Mr. Seamus McCarthy:

As members are probably aware, HBFI was established under the provisions of the Home Building Finance Ireland Act 2018 to address a perceived shortfall in finance available for the construction of residential housing throughout Ireland. It operates as a commercial State entity, providing finance at market rates for commercially-viable residential developments.

HBFI was incorporated as a designated activity company in December 2018 and the company’s share capital is owned solely by the Minister for Finance. A group entity, Home Building Finance Ireland (Lending) Designated Activity Company, was subsequently incorporated in early January 2019 and it is a 100%-owned subsidiary of HBFI. The operations of HBFI commenced on 28 January 2019, with access to an initial loan fund of €730 million to be made available by the Ireland Strategic Investment Fund, ISIF, on the direction of the Minister for Finance. At the time of its launch, HBFI’s initial loan product was targeted at small- and medium-sized builders and was limited to providing senior debt funding for residential projects of ten units or more, up to a maximum of €35 million per project.

During 2020, HBFI significantly expanded the scope of its lending. It now offers funding for projects to build apartments where lending of up to €75 million can be provided; for small residential development projects of fewer than ten units; for social housing projects contracted for sale to a local authority or an approved housing body, AHB; and a €300 million momentum fund, which was launched as a response to the Covid-19 pandemic to provide funding to established developers for larger-scale developments in prime locations.

Naturally, HBFI was still in the initial stages of scaling up its operation in 2020. From the date of inception up until the end of 2020, HBFI had approved offers of loans totalling €395 million, but significantly less funding had been drawn down by borrowers. As the statement of financial position discloses, HBFI had loans in issue by the end of 2020 to developers of just under €37 million, and HBFI had borrowed a total of €37.3 million from the ISIF to facilitate this lending.

HBFI’s operating expenses in 2020 amounted to almost €5.7 million, of which €2.6 million was paid in respect of salaries to HBFI staff. Members may wish to note that HBFI staff are employees of the National Treasury Management Agency, NTMA, seconded to HBFI. The NTMA also provides administration supports to HBFI, including premises, HR functions, procurement and financial management services. Income earned by HBFI in 2020 amounted to €864,000. This included net interest income of €544,000 and other income of €320,000. HBFI incurred a loss of just under €4.8 million for 2020.

I issued unqualified audit opinions on the 2020 financial statements of the HBFI group, and of the subsidiary company.