HF Group in Sh34b net profit

Housing Finance Group has engineered a turnaround to profitability to post Sh34 billion net profit in the first quarter of 2022, on recovery from Covid-19 pandemic shocks.

Nairobi Securities Exchange (NSE) listed firm pre-tax profit increased by 122 per cent to Sh39 million for the three months to March 2022, as it reduced non-performing loans and operating expenses. The  firm had posted a pre-tax loss of Sh178 million in the first quarter of 2021.

Sorting NPLs

To achieve these results, the group banked on a business transformation model that deepened focus on growing retail banking proposition and strengthening non-performing loans (NPLs) management measures.

The NPLs reduced by Sh2.1 billion year-on-year while total operating income increased by 27 per cent to Sh772.8 million with operating subsidiaries also registering profits during the period. 

Group Chief Executive Officer Robert Kibaara says the mortgage financier navigated the effects of Covid-19 to record a 10 per cent growth in net interest income to post Sh520.1 million in the first quarter of 2022.

“Diversification into full banking has led to significant revenue growth, increase in inexpensive Current and Savings Accounts (CASA) deposits, hence significant reduction in cost of funds,” said Kibaara. 

During the period under review, operating expenses reduced by 7 per cent to Sh733.8 million on the decline in provisions assigned for potential loan defaults.

The banking subsidiary, HFC, posted a reduction in its non- performing loan book by Sh 2.1 billion Year-on-Year from Sh10.5 billion to Sh8.4 billion, resulting in a reduction in loan provisions which has improved profitability.

The groups loan loss provisions reduced by 24 per cent to Sh56.4 million over the first quarter, while non-funded income recorded an 87 per cent growth to Sh252.7 million

The group continued to accelerate sale of its property projects, having sold over 1,100 houses over the last two years.