HF Group keen on diversifying investments away from real estate

Mortgage financier Housing Finance (HF) has expressed its keenness to move away from the real estate comfort zone highlighting the significant shift in the sector’s return on investment.

The lender who continues to bleed from the sudden downturn in the properties market fortunes has backed the diversification towards diaspora and virtual banking to guide the Group’s path back into profitability.

Regardless of the ongoing decline of the real estate sector the Housing Finance Group has stepped up its recovery of outstanding mortgage loans in a quest to repair the bank’s punctured balance sheet in the past year.

“Our recoveries have improved significantly and we are not worried by our past problems. What preoccupies us now is the building of a business of the future which is less dependent on one sector,” HF Group Chief Executive Robert Kibaara told Citizen Digital in a Monday interview.

The fall of the real estate sector in 2018 dragged Housing Finance to its first full year loss in over a decade as interest income fell sharply from a 15 percent plunge in customer loans.

HF’s Non-Funded income meanwhile stalled at Ksh.1.3 billion while the bank’s non-performing loans surged forward by Ksh.5.1 billion to Ksh.13.3 billion.

Housing Finance has in the year to date concentrated on the right sizing of the bank’s share of bad loans by placing customer houses on auction on a collaborative venture to support the offsetting of developed units.

In the year to June 30, the bank has managed to offset a total of 335 units recovering an estimated 300 million shillings of non-performing loans.

“There are prospects of more loan recovery and we wouldn’t be worried about this,” Mr. Kibaara added.

Subsequently, the step in loan recovery has paid off for HF having booked a reduced loss of Ksh.97 million from its first six months of operations in 2019 on the back of greater non-funded income which soared by 33.1 percent to Ksh.914.2 million.

While the depressed real estate environment has taken its toll on the lender, HF has rounded up the clearance of a seven-year tenure Ksh.3 billion corporate bond by paying out the principal Ksh.3.162 billion to bond holders on Monday from its generated generated cash-reserves.