- HF Group has posted $1.9 million in the 2022 full year results from a loss of $5 million recorded in 2021 representing a 939 percent increase.
- Management attributes the turnaround to improved performance by the Group’s banking subsidiary, HFC.
- The group’s performance reflects the relentless focus they have put on their business transformation strategy.
HF Group has posted a profit of $1.9 million in the 2022 full year results from a loss of $5 million recorded in 2021, representing a 939 percent increase.
Management attributes the turnaround to improved performance by the Group’s banking subsidiary, HFC, whose profit after tax grew by 147 per cent to $1.2 million from a loss of $2.8 million in 2021.
Net interest income grew by 18 percent to $16 million from $13.8 million same period 2021 while non-funded income grew by 63 percent to $6.6 million compared to reported $4 million the same period last year.
Despite the rise in interest rates, deposits grew by $11 million during the period to hit $274 million.
“Our performance reflects the relentless focus we have put on our business transformation strategy. Our diversification to full service banking has seen the Group maintain a flat interest expense line while growing customer deposits and significantly increasing our funded and non-funded income,” said HF Group CEO, Robert Kibaara.
The Group’s cost optimization programme yielded fruits as total expenses dropped by 14 percent year-on-year while foreign exchange income rose by 182 per cent.
“We continue to invest in people and technology, speeding our capacity building and digital transformation in order to enhance customer experience,” he said.
Kibaara remains confident in the sustained profitability across all business units driven by revenue diversification and the deepening of its full-service banking.
“As we embark on 2023, we have an optimistic outlook on our performance. Revenue diversification is expected to accelerate as the Group continues to roll out SME and Personal Banking offerings and project management initiatives, and this is expected to continue facilitating access to cheaper funding for the franchise,” Kibaara said.
This is the first time in four years the lender has reported a net profit since 2018.
The firm through its property development arm, HFDI, has suffered in the past from a slowdown in the real estate market and more recently the economic fallout from the Covid-19 pandemic, which has seen the loss-making firm cut its financing for mortgages.
In 2021 HF Group turned to property auctions and negotiated sales with borrowers to bring down its non-performing loans (NPLs) that have weighed down on its performance.
The lender was among the financial institutions to receive $3.5 million funding from Kenya Mortgage Refinance Company last year aimed at catalyzing the growth of home ownership in Kenya.
The loan is at an interest of 5.15 percent per annum due to mature on December 23, 2028 allowing them to on-lend the same at single-digit rates to mortgage customers earning less than Sh150,000 per month.
In 2020, Kenya issued a total of 26,971 mortgage loans worth $1.7 million with the average home loan size standing at $65, 000, with an average rate of 10.9 percent on the loans and a time to maturity of 11 years.