Housing Finance quarter two profit rises 18pc

Mortgage lender is shifting focus on growing deposits from savings accounts and current accounts

Housing Finance (HF) has announced a 18 per cent growth in pre-tax profit for the six months to June 30. The mortgage financier's profit before tax grew to Sh677.77 million, from Sh574.12 million in a similar period last year.

Its operating income rose 20 per cent to Sh1.84 billion, from Sh1.53 billion, while operating expenses increased 22 per cent to Sh1.16 billion, from Sh956.55 million in a similar period.

Managing Director Frank Ireri said the group is shifting its focus on growing deposits from savings accounts and current accounts. He said this would reduce the firm's reliance on expensive corporate deposits that have heavily weighed down its interest margins.

In a statement yesterday, Ireri said the company would re-brand to revamp its corporate identity. "The exercise will enable Housing Finance cater more efficiently to its current customer demands, rejuvenate the internal culture while reflecting the larger, more sophisticated company it has now become," he said.

According to the group's unaudited financial statements released yesterday, customer deposits grew seven per cent to Sh27.66 billion from Sh25.84 billion in a similar period last year. Net loans and advances to customers rose 19 per cent to Sh38.8 billion from Sh32.47 billion.

Borrowed funds grew 24 per cent to Sh14.96 billion, from Sh12 billion while gross non-performing loans and advances jumped 31 per cent to Sh3.87 billion, from Sh2.94 billion. Total interest income grew nine per cent to Sh2.91 billion from Sh2.77 billion.

Total operating expenses increased 22 per cent to Sh 1.16 billion from Sh 956.55 million on what the management attributed to the ongoing investment in branch network, staff costs and investment in the new core banking system.

Ireri said plans are also underway to establish a holding company to boost HF's income diversification strategy.

"Plans are at an advanced stage to establish a non-trading holding company that will enable Housing Finance launch new lines of businesses that will reduce our reliance on interest income," he said.

HF hopes to leverage on its partnership with Britam to explore joint venture projects and explore the possibility of issuing a joint Real Estate Investment Trusts (Reits). Britam has announced plans to acquire Equity Bank's 24.76 per cent shareholding in HF subject to regulatory approvals.

The deal is expected to bring Britam's direct and indirect control in HF to approximately 46.08 per cent of the issued share capital of the Company.