By Morris Aron

Mortgage financier, Savings and Loan, is banking on increased demand for mortgage loans among the middle class in the coming months for continued profitability after posting a 125 per cent pre-tax profit for the first half of the year compared to a similar period last year.

S&L, which is the mortgage arm of Kenya Commercial Bank, said most of its business was driven by retail loans advanced to the middle class to buy or build houses.

A significant portion of loans also went to commercial projects mainly residential properties in Nairobi and other key towns. S&L’s profits before tax grew to Sh467, 889 million in June from Sh208, 422 million in June last year.

The company advanced Sh11 billion in loans in the first half of this year compared to Sh7 billion in a similar period last year.

The increase in disbursement saw the company earn an additional Sh338, 349 million.

"Demand for loans from individuals earning a net of between Sh50,000 and Sh100,000, who are looking to own homes contributed to a significant portion of our business," said a senior manager who sought anonymity.

"We will continue exploring ways of expanding our market share by coming up with innovative ways of attracting the middle income earners as well as those in the diaspora seeking to invest back home," said Caroline Kariuki the Managing Director of S&L.

S&L registered an increase in the number of customer deposits by Sh2.7 billion from Sh3.6 billion in June last year to just over Sh5 billion, according to the half-year financial report.

Its main rival, Housing Finance (HF), registered a 124 per cent increase in profits over the same period.

HF’s profitability rose to Sh132 million compared to Sh59 million posted over a corresponding period last year.