HF Group posts Ksh.97 million half-year loss

The Housing Finance (HF) Group has reported a Ksh.97 million loss for the first six months of operations in 2019.

The loss which is against a narrow Ksh.6.8 million profit over the preceding 2018 period is largely attributable to a plunge in both loan issuance and deposit mobilization.

Customer loans fell by 16.7 percent over the period to Ksh.2.5 billion while deposits likewise decreased to Ksh.886.4 million from Ksh.1.1 billion as of June 30, 2018.

Even so, the lender registered improved recoveries in its non-performing loans (NPLs) portfolio during the period as the bank’s aggregate bad loans eased slightly to Ksh.13 billion from a slightly higher proportion of Ksh.13.3 billion at the end of 2018.

The registered appreciation is on the back of aggressive loan recoveries through property sales and auctions which saw the bank offset 335 units in the period.

Consequently, the Group’s revenues from non-interest funded sources grew by 33.1 percent to Ksh.914.2 million from Ksh.586.6 million.

At the same-time, the Group registered a consolidation in its costs management having held down both staff costs and asset depreciation.

Like its peers, the bank is keen on digitization to break back into profitability in the second half of the year.

“This new channel is part of our digital banking strategy and is reflective of our commitment to provide innovative financial solutions that enhance customer experience through ease of access, convenience, safety and simplicity,” said HF Group Chief Executive Officer Robert Kibaara.

“Our business transformation strategy is paying off and given the trend in performance, we project a turnaround to profitability by end of 2019.”

HF Group will in the latter half contend with the repayment of a paltry Ksh.3 billion in October, which makes for the second tranche of its Ksh.10 billion corporate bond issued in 2010.

The bank expects to finance the repayment of the bond through internally generated cash flows which will exert pressure on the Group’s Cash and Cash Equivalents (CCE).

NPLs remain a weak point for the lender, having seen asset deterioration in the second half of 2018 sink the bank to a Ksh.598.2 million loss in 2018.