Housing Finance (HF) Group is set to receive an Sh1 billion capital injection from Britam Holdings ahead of its transformation into a full-service bank.
HF Group Chief Executive Robert Kibaara said the funds would accelerate the lender’s operations, boost small and medium enterprise (SME) lending as well as finance the affordable housing segment.
“The investment comes on the back of a turnaround strategy that is poised to see the business transform into a full-service bank. This is a major vote of confidence informed by the results already being witnessed through our business transformation initiatives,” Kibaara said yesterday in Nairobi.
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The SME sector, which contributes 30 per cent of Kenya’s Gross Domestic Product (GDP), is a key focus for the HF Group.
Mr Kibaara said the funds would also help the bank to empower entrepreneurs through trade financing, working capital and other short-term facilities to spur the sector. “Investing in SMEs is a powerful mechanism through which we can deliver impact at scale," he noted.
HF has diversified into new business segments such as SME banking, diaspora banking as well as personal banking - moving away from being solely a property development company.
Over the past two years, HF has seen customer deposits grow by over Sh3.5 billion while interest expense has decreased by Sh1 billion.
Customer numbers have grown by 25 per cent on the back of a robust digital banking platform and diversified product offering.
Britam Holdings outgoing Chief Executive Benson Wairegi said the capital injection was a vote of confidence in HF Group's transformation strategy. “Our support will allow the bank to grow its full-service banking offering, deepen penetration of banking services and promote financial inclusion for all,” said Wairegi.
The cash will also boost HF Group’s strategy, focusing on financing affordable housing projects and creating opportunities for Kenyans in the middle-income bracket to own homes.
HF has signed agreements with the State to finance buyers of Park Road affordable housing project and private sector developers.
They include real estate developer Tecnofin Ltd, which is developing 1,562 housing units in Pangani.
The diversification is on the back of a property slump. HF's property business has been characterised by high defaults and non-performing loans, which the lender has been taming in a turnaround strategy.