HF Group profit before tax jumps to Sh1.7 billion

NAIROBI, KENYA:  Integrated financial and property services provider HF Group today announced a 25 per cent growth in profitability for the year ended December 31, 2015. The Group’s profit before tax grew to Sh1.754 billion in the period compared to KShs 1.401 billion over a similar period in 2014.

Net interest income grew by 19 percent to Shs 3.6 billion from Shs 3 billion. Total non- interest income increased to Shs 1.171 billion from Shs 843 million (39 percent increase) on account of increased house sales during the year.

HF Group Managing Director Frank Ireri attributed the rise in profit to interest income from the banking and mortgage lending subsidiary HFC and profits from sale of properties by HFDI (HF Development and Investment) during the year.

Operating expenses increased by 37 percent to Shs 2.608 billion from Shs 1.907 billion in 2014 on account of increase in staff, marketing and IT costs incurred as part of the ongoing growth strategy.

The profit after tax rose 23 percent to Shs.1.2billion from hs 975 million in 2014.The performance was despite macroeconomic challenges faced in 2015. The year was characterised by an unstable shilling as well as high interest rates that made customers shy away from taking loans as well as pushed up the cost of doing business for banks.

“Despite last year having been a challenging one, we have been able to get a good return. The growth in profitability is mainly due to our diversified banking, property development and insurance strategy,” said Ireri when the Group released its full year results this morning.

“HFDI has posted good growth following the completion and sale of houses from some of the key projects that we have been undertaking. During the year the subsidiary completed 500 residential units (Komarock 5B, Precious Gardens phase 1, Kahawa Downs), 1 retail commercial development (K-Mall) and also launched the construction of Komarock Heights phase 1 which comprises 480 residential units.”

Loans and advances to HFC customers increased by 17.2 per cent to Shs. 53 billion from Shs 45.2 billion in the previous year following continued uptake of new banking products.

Gross Non-Performing Loans ratio declined to 7.7 percent from 9.5 percent as a result of continuous collection on NPL accounts as well as improved credit underwriting and monitoring practices during the year.

It is the first time that the company is reporting its financials as a Group, having restructured in August last year. Following the move, a non-operating holding company, HF Group, was created and the mortgage and banking business moved to a new subsidiary HFC. In addition to HFC, the Group’s other subsidiaries include HF Development and Investment (real estate development), HF Insurance Agency and HF Foundation.

The restructure was aimed at enabling the company to optimally achieve its growth agenda.

During the year, HF Group also marked its 50th anniversary during which it unveiled an ambitious growth strategy dubbed “Vision 2020”. Through the strategy, HF Group is looking at growing its mortgage lender and banking subsidiary HFC to be a top 10 commercial bank by 2020 by tapping into retail and corporate banking as well as property finance.

In addition, HFDI is also expected to play a critical role in growing the Group through property development that will be targeted at addressing the gap in low cost housing. The Group is also looking at growing its banc assurance business through the insurance agency.