2007 through five SAPO branches in Gauteng targeting Post Office staff.
Additional distribution channels introduced in August 2007 due to low number of applications received from SAPO.
Building and renovation loans added to product offering in September 2007.
Rolled out to Kwa-Zulu Natal, Western Cape and Free State in November 2007.
SAPO staff trained and borrower education material developed. 18

20. 6. Retail Roll-out Plan
Development of infrastructure (people, processes, technology and governance) underway.
Envisaged to be in place for roll-out to public from end of July 2008.
Distribution channels:
SAPO
Mortgage originators
Loan officers
Developers
Call Centre
Internet 19

21. 7.Strategic Partnerships
JV with PACH to introduce the Income Linked Home Financing Instrument.
MOU was signed with ABSA on 26 November 2007 that will result in R1.3bn released towards affordable housing.
Mou with Basil Read - Mixed income intergrated projects based on Cosmo experience
Agreement with DBSA consortium (DBSA, NHFC, French Development Agency and Gauteng Partnership Fund) Intergrated developments projects on certain land parcels managed by JPC; and
Provinces – Facilitation to fast track housing delivery including pre-project funding, bridging finance and project management. 20